Brand extensions that succeed begin in the same place: by asking what customers want, writes Robert Gray.
If you own a strong brand, there is the perpetual temptation to stretch it into new product areas or even across categories. Look at the runaway success of Apple's iPod, which married innovation with the design-conscious funkiness of the parent brand to immense commercial success, or Caterpillar's move beyond heavy machinery into popular chunky footwear.
Yet, while rewards are potentially immense, it can be a risky undertaking.
Research last year from Ernst & Young suggested that brand extensions are more likely to fail than new brands. And data from Millward Brown found that awareness of extensions' advertising is considerably lower than that of new brands, with many consumers confusing the extension with the parent.
This raises many intriguing questions. Do some brands or categories of brand stretch better than others? If so, why? How do you decide when to extend and in what direction? And what should you do to give yourself the greatest chance of success?
'The problem in my view is that while the best brand extensions profit from the reputation of the parent brand, this can breed complacency within the company - an attitude that the normal rules of marketing don't apply because the brand name will carry them through,' says MCBD planning director Andy Nairn. 'Thus the main mistakes are shockingly basic ones. Very often, there is no real consumer need for the brand extension; the product is developed on the basis of what the company can make, and how it can squeeze more value out of its existing assets, rather than what consumers actually want.'
If the basic product is not different enough or brings nothing new to the category, the chances of it failing are extremely high. Extensions are also likely to fail if the core values of the parent brand have been misunderstood or carelessly interpreted.
Pearlfisher creative partner Jonathan Ford says there are three basic steps to successful brand extension. First, the essence or truth of the original brand must be clearly defined. Second, the way this can be transferred into a new category or offer must be painstakingly researched. Finally, executing the extension must be done in a way that is highly desirable.
'Brand extension failures tend not to have followed these three steps,' says Ford. 'With McDonald's, the obesity debate led it to distance itself from its core focus. It introduced salads, but some of these were found not to be as healthy as they were originally thought to be. What McDonald's should really be focusing on is better-tasting burgers.'
JKR chief executive Andy Knowles says that in principle it is a mistake to launch a me-too brand extension against a long-established, stand-alone brand. He reels off a list of brands that have struggled against strong, well-entrenched competitors: Tia Lusso against Bailey's; Virgin Cola versus Coke; Kit Kat Balls taking on Maltesers; Tropicana Smoothies and Innocent. Despite the hype surrounding its launch, Branston Beans, he believes, faces a tough task in making inroads against Heinz.
Knowles believes that brand extensions that are designed to build on and add back to the core brand equity work best. In this category he places Robinsons Fruit Shoot and Audi TT. JKR has worked with brands such as Scholl Party Feet, helping create a product positioning that took the focus away from a curative proposition to a preventative one.
'The consistent theme in all of these is that they were not head-on attacks, but flanked existing products by bringing something new and special to the market, and that is the golden rule for extension,' says Knowles.
'Copy others and you will end up in a price war at best. Invent your own way and you give yourself a decent chance of success.
'At the beginning, the temptation is to do something different from the mother brand to attract new customers,' he adds. …