Brand extension is one of the most common ways for an established brand to achieve meaningful growth. In our last post, The important Role of Demand in Successful Brand Extension, we described three factors and their collective contributions to successful brand extensions—demand, solution, and brand relevance. We spoke in great detail about the demand and importance of identifying an unmet need or desire in brand extension (or, if one doesn’t exist, the brand must first find a way to create the need or want—a more difficult, but viable path). Here we will focus on the second factor, the solution.
The product/service solution
Although identifying a meaningful, unmet need or want is a critical first step, it is not enough to achieve successful brand extension; an appealing solution is also required. Several factors can derail this step in the process, and each has the potential to singlehandedly derange an otherwise successful brand extension.
1) The solution does not adequately address the market want or need
Microsoft Bob was supposed to be a user-friendly interface for Windows, a project that Microsoft killed one year after launching it in 1995.
The reason? According to Bill Gates, "Bob died." The software demanded better performance than typical, underpowered computer hardware could deliver at the time. Bob was one of Microsoft's more discernable product failures, continuing to catch severe criticism in reviews and the media. In fact, in 2017, Melinda Gates acknowledged that the software "needed a more powerful computer than most people had back then.”
2) Unappealing attributes
Even if the solution is ideal and inspiring, unappealing side effects of an offer sometimes can kill the entire proposition. In 1997, Clearly Canadian Beverage Corp. was looking to expand on their "Clearly Canadian" line of Carbonated Fruit beverages. What they created was a noncarbonated fruit-flavored beverage. But not just any noncarbonated fruit-flavored drink, but one that had small edible balls floating in it, marketing it as a "texturally enhanced alternative beverage."
People began comparing the beverage to cough syrup, and the gel balls were only making the taste worse. Orbitz quickly disappeared from convenient stores across the U.S, almost as quickly as it's floating balls arrived. After all, how many people do you know who enjoy chewing when they should be drinking?
Solutions—and the extension efforts behind them—can also fail due to cannibalization. Brand cannibalization occurs when a company launches a brand extension that competes with one of its existing products or services and seizes a portion of its market share.
In 2008, Chrysler canceled an upcoming clone of its Dodge Journey to devote more resources to moving its lineup toward smaller, more fuel-efficient vehicles. Chrysler president, Jim Press stated that the company “only needed around half of the eleven SUVs currently in its lineup.” The automaker subsequently announced to the press that it planned to consolidate its brands into single dealerships, versions of the same vehicle would have to be ditched to prevent cannibalization of sales between brands.
In my book, The Indispensable Brand, I discuss in detail how, back in the day, Crest owned 50% of the market with a single product, but now owns just a quarter of the market with 50 products (e.g., new toothpaste twists – gum protection, whitening, tartar control, etc.). In other words, each introduction competed for the same usage occasion, and introduced new value, but not enough added benefits to create incremental growth. To avoid cannibalization, brands must not only ensure that they develop high-quality solutions that fulfill an unmet need, but they must also avoid merely moving revenue from one internal statement column into another.
Stay tuned for our final post in this brand extension series where we will highlight the third factor, brand relevance because when all three factors are met—demand, solution, and brand relevance—the potential for success is high.
If you need help launching your brand extension strategy, our brand strategy consulting partners have the knowledge and expertise to help your company successfully extend with care.