Robust brand extension strategies are vital to maintaining relevance in today’s hyper-competitive marketplace. To a degree, brand extendibility represents the most logical way to achieve profitable brand growth, however, many companies struggle with how far to stretch, where specifically to extend, and how to ensure success. This perhaps explains why the failure rate is as high as 80 to 90 percent. Play it too safe, and the likely result will be boring, short-lived line extensions that underwhelm consumers. Stray too far from your brand’s core positioning, and you risk diluting valuable equity and trust in the parent brand; extended brands should make sense and be a logical step from the flagship product. If not, consumers are left scratching their heads asking, “OMG, what were they thinking?”
Three Challenging Aspects of Extending Brands
From a brand strategy consultant’s perspective, to achieve success, a brand extension must be a logical fit with the parent brand, a leverage for competitive advantage, and an opportunity to enhance the brand and stimulate growth. When brand extensions fail, not only does the new product fail, but negative associations impact the parent brand’s image and equity.
1) Identifying Unmet Consumer Needs
Identifying meaningful “white space” in a given market is a difficult challenge for a variety of reasons. Brands must uncover problems, be different in a way that stands out, and uniquely address needs in a way that no one else is even thinking about. Companies like Uber, Airbnb, and Amazon understand this; Uber’s success didn’t come from manufacturing new and better taxis, but from recognizing and solving people’s transportation problems.
Often, customers are unaware they even have a particular need. Some of the most successful new products and brand extensions in history were not inspired by an articulated need. Light-emitting diode (LED) was a radical product development. The lights use less power and last longer than even ‘low-energy’ bulbs, but consumers were probably not aware of their need for such lighting before it was launched to the market.
Some extension strategies fail because the unmet need is too niche. How niche is too niche? In 2004 Jones Soda, a Seattle-based company that specializes in unusual soft-drink flavors introduced five soda flavors in a limited-edition holiday pack—Thanksgiving Dinner Soda—which included Green Bean Casserole Soda, Mashed Potato & Butter Soda, Cranberry Soda, and Turkey & Gravy Soda. The sodas were designed to give you all the flavor of Thanksgiving without requiring you to chew.
2) Uninspiring Product/Service Solution
The secret to unparalleled success is to differentiate with solutions that solve consumers’ greatest unmet needs. It’s not enough to simply be different; you’ve got to be different in a way that solves problems and offers tremendous value for which people are willing to pay.
Martha Stewart Living’s brand extension, “American Made,” is an example of a brand successfully building relationships with customers through aspirational branding. Dedicated readers have been inspired by the perfection displayed in the pages of Martha Stewart Living. American Made encourages brand loyalists to act on their aspirations of becoming trendsetting homemakers, through home-product design challenges, maker summits and the chance of being featured on the pages of the magazine.
General Foods launched Maxwell House Ready-to-Drink Coffee in 1990, long after Mr. Coffee arrived and shortly before Starbucks transformed the specialty coffee industry. The Maxwell House carton was found in the refrigerated section of the store, promising consumers a convenient new way to enjoy Maxwell House Coffee. So, what happened to make this day-starter disappear from grocery shelves? The ready-to-drink java couldn't be microwaved in its foil-lined carton and consumers were just as happy pouring from coffee pot to mug as they were from a cold container.
3) Lack of Relevance
If the new product or service does not express the key attributes of the parent brand, it is not a strong fit. The new product category must convey the emotional benefits associated with the parent brand, and the attributes must be meaningful to consumers when it moves into the new category. Furthermore, consumers must perceive the brand’s ability to deliver credibly on all the primary attributes in the new category. The Clorox brand is associated with cleanliness and is known for its bleach product. So, when the company introduced toilet bowl cleaner, Clorox delivered a product that perfectly lined up with consumer expectations and met a new need.
Many unsuccessful brand extensions demonstrate the limits of a brand’s ability to stretch into a new category due to a lack of credibility (e.g., Ben-Gay aspirin, Smuckers ketchup, and McDonald’s McPizza). In 2016, KFC released a ‘Finger Lickin’ Good’ edible nail polish (supposedly tasting like fried chicken) that was described by Huffington Post as “your worst nightmare coming true.”
Brand extensions have the potential to both enhance affinity for the new product/service and promote positive spillover effects on the parent brand. Marketers must weigh each potential brand extension by how effectively it leverages brand equity from the parent brand, as well as how effectively it contributes to the parent brand’s existing equity. While products and services should be a strong fit with the parent brand, in our next post we will examine how, contrary to popular belief, consumers give some brands a great deal of permission to extend into unlikely places.