How Far Will Brand Extensions Stretch?
Brand extensions are a tempting means of leveraging brand assets and equity to market new products, increase sales, and produce profits. But there are significant risks associated with this strategy – brand owners should proceed with caution.
Many authors quote Virgin as a brand extension success story. And yes, the company was able to stretch its considerable brand equities from the entertainment to the travel industry. But does anyone remember Virgin cola? Virgin vodka? Virgin jeans?
Too many marketing managers think that it makes sense to “transfer” the promise and equity of their established brand. But that isn’t always true. Companies sometimes go too far, extending into categories that aren’t a good fit, or over-extending into too many categories, and risk losing credibility in their flagship brands.
The key to successful brand extensions is consumer research. First, uncover the existing marketplace perception of the brand. Then discover if the proposed extensions resonate with this perception. Brand extension ideas should not emanate from management’s point of view, but from consumers.
When properly conducted, research should yield the following information about brand extensions:
- Customers’ understanding of the brand’s core attributes.
- Their ideas as to which kinds of products or services are logical and consistent with those values.
- Their view that the brand extension is credible and acceptable.
- Their perception that the core brand can be transferred to the specific product or service extension in question.
A lack of understanding of the consumer and the marketplace can lead to failures that range from minor to catastrophic. Companies have far more at stake than the failure of new products. The wrong category extensions can create the perception of diminishment of the value of the brand.
It takes years to build equity and loyalty in brands—and a few missteps to destroy them. Remember: A brand is a sacred trust, and it must be properly managed and protected, at all costs.
by Ted Mininni