Let’s talk about brand extensions today. And, how product extensions and line extensions work as well.
Brand extensions have probably been around for as long as brands themselves. After all, every businessman – whether he is a professionally-qualified manager in an MNC or a local entrepreneur, knows the value of carrying a success formula into new areas.
The concept is easily understood. Let us say I launch a brand of toothpaste called XYZ and the brand does well in the market. After some years, I decide that I would like to launch a mouthwash as well. It makes sense for me to name the mouthwash also as XYZ. That way, consumers know that the new mouthwash comes from the trusted house of XYZ, and they also know that they can expect the same qualities that XYZ paste stands for. Plus, I can save some advertising money.
And what about product extensions and line extensions?
I honestly believe those distinctions are best left to the textbooks. I think it is enough to broadly understand them as extending the equity from one product or sub-product to another.
Do brand extensions work well? Is it a good thing to do?
Oh, there is nothing like it is a good thing or not. There are times it is a good idea, and there are times it is not such a good idea. There have been many, many cases of brands doing well in one product line being extended successfully into another; but there have also been many cases where the extension has failed.
As in most things with marketing, the process needs to be handled well, the budget needs to be good and wisely spent, the conditions need to be right, and of course some degree of luck is required.
Ok…..but surely there must be some methods to ensure that the extension succeeds?
Yes, there are some guidelines that will help.
Many brands can extend successfully into closely-related areas; examples could be a soap brand extending into the shampoo space; a floor-cleaner extending into the toilet cleaner space and so on. This kind of extension is seen very often in the consumer electronics space, where almost every brand worth its salt has a presence in TVs to refrigerators and washing machines.
Quite a few brands can extend into relatively unrelated areas too; for example, some detergent brands can extend into soap and so forth.
It is the few, truly great, corporate brands that can extend into almost any category; the Tata name can successfully compete in commercial vehicles, passenger cars, banks, airlines, telecom, watches to jewellery.
There are a few key requirements for successful brand extension into other areas – related or unrelated.
The first is that the brand should have a strong position in its original space. A brand that is weak in its original space cannot normally be expected to succeed when extended into another area. In fact, it doesn’t make any sense to extend a weak brand into another area.
The second consideration is what qualities the brand stands for. A brand needs to stand for slightly “general” qualities if it is to be extended successfully. For instance, a brand which is very strong in audio systems /music players may perhaps stand for “great sound” in the consumer’s mind. It would be difficult to extend such a brand into (say) refrigerators since the core brand quality is not relevant there. However, if the same audio system brand instead stands for “great engineering”, then it can extend more easily into non-sound related categories too. This is often the key determinant of success if a brand tries to move from household cleaner / detergent to personal care like soap / shampoos (for example, Nirma).
This leads us naturally to the reason for a brand such as Tata being able to straddle so many completely unrelated categories. The brand stands for trust – and that is always relevant, irrespective of the product or service category.
So, just to understand this better with this question: can the brand of say ABC phones be extended successfully to say biscuits?
Hmm…a little awkward to give such a specific answer since it may look like I am talking about ABC, whichever brand it is.
Let me say this – I don’t think any phone brand can be extended easily to biscuits. This is not about ABC’s strength at all….but about the principle of extension in general.
See, we need to get this clear. Extension makes sense only when there is some synergy, some benefit in extending. Extending a phone brand to biscuits is as good as starting a new brand per se. There is no real advantage in brand extension in this situation
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