Notice I keep using that pesky word "may." Here's why: many brand extensions
end up disasters, draining the marketing budget and diluting their parent
brand in the process. In their rush to grow, even large corporations
overlook the simple fact that brands should only be extended when the new
product or service addresses genuine consumer needs and is based on accurate
knowledge of the parent brand's core strengths in the minds of its
customers. Having more products doesn't always mean achieving more profit
– especially in the long term.
Let me give you a true example of a poorly thought-through brand
extension. Not long ago, a leading manufacturer of motorcycles introduced
cake-decorating kits. One nationwide survey "awarded" the product "worst
brand extension." After all, the baking world and the biker world don't
seemingly intersect. The product doesn't seem to fit with the brand's core
values
What a Brand Extension Should Do:
A brand extension should:
A brand should move into a new industry only if it can do so without losing relevancy (i.e., cake-decorating example above). The new market should be a natural fit with the original market, because most brands become linked to a specific industry in the consumer's mind. As a result, few brands can wander outside their flagship market. Virgin (as in Virgin Mobile, Virgin-Atlantic, etc.) is one example of a brand whose values transcend industry segment.
Another way a brand extension can be successful is by creating a new
category versus moving into an existing one, where it may get lost among
more established competitors. Before Starbuck's, who would dream of paying
so much for a cup of Joe? Starbuck's revolutionized an industry with its
introduction of a new category: the European-style coffeehouse.
Keeping your focus narrow doesn’t mean you have to carry a limited
product line. For example, Starbuck’s has stuck (for the most part) with its
original market, but offers lots of choices to that market, including
extensions like coffee liqueur. Companies who stay focused on a particular
market are perceived as specialists, and specialists are usually thought to
know more or be better.
As you calculate revenues from sales of your brand extension, be sure to tally up its true costs in terms of brand erosion as well. Maintaining long-term brand health is usually more important than short-term dollars.
John Williams is president and founder of LogoYes.com, the world’s first and largest DIY logo website. In his 25years in advertising, he has created brand standards for Fortune 100 companies like Mitsubishi and won numerous awards for his design work