This article discusses what brand extension strategy to choose to best build your brand. To bring to life the options we also share insights from some really iconic brands.
Early brand extensions
In 1881, Rowntree launched Fruit Pastilles, and in 1893, Fruit Gums. Their success with fruit products subsequently allowed the business to launch a series of chocolate products, including chocolate beans (1882).
However, through the early 1900s, Rowntree struggled to make milk chocolate of comparable quality to market leader, Cadbury’s Dairy Milk.
In the 1931, George Harris was appointed marketing manager for chocolate products. He mined his knowledge of marketing, advertising and consumer research and built on his experiences in the American market. In 1935 he launched Rowntree’s Chocolate Crisp. This was renamed KitKat in 1937 (Figure 1). Today there are over 200 KitKat brand extensions, though mainly flavour variants.
Subsequently he also transformed Rowntree’s Chocolate Beans into Smarties. Brand extensions available today include large size Smarties, Fruity Smarties, and ice cream Smarties (including McFlurry versions). As a result of his successes, Harris became Rowntree’s company Chairman in 1941. And he is now recognised as one the fathers of modern marketing (Figure 2).
Figure 2: George Harris – The Father of Modern Marketing
Reasons for extending brands
There are two principal reasons to extend brands.
First, they help grow market penetration or share within a market.
Second, they help strengthen reputation (i.e. brand positioning).
Alternative brand extension strategies
Figure 3 summarises the benefits of alternative brand extension strategies.
Extending brands in existing markets or to existing customers requires brands to sell more to customers, for example via new size variants.
To attract new customers with existing products requires the identification of new customer segments or new market categories for example via new flavour variants.
Strengthening brand reputation to existing customers demands brand repositioning. Strengthening rational and/or emotional benefits improves value perceptions, and value share. A famous example of this type of strategy in action is the repositioning and repackaging of Lucozade from a brand that aided recovery, to a sports drink in 1983.
The fourth type of brand extension strategy both attracts new customer segments and involves reputation change. This option provides the strongest case for launching a new new brand rather than extending an existing one. The KitKat example discussed earlier evidences how a new new brand better helped Rowntree successfully build a bridgehead in chocolate confectionery.
The further a new brand extension proposition is from the original or core brand the greater the risk and potential opportunity as in effect you are creating new markets (Figure 3).
What brand extension strategy to choose?
So is it better to extend a brand, or launch a new brand? Here’s a summary of the pros and cons of each strategy (Figure 4). Net extending an existing brand benefits from the existing awareness and equity a brand has in a market. This strategy was originally employed by Procter & Gamble when launching the first ever combined shampoo and conditioner product – Vidal Sassoon Wash & Go.
How to extend your brand?
There are two principal ways; either a brand extension push vs. brand vision ‘pull’ innovation strategy
Brand extension through evolution from a core
Boots No7, launched in 1935 as a retailer own skin care brand. Though colour cosmetics followed and took off in the post war years (3). The brand has since had many make-overs; both changes in livery (blue, terracotta, brown, grey, black etc), and many brand extensions. In 1971, the decision was made to build an independent brand, repositioning it as a fashion brand, though exclusive to Boots. Product innovations added to the equity, with (Special Collection) Positive Action Cream (1980) (designed to compete with upscale skin care brands), and in 2007, No7 hit the jackpot with Protect & Perfect Serum. A BBC Horizon documentary declared it the only product on the market to have proven anti-ageing effects. It caused a storm in Boots’ aisles with stock selling out in just two weeks. Today ‘Protect and Perfect’ is a sub-brand extension in its own right; it’s even available at Amazon (Figure 5).
This requires clear brand understanding; on the nature of the brand equity, and its strengths and weaknesses, in order to build on or refresh those strengths, and eliminate any weaknesses.
Brand extension through delivering a vision
Olay (or Oil of Ulay, Olaz, or Ulan) as it was originally known, launched in South Africa in 1952 (4). A pink beauty lotion, it was promoted as ‘the secret of younger looking skin’, becoming global category leader. In 1985, while largely a single product brand, it was clearly perceived as ‘for younger looking skin’, and thus P&G acquired the brand. They then invested significantly in R&D, to create a raft of brand extensions to better deliver the said promise. Today brand extensions include Complete, Total Effects, ProX, Regenerist, Regenerist Luminous, Classics, Fresh Effects, Body (North America) and White Radiance (Asia). They include range of ingredients to deliver against the desired claims: including a broad spectrum sunscreen, retinyl propionate (a vitamin A derivative), glycerin, niacinamide (vitamin B3), and amino peptides.
This primarily requires a clear vision for the brand in customer’s minds, then rigorous innovation, perhaps though new technology, or new ways of thinking, to deliver that vision. Thus a more substantive step change is possible. Of course, understanding and building on the core equity also helps too.
Lessons learned from other brand innovations
Gucci brand extensions
Gucci started out making saddles for wealthy horsemen in Tuscany in 1921 (5). Impressed by some of the luggage he saw guests with at luxury hotels, he then employed fine leather craftsmen, and the latest machinery, to make luggage. Then over time setting up stores to reach elite customers. Clothing followed as did the iconic double GG logo on belt buckles in 1964. As the company established a reputation for classic Italian style and luxury, it prospered through the 1970s. While ups and downs followed, the hiring of a strong creative, Tom Ford, in 1990 to design a ready-to-wear collection, took the company to new heights. Most recently the brand extended into homeware and decoration (Figure 6). Delivering a great online and social media brand experience has also inspired further growth.
Caterpillar brand extensions
Caterpillar Inc. (sometimes shortened to CAT) is the world’s biggest manufacturer of construction equipment. The name dates from the merger of two other companies in 1925; one of whom Holt, whose tractors were used to haul guns in World War 1. During World War 2 their trucks also found fame with the US Navy who used them to build military bases. Since the 1950s the company has grown through a series of related product acquisitions, bringing them all products, under the Caterpillar name.
By the late 20th century, its distinctive yellow livery, Caterpillar was synonymous with reliability, durability and technology. In 1994, therefore, via a carefully controlled licensing programme, Caterpillar extended the brand to a selected range of merchandise. Originally and most famously boots. The footwear sector has boomed since, and remained the most successful consumer product licensing segment to date. In the late 90s, Caterpillar also issued its first watch license, to Catwatches.com (CAT calls them rugged timepieces), and in 2016, to mobile phones.
Walt Disney brand extensions
Walt Disney, a shy yet visionary man, famously created his first sound cartoon, Steamboat Willie in 1928 (4). It featured what was to become the world’s best known mouse. In 1935, he went on to create the first full length, animation, Snow White and the Seven Dwarfs. In 1955, he opened the world’s first amusement park, Disneyland (in Anaheim, Los Angeles). To fund this he also diversified into TV programmes, including the Mickey Mouse Club, and live action movies. By the mid 1960s, when Walt Disney died he’d set high standards, instilled strong beliefs in, and established a clear vision for the company, “to make the world happy”.
This vision has guided Disney’s “imagineering” since. You can learn from this too. It means that Mickey Mouse management isn’t a joke – but a ticket to business success.
Marketing Inspiration
1. Brands grow and extend arise through both evolution (from a core brand promise) and revolution (to achieve a brand vision). Ultimately, reinforcing clear customer perceptions, and thus an ability to answer the question – “what does the brand stand for”? (Figure 8)
2. Great brands, and brand extensions, offer both strong, and distinctive rational and emotional benefits. Thus, don’t underestimate the importance of the latter. Especially as it means people pay more.
3. Successful brand development springs from many sources; a strong creative leader, visionaries, or a strong brand belief system. All fuel a clearer, almost obsessive, sense of direction.
4. Don’t think narrowly i.e. within a market segment, to extend a brand. However, do think logically and laterally, to understand customers, and their brand perception, to uncover an insight that gives a sense of direction.
5. You are more likely to reveal extraordinary brand extension ideas, through a culture of innovation. It’s also possible to create a culture of innovation by hiring or bringing together folk, who are not hidebound by their previous experience. Virgin Atlantic, for example, was established by a team with no initial airline experience.
6. Don’t cannibalise your own sales unless you are making more money i.e. gaining higher margins.
7. Beware of a stretch too far, unless innovation, and risk taking is part of your brand equity. As is the case for fashion brands, and corporate investment companies, who aim to create new brands, and sell them on quickly.
References
2. Sébastien Jaulent, Katia Luxin, and Yna Sacko, Dissertation on ‘Advantages and Disadvantages of Brand Extension Strategy for Companies’
3. No7 Beauty https://www.no7beauty.co.uk/about-us/
4. Olay – Our History https://olay.co.uk/olay-promise/our-history
2. Gucci – https://Gucci.com
3. Caterpillar timelines https://Caterpillar.com
4. Capodagli Bill, Jackson Lynn, The Disney Way – Harnessing the Management Secrets of Disney in Your Company (1988)
