A stretch too far?

14 September 2007
The temptation to extend an established brand is strong. But is success in one product category a guarantee for success in another?

Owners of established brands face constant challenges to their market leader position. One way to stay on top is to extend successful brands into other product categories.

It sounds simple enough – take an already successful brand and stretch it just a bit further. After all, it’s not the product that makes a brand, but rather the association the brand creates in consumers’ minds. 

Increasingly, businesses are looking at brand extensions as a way of leveraging value from their core brands. Many businesses have extended their brand use - but with mixed results.

It takes just as much time to build a successful brand as it does to extend one.  There is no formula for guaranteed success but those businesses that got it right are the ones that kept customers’ needs in mind.  When businesses fail to understand the true nature of their brand, the results can be disastrous.

The reasons for brand extension are obvious.  Having saturated a market with one product, a business has two choices for growth.  Expand into a new market or launch a new product.

There are good economic reasons for using the same brand for a new product.  Extending an existing brand means immediate consumer recognition, less money spent on advertising and increased visibility of the core brand.  Further cost savings are possible by using the same distribution network for both the original and the new product.

The greatest chance of success is when a brand is well developed for its higher emotional profile: personality, values, taste, and appearance.

There are many examples of successful brand extensions in the fashion industry.  LACOSTE, BURBERRY, PRADA, LOUIS VUITTON spring to mind.  Starting off as clothing brands, these brands have been successfully extended into other lines – sunglasses, cosmetics and luggage for example. 

But not all extensions have been successful.  Brand extension may fail if the brand is not compelling in the new product line. The existing brand could lose its differentiation and relevance.  Worse still, introducing conflicting or confusing qualities can damage the original brand.

HARLEY DAVIDSON is an example.  Famous for motorcycles, this business created a brand culture based on the freedom of the open road and all its macho connotations.  Riders related to this brand because of its masculinity. 

Intending to capitalize on the strengths of the brand, the business sought to expand into a diverse variety of branded goods – clothing, ornaments and cigarette lighters.  Core fans accepted this diversification (reluctantly) but when the business expanded into perfume and aftershave, the fans revolted. 

Exploiting a masculine brand and applying it to ‘girly stuff’ did not impress the fans. The brand extension failed because it had alienated its core customers.  The business, tempted by the allure of making easy money, forgot about its values.

Stretching the use of a brand too far from the original products or services it has built its reputation on can lead to brand erosion if the extension confuses the consumer.  The business needs to ask:

  • What does the brand stand for in the minds of existing and potential consumers?
  • What could it stand for?
  • In what markets could the brand profile match needs and in which segments?
  • Are those segments attractive?
  • Does the business have (or could it have) competence in those markets?

Often extensions are made by businesses with no clear understanding of what their brand is about.  A clear, well thought out strategy is needed for brand extension to succeed.

An edited version of this article was published in Apparel magazine September 2007

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