Brand Extension Basics

Extending your brand into new platforms, product lines and "spheres of influence" leverages the market power of your brand's name in order to extend the reach of sales opportunities. An extension can give you a built-in advantage because consumers are already acquainted with your brand's name and values. Gaining reach for extensions costs less, and they usually create significant market momentum straight out of the gate.

In today's marketplace, larger brands are seeking new ways to leverage brand equity with loyal customers to increase revenues and dominate categories once thought impossible for some brands to penetrate. Not a new concept, but it is one for which social and new media are helping to drive awareness and engagement as these brands seek to leverage their ever-growing popularity.

A Second Look at Some Big-Name Brand Extensions

Paula Deen Furniture - Whether or not you're a fan of Paula, put her name on any product and the image that's conjured up is one of deep comfort and breezy southern living. That immediate association is the value of the Paula Deen name. AdWeek readers rated her furniture line one of the worst brand extensions of last year, but the original collection was so successful that four additional lines have been rolled out to satisfy consumer demand. Make all the butter jokes you want, but you can't argue with sales.

Whole Foods Health Resort - We look forward to the end product of this one. Whole Foods reported last month that it's in the planning stages of its own health resort, to open in Austin within the next few years. Whole Foods consumers are a health-conscious bunch who will gladly spend a little extra to stay well and buy the best. Besides, Whole Foods consistently delivers products that play a symphony on shoppers' heartstrings. That said, we're banking on the first resort being a success.

Smith and Wesson Mountain Bikes - Smith & Wesson makes great mountain bikes for law enforcement, so extending the product to the public market wasn't a terrible idea - but it was a gamble. The idea flopped because there's no link between guns and bikes. More specifically, there's no link between marksmen and mountain bikers. The company might have had better luck creating an all-new brand name, rather than relying on the fame of a name synonymous with firearms.

The Apple Better Not Fall Far from the Tree

There must be a logical fit with the parent brand and the extension product. Extensions that do not fit the parent brand's core values are destructive in the long run, even if initial sales are strong.

The Honda name gives street cred to a range of products from generators to power washers. Consumers already have faith in Honda-brand car engines, and their confidence readily spills over to a full line of gasoline-powered products with the same name. However, if Honda were to try to manufacture baseball bats or tennis shoes, it would be a tough sell. Though the brand is known for quality, it has nothing to do with sports and would confuse consumers.

A brand may be known for being economical, avant-garde, health-conscious, sexy or practical; whatever it is, if a shared-name extension lacks the same values, it will create brand erosion.

Imagine if Daimler were to produce Smart cars under the Mercedes-Benz brand. The mismatch of the economically and environmentally-minded Smart car would degrade the parent brand's perceived core values of luxury and status. And keep in mind, the extension brand would lose right along with the parent.

Brands Are Fickle and Intangible

A company can work hard and produce a stellar product, but it takes a brand to make sales. Or in some cases, to increase sales. Paula Deen makes food, not furniture. Nickelodeon makes TV shows; not sneakers. In these cases, one brand is just agreeing to put Paula's blue eyes or Dora the Explorer's chubby face on another brand's product. The intangibles of a brand - the comfy appeal of one or the squeal-worthy familiarity of another - are what's used to get consumers' attention and give merit to products which by themselves might be beige and blase.

The intangibles are directly related to the brand's core values. It takes years to cultivate them, and one bad product to make them go away. Choose your extensions wisely.

Keep It Simple, Stupid

When considering brand extension - it's often best to keep it simple. Sure, Bic can make mechanical pencils AND surfboards, but that's a product chasm not every company can bridge. (Later this month, we'll talk about making that bridge.)

Simplicity and some common sense will steer you away from confusing your customers and biting off more than your marketing department can chew - which are two of the biggest reasons brand extensions go bad. Wine by Diesel Jeans was an extension that lacked simplicity; Frito Lay Lemonade was one that lacked common sense. Get it?

Diet Coke, the kingpin of brand extensions, is a stupidly simple deviation from the original Coke product. But here, stupidly simple equals wildly successful: Coke and Diet Coke have earned the no. 1 and no. 2 spots, respectively, as America's drinks of choice. Simple and practical is a sure bet.

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