Brand Extension Research: Case History - CARNATION
A Consumer-centric Approach
Carnation is a brand that was nationally known and was thought to be a good candidate for expanding into a variety of other food and beverage areas. At the time of our study, Carnation was found on evaporated milk, powdered (dry) milk, Carnation Instant Breakfast, hot cocoa mix, fresh milk, ice cream, yogurt and various other dairy case items. However, the fresh dairy side of the business was only in the western part of the United States. When asked what business the brand was in, management gave various definitions – a dairy company, a milk company, a nutrition company, a progressive multi-product company.

Leverage an Ingredient
This internal conventional wisdom turned out to be different from the view held by the consumer. Carnation was associated with evaporated milk and to a much lesser extent powdered milk – period. As a result, consumers did not think of the company behind the brand as a dairy, a milk company or anything like that. When compared to dairy company brands, Carnation was seen very differently. "Carnation makes base foods, ingredients and mixes, not finished ready-to-eat foods. Carnation was seen as wholesome, but not a nutrition company.
Defining the 'Business' of the Brand
Products that used milk as a primary ingredient were viewed as appropriate for Carnation. There were properties such as creamier, richer, more wholesome, etc. that translated to any Carnation brand extension. Most dairies were regional, so a national brand owning the properties of milk as an ingredient was a viable idea.

One interesting concept that appeared to have fit and leverage was infant formula. A number of people thought that there already was a Carnation infant formula in the marketplace. This may have occurred because historically, some mothers used Carnation evaporated milk as an ingredient in making their own infant formula. As a result of this finding, development began on a Carnation infant formula.

Creating a Brand Plan
The parent company of Carnation, Nestlé is the world's largest infant formula producer. Using their formulations and technology, a number of formulas were developed for use in the American market. The existing infant formula market was dominated by two pharmaceutical companies. Their brands – Enfamil and Similac – had names that were more "drug-like" to mothers. In contrast, Carnation was a more "food-like" brand. In keeping with that differentiation, the name Good Start was chosen to launch the new line of formulas. Carnation formula based baby cereal was launched later. Over time, management wanted to re-brand the formulas Nestlé to be in keeping with their worldwide formula name. In the U.S. these formulas have been very successful with sales in the hundreds of millions of dollars.

Case Three >