10 Principles of Brand Extensions

Brand Extension Research has identified 10 principles that characterize a GOOD brand extension. These rules should guide any work in order to increase the probability of success.

 

1. Brands should not be extended unless they are well-known, have high awareness and a good reputation among the new target market.
2. Brand extensions must be a logical fit with consumers’ expectations.
3. Brand extensions must have leverage in the new category – a transfer to the new product of a distinctive property associated with the parent brand that gives the brand extension an edge in the new category. The test: “Just knowing the brand name, customers of the new category should be able to identify a reason why they might prefer the new brand extension to existing competition.”
4. Brand extensions that could create confusion or a negative image for the parent should not be undertaken.
5. Brands that consumers use synonymously with a category (generic) should not be extended to other categories.
6. Brands should not be stretched to too many diverse categories risking dilution in the long run. (There are cases, however, where a brand dominates a modest sized category and has no room to grow. In these instances, the upside potential of extending is worth the risk of dilution – e.g., Arm & Hammer.)
7. Brand extensions that will not create positive synergy for the parent brand should not be pursued. (Ask consumers whether their opinion of the parent would be lowered if the new brand extension were available.)
8. Brand extensions must make business sense.
9. Every brand extension should open a category for the firm. The whole point of brand extension is to efficiently and successfully enter a new category.
10. A critical part of every brand extension research study is developing a brand plan. Short and long term possibilities should be identified up-front.

Here we might discuss in more detail the last three points. Many brand extensions are simply bad business ideas. Just because consumers would accept chocolate pudding from Nestlé doesn’t mean this is a good business idea. The category may be dominated by another company. Nestlé may not be able to efficiently manufacture the product. The margins in the new category may be too small to justify the investment, etc. In point 9, we suggest that every brand extension should open a new category for the company and in point 10 that long term possibilities should be contemplated in advance. When Ocean Spray launched Ocean Spray Cranberry Juice Cocktail, that product opened the door for the company to enter the bottled juice business in a big way. A myriad of other flavors followed creating a sizable business. Launching a brand extension that is an orphan in the category can be a prescription for failure because the item cannot generate sufficient sales to be adequately supported and defended.
Developing a long term plan using brand extension as a means to enter a category is what brand extension should be all about.