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Where to start?
What brand extension strategy best suits your brand? And when is it better to extend your brand or launch a new brand? First, here are some factors to consider.
The Rowntree story
In 1881, a confectioner called Henry Rowntree launched Fruit Pastilles, and then in 1893, Fruit Gums. His success allowed him to launch new chocolate products, including chocolate beans. However, through the early 1900s, Rowntree struggled to make milk chocolate to match the quality of market leader, Cadbury’s Dairy Milk. However in 1931, George Harris became marketing manager for chocolate products. With knowledge of marketing and consumer research gained in the USA, he launched Rowntree’s Chocolate Crisp, later renamed KitKat (Figure 1). Fast-forward to today and there are now over 200 KitKat brand extensions.
He also transformed Rowntree’s Chocolate Beans into Smarties. This is the brand we know today. It has spawned many brand extensions including large Smarties, Fruity Smarties, and ice cream Smarties.
These name changes gave KitKat and Smarties the focus to grow into discrete, and successful new ‘chocolate’ brands. Harris was lauded for this success, and in 1941 he became Rowntree’s company Chairman. As a result of his successes, he is today viewed as a father of modern marketing (Figure 2).
Why bother extending your brand?
Typically for one or two reasons. Either or both to:
- Grow your brand i.e. increase market penetration or share, for example by attracting new customers, entering new segments or markets, increasing use, and thus sales and profits and / or to
- Boost your reputation or equity by increasing awareness, or rational or emotional perceptions.
However, the further a brand extends, the greater the potential dissonance from the core. While this offers opportunity, and potential for a ‘new’ brand, it also brings greater risk. (Figure 3). A key question then, as George Harris understood, is whether extending a brand or launching a new brand will inspire greatest success?
Brand extension vs launching a new brand?
Extending a brand allows it to benefit from its existing brand awareness and equity, thus potentially reducing launch promotion costs. Conversely, launching a new brand, requires building new equity. Usually at higher cost (See Figure 4). This form of brand extension strategy is therefore likely to be most suited to launching a ‘new to world’ product or variant which requires a more differentiated positioning.
Principal brand extension strategies
There are two principal brand extension strategies; by evolving from the brand core or by making a step-change to realise a brand vision. The latter typically requires a revolutionary change in positioning.
1. Extending brands by evolving from the core
Evolving brand extensions from the core requires understanding on the nature of the brand equity, its strengths and weaknesses, and then building on those strengths, or eliminating weaknesses.
Boots No7 brand extension
In 1935 Boots launched a retail own brand called Boots No7. Originally, it was just a skin care line, though cosmetics followed and subsequently took off after the war (3). Over the years the brand had many make-overs: both changes in livery (blue, terracotta, brown, grey, black etc). Also many brand extensions. Though growth was impeded through a close association with Boots. So in 1971 the decision was made to build an independent fashion brand, exclusive to Boots.
New products also added to the ‘skin care’ equity, for example via No7 Special Collection, including Positive Action Cream (1980) (designed to compete with upscale skin care brands). Then in 2007 No7 Protect & Perfect Serum. A BBC Horizon documentary declared it the only product on the market to have proven anti-ageing effects. As a result it caused a storm in Boots’ stores with stock selling out in two weeks. Today ‘Protect and Perfect’ is a sub-brand extension in its own right. It also sells outside of Boots’ stores (Figure 5).
2. Extending brands by realising a brand vision
Olay is a pink beauty lotion (or Oil of Ulay, Olaz, or Ulan as it was originally known) launched in South Africa in 1952 (4). Promoted as ‘the secret of younger looking skin’, it eventually became global category leader. While largely a single product brand, it was clearly perceived by consumers as ‘for younger looking skin’. In 1985, Procter & Gamble acquired the brand, and invested significantly in R&D, to better deliver the said promise and create a raft of brand extensions. Resulting brand extensions now include Complete, Total Effects, ProX, Regenerist, Regenerist Luminous, Classics, Fresh Effects, Body (North America) and White Radiance (Asia). These products better deliver the younger looking promise via a range of active ingredients including a broad spectrum sunscreen, retinyl propionate (a vitamin A derivative), glycerin, niacinamide (vitamin B3), and amino peptides.
Some other great brand extensions and extension strategies
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. He also set up stores to reach elite customers. Clothing then followed in 1964, as did the iconic double GG logo on belt buckles. As a result the company established a reputation for classic Italian style and luxury, and prospered through the next decade. Ups and downs then followed though the hiring of the highly creative Tom Ford to design a ready-to-wear collection in 1990 took the company to new heights. Most recently the brand extended into homeware and decoration (Figure 6). the cool and visual appeal of the brand has also encouraged social sharing via digital media. In turn, fueling further growth.
Caterpillar Inc. (sometimes shortened to Cat) is the world’s biggest manufacturer of construction equipment. During World War 2 their trucks also found fame with the US Navy who used them to build military bases. Then through the 1950s, the company made a series of acquisitions, bringing new products to market under the Caterpillar name.
Through the late 20th century, Caterpillar became synonymous with reliability, durability and technology, and a distinctive yellow livery. Then in the mid 1990s, Caterpillar extended the brand to a other merchandise though a carefully controlled licensing programme. Firstly, and most famously, to boots. The footwear sector has since boomed, and it remains their most successful consumer product licensing segment to date. In the late 90s Caterpillar extended into timepieces, (Cat calls them rugged timepieces) (Catwatches.com), and in 2016, to mobile phones, and in 2020 to robotics. According to Kenny Beaupre, Caterpillar Brand Licensing Manager, “This builds positive brand awareness which helps in many ways. It also connects new and existing audiences to Caterpillar’s products and services. We’re fortunate people like being associated with our brand, and Cat licensed products are a great way to show this connection.“
The Walt Disney Company
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. Later in 1937, he went on to complete the first full-length animation, Snow White and the Seven Dwarfs. Then in 1955, he opened the world’s first amusement park, Disneyland (in Anaheim, Los Angeles). To fund this he diversified into TV programmes, including the Mickey Mouse Club, and also live action movies. When Walt Disney died in the mid 1960s, he left the company with high standards, strong beliefs, and a clear vision “to make the world happy”. His resulting ethos and vision guides Disney’s “imagineering” to this day. More recently, the acquisition of content that appeals to wider demographics, combined with the availability of fast broadband has enabled Disney to extend their brand into millions and millions of homes with their streaming service Disney+.
1. Brands grow through evolution (from a brand promise), or more revolutionary approach to realise a brand vision. Critical is to decide “what you want the brand to stand for”? (Figure 8)
2. Great brands tend to have high awareness (at least in their niche). And also distinctive rational and emotional benefits. Building both rational and emotional perceptions adds monetary value and justifies a premium vs. your competitors.
3. Successful brand development springs from clear insight, a strong creative leader, visionaries, a great R&D department, or a strong brand belief system.
4. Don’t think too linearly i.e. just within a market segment, to stretch your brand. Try and think laterally. So understand customers, and their views on your brand. Also seek a new insight or thread to connect the brand parts, and inspire a clear direction. Further even if a finding is untrue, it could still inspire growth.
5. You are more likely to reveal extraordinary brand extension ideas, through a culture of innovation. So hire bold and creative thinkers.
6. Don’t cannibalise your own sales unless you are making more money i.e. higher margins.
7. Slapping your brand name on any product risks eroding rather than boosting your brand. So avoid a stretch too far – only launch a new brand when clearly different and the upside potential is great.
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2. Sébastien Jaulent, Katia Luxin, and Yna Sacko, Dissertation on ‘Advantages and Disadvantages of Brand Extension Strategy for Companies’
3. No7 Beauty
7. Capodagli Bill, Jackson Lynn, The Disney Way – Harnessing the Management Secrets of Disney in Your Company (1988)