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  Brand Extensions: Risks and Rewards   Brand Extensions: Risks and Rewards  Barry Silverstein  
         
 
Brand Extensions: Risks and Rewards Brand extension is different from line extension. Line extension basically fills a shelf with products that are variations on the same brand in the same category. It is a relatively low risk way to increase the potential for sales by increasing the number of options within the same brand family.

Procter & Gamble’s Crest brand is an excellent illustration of both line and brand extension. On the line extension side, Crest has twelve categories of toothpaste, and within them, distinct toothpaste products. The consumer can choose among a mind-boggling array of Crest toothpaste line extensions, including cavity protection, tartar protection, whitening, sensitive teeth, baking soda, and gel. There are Crest toothpastes for both adults and children.

On the brand extension side, Crest has entered the tooth whitening, toothbrush, mouthwash, and floss categories. While one could argue these are all in the broader oral health and beauty category, they are technically different product categories…but you get the idea.

 
What would really be news is if P&G decided to introduce a Crest brand extension in a totally unrelated category, say, “Crest Chocolate Cookies.” While such an illogical product probably won’t see the light of day, equally puzzling and quirky brand extensions have been introduced in past years. Consider, for example, the Harley-Davidson cake decorating kit, Hooters Air airlines, and Stallone High Protein Pudding (named for the actor Sylvester Stallone). Somehow, these ideas don’t quite fit the perception of the associated brand.

Frivolous brand extensions such as the three mentioned above are unlikely to continue in today’s slumping economy, according to Dr. Edward Tauber. Tauber, who originated the term “brand extension” in 1979, has been researching and developing brand extensions for twenty-five years through his firm, Brand Extension Research. In an interview with brandchannel, Tauber said: “If this recession is like the past ones, new product launches of any type will be on the decline. Brand extensions have risk—even more so than line extensions—because they need marketing support to educate consumers in the new category.

“Brand extensions implicitly ask the consumer to take a risk,” Tauber continues. “When you shift a brand into a new category, you have to attract the customer there to risk buying your brand, which by definition has had no experience in the category. In this economic climate, consumer risk taking is likely going to be limited, except maybe toward lower cost brands.”

But this doesn’t mean the idea of brand extension is doomed; on the contrary, Tauber says, “The first thing to examine is the size of the category being considered for entry. If the category is small, the business you generate will be small. But a well-conceived brand extension in the right category has staying power. The earliest concepts I developed like Clorox Clean-Up [a spray cleaner with bleach] and Nestlé (Carnation) Good Start infant formula are still around generating hundreds of millions of dollars.”

Tauber points out that the appeal of the brand extension was always its efficiency as a new product tool. In its early days, Tauber says, the brand extension was “over-extended” and sometimes used indiscriminately. It was a high-risk venture potentially prone to failure. Today, however, Tauber believes the brand extension launch is more deliberative. “Marketers have learned the hard way that just putting your well-known brand, or worse, lesser-known brand, on any item is no guarantee of success,” he says.

 
A key to successfully stretching a brand is to view brand extension as a “strategic tool,” not just as a new product, according to Tauber. What some brand managers fail to realize is that “brands are the barrier to entry in most categories,” says Tauber. “Therefore, a brand that fits and brings a competitive advantage to a new category is a means of entry. As a strategy, this enables a firm to enter a new category where future new products should be offered. Unfortunately, many companies do not understand this and even initially successful brand extensions fade over time and thus fail.”

The reality is a brand extension is not, and never has been, a quick fix. If the brand itself isn’t strong, the brand extension is likely to be weak. In fact, brand extensions cannot insulate brands from decline, especially now. “The only thing that successful brand extensions offer in this environment beyond what any new product offers is the opportunity to bring a brand back into the consumers’ consciousness,” says Tauber. “Brand extensions offer new news that consumers can then associate with the brand and make it more exciting.”

In the end, what may make brand extensions most effective is the same thing that makes all marketing more effective—the relationship with the target audience. Rohini Ahluwalia, professor of marketing at the University of Minnesota, says “stretching a brand makes it important to target an audience that will be able to process and understand the relationship of the brand to the new product. Getting it right the first time is crucial, because early success with a target audience can help with future extensions.”

In her paper in the Journal of Marketing Research (“How Far Can a Brand Stretch? Understanding the Role of Self-Construal,” June 2008) Ahluwalia’s findings reveal that buyers with a more relational or connected-to-others self-view (e.g., females, Asian Americans, Hispanics and those hailing from Eastern nations) are more open to accepting brand stretches than those associated with an independent self-view (e.g., males, Caucasians and Westerners). “Consumers whose self-view stresses connectedness are predisposed to finding more relationships between objects—such as a parent brand and its extension—than people with a more independent self-view. They uncover more similarities and synergies, making them more receptive to a brand stretch,” says Ahluwalia.

Professor Ahluwalia’s advice to increase the potential for brand extension success is to “know your target audience. Your customers who relate to an interdependent or relational self-view are more likely to accept brand extensions than other people, especially if you capture their attention and get them to think about the brand-product connection.”

If the assessments of Tauber and Ahluwalia are correct, brand extension is a strategy that should continue to serve brands well. Despite an economic downturn, it appears that brand extensions will be around for a long time to come.     

[5-Jan-2009]

 
  
  

Barry Silverstein has been a frequent brandchannel contributor since 2007. He has thirty years of advertising and marketing experience and is currently a freelance writer and marketing consultant. He founded and ran his own direct marketing agency and held executive positions with Epsilon, a leading database marketing firm and Arnold, a major ad agency. Silverstein is the author of three marketing books, including the McGraw-Hill book, The Breakaway Brand, which he co-authored with Arnold CEO Fran Kelly.

     
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Brand Extensions: Risks and Rewards
 
 I tend to agree with the author that carefully planned and well executed brand extensions will stay regardless of the exonomic downturn. I guess it is important to understand as to how your existing customers have experienced/ perceived your brand before you plan to extend it. In some cases the brand can be extended to an entirely unrelated category altogether. For example, Tata brand in India extends across disperate categories such as Automobiles, Mobile telephony, Iron 
Ramachandran Thencheri, Associate Director - Marketing, Equitor Management Consulting Pvt. Ltd. - January 6, 2009
 
 Brand extensions will certainly be around for a long time to come, but I have to wonder out loud if there will be a ripple effect of the very public villanization of Detroit for having 112 different car and truck models across 15 brands. While some of their extensions may not have been as carefully planned and executed as most readers of this publication would have advised, the publicity of this fact may create an unexpected subconscious skepticism among some stakeholders when the idea of a brand extension is mentioned. 
Peter Bysshe, Director of Brand Development, The Ito Partnership - January 8, 2009
 
 I agree how extensions can be successful/ disastrous. One example that comes to my mind is Nirma. Nirma as a heritage brand known for its detergent powder/soaps has been one of the largest players in the detergent market especially in the VFM category. Still recall the old jingle dudh si safedinirma se aayi.rangeen kapda bhi khil khil jaaye which has been used for over 30 years till date and is plastered on our minds. Nirma moving to dish washing bars is a possible extension but I dont know how well does edible salt fit in for Nirma as a brand extension. (wonder how big is salt as a category!!!) 
swetha jalan, Account supervisor, DRAFT FCB ULKA ADVERTISING - January 12, 2009
 
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