Not everybody agrees.

Intel positioned itself to be the heart and soul of personal computers, according to Rob Gelphman, who heads his own integrated marketing communications agency. The strategy was to create a brand, and it worked – for PCs. But it doesn’t work for consumer electronics, communications, or web hosting, which are among the new markets that Intel went into. “The brand doesn’t translate,” says Gelphman, a former advisor to Intel on public relations strategy.

“The Intel brand is about microprocessors,” says Chip Shafer, president and CEO of neoBrands. “They have correctly identified the need to re-focus their energy and effort on silicon.” Getting out of consumer electronics is another step in that direction, adds Shafer, who was part of the creative team that produced the award-winning “Intel Inside” marketing campaign, which shifted the balance of power in the PC industry.

Marketers who are tempted to extend a strong, successful brand into a new category are confident because of the proven advantages. The core brand’s perceived quality obviously helps the brand extension. Due to the strength of the brand, the consumer already knows something about the new product: the quality, personality, character, and performance. When introducing a new product, that’s obviously a huge advantage.

But a successful brand extension can sometimes dilute the reputation of the core brand, says Sam Hill, co-author of The Infinite Asset: Managing Brand to Build New Value. Hewlett-Packard is now the world leader in value-priced printers. But this success has diluted some of the great HP brand equity in high-end scientific instruments, he says, which prompted its launch of a new brand, Agilent.

Then there is the flip side. Can an unsuccessful brand extension come back to haunt the original brand and damage its reputation? Keller, the marketing professor, says that won’t happen if the new brand is in a distinct category far enough away from the parent brand. He singles out the Intel brand of watches, launched some 20 years ago. Its failure didn’t affect how people felt about Intel microprocessors.

“Consumers can be very literal,” says Keller. “They have a very black-and-white picture of brands and what they can do. They’re going to make inferences about what the product is going to be like. If those are not favorable inferences, the brand is in trouble.”

For example, consumers rejected a three-piece suit marketed under the Levi’s brand. The company learned its lesson and launched its next major line of clothing under a different brand – Docker’s – which became a consumer favorite.

Sometimes marketers are forced into extending their brands into new categories, according to Marsha Lindsay, president of Lindsay Stone & Briggs, a brand marketing agency in Madison, Wisconsin. For example, the market for photography was changing and Kodak needed a new revenue stream. So, the company got into digital imaging and is trying to extend its brand equities there. Another motivation for brand extension is the opportunity for widespread distribution. Retail giant Wal-Mart could promise to stock a product internationally if a marketer extends its brand into a new category. That’s a difficult invitation to turn down.

Before taking the plunge into extensions, Lindsay recommends analyzing the core equities of the brand. “What is the brand profile? If it includes functional benefits such as faster computer chips, that’s difficult to expand into other markets,” she says.    

[3-Dec-2001]