Many companies seek to capitalize on profitable brands and exploit their brand equity by introducing brand extensions, which are new products introduced under an existing brand name (known as the parent brand). Some brand extensions, called line extensions, are introduced into the same product or service category as the parent brand. For example, Mint Oreo cookies are a line extension of the Oreo cookies brand.
This article addresses category extensions, which are brand extensions introduced into a different product category from the parent brand. Oreo Pie Crust, Oreo Thin Crisps crackers, and Oreo ice cream bars are all Oreo-branded products that broaden the brand’s presence into new product categories.
Because they have pre-existing brand awareness and (hopefully) favorable attitudes, brand extensions can reduce the risk that a new product will fail in the marketplace. Still, most new products are unsuccessful, and there are plenty of brand extensions among them on the ash heap of marketing history. Here are three questions to ask to help you decide if your next brand extension will profit or perish.
Question 1: Does the Brand Image Favor a Brand Extension?
One of the key success factors for a brand extension is the appeal of the parent brand. It should be obvious that a brand extension has a greater chance of success if customers have favorable attitudes toward the parent brand than if the parent brand is widely despised. That is why the movie Pirates of the Caribbean spawned three sequels, while the critically-panned comic book spinoff Daredevil generated none. However, even among well-liked and respected brands, some brand images are more likely to foster successful brand extensions than others. One key success factor is whether the brand’s image is concrete or abstract.
Concrete brand associations are very specific to a particular product category. Imagine a brand of car battery with the concrete brand image of “long-lasting car battery that starts my car every time.” As long as the brand image is tied to the car category or is associated with “starts my car,” the brand may have difficulty extending beyond the car battery category.
In contrast, abstract brand associations are broadly applicable to a variety of product categories. Imagine the same brand of car battery positioned itself as a “long-lasting power source.” That abstract brand image of a “power source” could make the brand much more extendible. It is easier to imagine a brand with this abstract brand image being extended into alkaline batteries, rechargeable batteries for mobile devices, generators, solar energy panels, and other product categories that involve the production or provision of electricity.
As another example, if the brand image of Honda was concretely described as “fuel-efficient automobiles,” the brand would only make cars and motorcycles. But, with the abstract brand image of “fuel-efficient gasoline engines,” it is easy to understand why Honda’s brand extensions into lawnmowers and power generators have succeeded.
Question 2: Does the Brand Extension “Fit” with the Parent Brand?If the parent brand image is abstract enough to foster a brand extension, the next object is to determine how closely the brand extension “fits” with the parent brand. Fit is the similarity between the brand extension and its parent brand. Often, brand extensions with better fit have a greater chance of succeeding in the marketplace. (Exceptions do exist – who would have thought Richard Branson’s Virgin Group could both sell records and provide commercial space flight?)
There are four components of fit. Not all must be satisfied for a brand extension to be successful, but the more of these that fit, the better the odds of success.
- Brand image: Is the image of the brand extension similar to that of the parent brand? For instance, Timex watches have the brand image of durability. If Timex introduced durable luggage, that could be considered to have a brand image fit. However, if it introduced luggage with extra storage compartments, there would be a mismatch of brand imagery.
- Product features: Does the brand extension have similar physical features as the parent product? For example, if the control buttons on a Samsung television look and feel the same as those on a Samsung DVD player, there would be a strong product feature fit. However, if the TV and DVD player are designed by different teams and have different control buttons, there would be a mismatch of product features.
- Consumer goals: Would consumers get the same type of benefit from using the brand extension as they do by using the parent? For example, some consumers may rinse with Listerine mouthwash to freshen their breath. If Listerine PocketPaks mints also provide clean-smelling, fresh breath, then consumers would fit a good fit between the two products. However, if consumers use Listerine for oral health, then the mints probably won’t satisfy the same consumer need.
- Usage context: Would customers use the brand extension as a complement to, or at the same time as, the parent? For example, Smucker’s is a well-known brand of jelly, jam, and fruit spreads. What else might you put on a sandwich with your strawberry jelly? That’s right – peanut butter! And that’s why Smucker’s peanut butter brand extension perfectly complements Smucker’s jelly.
Question 3: How Will the Brand Extension Impact the Parent Brand?Finally, the brand extension itself might be profitable, but if it hurts the parent brand image, it might not be worth it. Therefore, the third question to ask is how the brand extension might impact the parent brand. There are four possible impacts that a brand extension might have on its parent: it could be direct or indirect, and either could be positive or negative.
Brand extensions can be appealing ways to introduce new products with less risk. Generally, brand extensions have a greater likelihood of success if the parent brand image is abstract enough to accommodate a brand extension, the brand extension fits well with the parent brand, and the brand extension helps – not harms – the parent brand.