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There are obvious benefits to pursuing a brand extension strategy but there are also significant downsides if a brand extension doesn’t work. And one of the main reasons brand extension doesn’t work is because the extended brand doesn’t fit with the core brand.

Businesses that have extended their brands have met with mixed results.  There have been some outstanding successes and some dismal failures.  We look at some examples to see if any lessons can be learned.

What is a brand extension?

Brand extension has been defined as “the addition of a new product to an already established line of products under the same name”. 

Why pursue a brand extension strategy?

Businesses consider brand extension to use brand equity for business growth and to cement core brand qualities. 

You’ve created a successful brand once – surely you can do it again.  After all, it’s not the product or service that makes a brand, but rather the association created in a consumer’s mind between the brand and the brand owner.

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 product.  Economic reasons are the main motivation for launching new products using the same brand.  After all, the extended brand will still be recognised by consumers. And without spending much more money on advertising, the visibility of the core brand increases as well.  Sometimes costs can be saved if the same distribution network is used for both the original product and the extended product range.

The key to successful brand extensions

It takes time to build a successful brand.  Success rarely occurs overnight. 

The key to successful brand extensions is to find out if the brand extension fits or is consistent with the core brand.

If thinking about pursuing a brand extension strategy, bear in mind the following:

• Relevance – are the core brand qualities relevant or important to the brand extension category?
• Recognition – do consumers understand the reason for extending the brand?
• Credibility – does the core brand have qualities that are credible and acceptable to sell the brand extension?
• Transfer – does the core brand have the ability to transfer its skills and experience to the brand extension?

There is no formula for guaranteeing success but those businesses that get it right are the ones that kept customers’ needs in mind.  Top of mind has been the issue of ‘relevance’ for these businesses.  They have stayed true to their brand values and not been tempted to sell the brand short.  Consumers can see a direct link between the qualities of the core brand and the brand extension.

Think about why you want to extend your brand

Examples of successful brand extensions encourage other brands to follow suit.  But often extensions are made by businesses with no seeming understanding of what their brand is about.  A clear, well thought out strategy is needed if a brand extension is to work.  Stretching the use of a brand too far from the original products or services on which it built its reputation on can lead to brand erosion, particularly if the extension confuses the consumer.

Looking at some examples of successful brand extensions

There are many examples of successful brand extensions, especially in the fashion industry.  LACOSTE, BURBERRY, PRAVDA, LOUIS VUITTON spring to mind.  Starting off as clothing brands, these brands have been able to extend into other areas – sunglasses, cosmetics, and luggage with seemingly little effort. 

NIKE started life as a footwear brand.  But after expanding into the clothing arena initially it is now as successful across the sports goods market.  The brand has a “midas” touch – no matter what product it touches, that product is usually successful when sold under the NIKE brand.  Even plagued by manufacture exploitation claims, the brand continues to be highly sought after.

Effem Foods Limited successfully extended it MARS brand from chocolate confectionery to ice-cream.

These businesses expanded within the limits of perception of the brand; outside their niche areas but not too far to seem unrelated.

Sometimes a successful brand for one product can extend to another even if different.  CATERPILLAR is such an example.  Well-known and regarded for earthmoving machines, this business extended their brand to footwear. 

Richard Branson seems to be able to apply his brand VIRGIN to almost any product or service with relative success.  Starting out as a record label, signing controversial acts such as the Sex Pistols, it now encompasses almost everything – from airlines to financial services. 

And when an extension goes wrong?

When businesses fail to understand the true nature of their brand, the results can be disastrous.

If the brand extension does not fit with the core brand, the extension may fail, or the core brand qualities may be diluted and negative qualities may be associated with the core brand.

Not all extensions have been successful.  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 the HARLEY DAVIDSON 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 seemed to accept this diversification (reluctantly) but when the business expanded into perfume and aftershave the fans revolted. 

To exploit the HARLEY DAVIDSON brand, having built it on masculinity, by applying it to “girly stuff’ did not impress the fans.  Not unsurprisingly the brand extension failed.  It had alienated its core customers.  The business had been tempted by the allure of making easy money and forgot about its values along the way.

BIC also faced problems when it sought to diversify its brand.  The business, best known for producing disposable pens, thought its brand was strong enough to extend to other categories.  Taking the idea of ‘disposability’ the business had success with cigarette lighters and safety razors.  But when the business sought to extend into women’s underwear, being a line of disposable panty hose, it met resistance and failed to attract customers. 

An example close to home is MICHAEL HILL.  Having built up a booming business in jewellery, the allure to extend the brand to footwear was strong.  But the move to footwear failed to fire.  Customers just did not resonate with MICHAEL HILL being used as a footwear brand.

The lessons

Although a brand extension may increase sales immediately, it can devalue the identity of the brand in the long-term.

Using the same brand in unrelated categories can create difficulties, if there is no link between the products.  If a consumer has a powerful view for one class of product, it can be almost impossible to extend that view to a different class. 

If pursuing a brand extension strategy, it is critical to understand from a consumer point of view the perception of the core brand to find out if a brand extension can work.

Making a brand extension work

Brand extensions are everywhere.  What lessons can be learned from others:

• Focus on your brand values.
• Don’t alienate your core consumers.
• Think from the consumers perspective
• Don’t confuse the consumer.
• Don’t offer too many products.
• Expand within the limits of your brand perception

Extending a brand successfully must involve conducting research and talking to core consumers.  Use insights gained from consumer conversations to brainstorm and develop brand extension ideas.  Then investigate consumer reactions to potential brand extensions and their fit with the core brand.  Select the extension which the research shows has the highest level of fit and is more likely to be successful.  And only then take the step to extend.

An edited version of this articel was published in NZ Retail magazine October 2007

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  Corinne Blumsky

  Partner