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How to extend a brand

Giles Lury
Warc Best Practice
June 2016

Title:

How to extend a brand

Author(s):

Giles Lury

Source:

Warc Best Practice

Issue:

June 2016

How to extend a brand


Giles Lury

Jump to:
Speed Read | Definition | Where to Start | Essentials | Checklist | Case studies | Further reading

Speed Read
Do you want to wear your Lego, (Lego clothes) smell like a HOG (Harley Davidson after-shave) or make love in a Benetton
(Benetton coloured condoms)?
It wasn't that long ago that Ries & Trout of 'Positioning' fame, pronounced that "A brand name is a rubber band, the more you
stretch it, the weaker it becomes" but things have changed. The days of "one brand, one product" are long gone.
Even Procter & Gamble, who for years seemed to be the last bastion of the single-product brand, now recognises the value of
extensions; focusing on fewer brands, more sub-brands and wider product portfolios. It is one of an ever-growing number of
companies which have a stated corporate strategy of focusing on the expansion of a smaller number of major brands. In other
words, it has a strategy dependent on brand extension.
Definition
Like so marketing terms, there are numerous variation and alternative uses of related phrases line extension, brand
extension, brand stretch. For the purpose of this paper, brand extension is defined as the use of an existing brand name on a
new product or service entering a market or market sector that is different from the original market of that brand.
Existing brand
development

New brand development

Product improvements

Line extensions

Brand extensions

New varieties
Newimproved
New flavours
New formula
Diet
Now with added

New product/service
categories
New markets

Reduced
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So to take an example if Mars develops a slightly revised recipe it is a product improvement. Mars Duo, Mars Funsize, Dark
Chocolate Mars are all line extensions. Mars as an ice-cream, a drink and a biscuit are all brand extensions.
Where to start
Why have brand extensions become so popular?

The short answer is that new brand development is seen as high cost and high risk with a high failure rate - whereas brand
extension is seen as a lower cost, lower risk option which contrary to Ries and Trout's prediction has been shown in many
cases to not only build the brand, but strengthen its equity.
Disney which brand-extended in theme parks as early as 1955 and subsequently in many other sectors is just one of the
myriad of successful case studies.
However, it is equally true to say that brand extension isn't fool proof and there are examples of expensive failures.
Two models SWOTing and SWEATing

Brand extension allows a company to leverage the existing equity of its brands, which at the extremes can be classified as
either:
SWOTing the brand - investing from a position of strength as a means of entering either new and/or growing markets, of
building on the relationships and perceptions of consumers. It is often a medium to long-term strategy that aims to further
build the brand's equity.
SWEATing the brand often a more short-term option. It can be a pragmatic solution but at its worst it is milking the
existing brand equity by simply applying that brand name to almost any product in any category.
Brand extension can also help companies minimise costs with regard to new product development and marketing. It may allow
for economies of scale. When it comes to launch the new brand extension, that brand name is already known and there are
existing, hopefully positive, associations with it that the new extension can build (or feed) from.
If properly aligned the different range can benefit from a coherent master brand positioning and where desired range or master
brand advertising.
In extreme circumstances, brand extension is a strategy to try and maintain a brand in the face of social or regulatory changes.
Marlboro's move in clothing and holidays can be seen as a classic example of this.
Different start points

There are a number of different start points for brand extension, including:
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A key ingredient Arm & Hammer's use of bicarbonate of soda and its odour eating and cleaning capability allows it to
move across cat litter, detergent, toothpaste and antiperspirant

A unique recipe the previously mentioned Mars example where the mars recipe is the constant

A technology Honda's expertise in small motors allows it to compete not just in cars and motor-cycles but lawn mowers
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as well
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A proposition the easybrand with a simple low cost promise moves across airline travel, hotels, car hire and many
other sectors

A brand purpose or positioning the previous Disney example reflects the brand's vision to make people happy within the
wonderful world of family entertainment

Essentials
Four of the most important tasks when exploring the potential for any brand extension are:
1. Before extending your brand, take the time to ensure you really understand it

Brands are built up over time from both rational product benefits and associated emotional values.
Any brand extension should therefore look to build on those core values and this will help fast-track consumer understanding
and engagement to ensure that the brand equity will not be seriously or dangerously diminished.
2. Overcome marketing myopia and (re) set your brand vision

When it comes to brand extension, ideas often aren't the problem. Structure, strategy and above all vision are as important if
not more so.
The notion of marketing myopia was defined by Theodore Levitt in 1960 but is still a very useful concept for brand extension.
Levitt identified that the US railroads, once the most successful business and biggest brands in America, declined because
they saw themselves in the "railroad business". They could and perhaps should have seen themselves in the "transportation
business" or "the A-B business" or maybe even the "connecting people and places business".
If they had, they might have identified the 'new, fangled' motor car not as an irrelevance but an interesting brand extension
possibility.
Disney is not in the film business but the family entertainment business, Apple is not in the computer business but the intuitive
technology business - but these visions allow the brand to stretch into new spaces and extend themselves.
Setting a vision is a key task and it will define the longer-term strategic direction. In the 1970s the UK shaving market was
dominated by two brands; Gillette and Wilkinson Sword. They had similar product ranges and many of the same values and
associations. Over the coming decades both were to extend their brand but they chose very different visions based on
different brand aspects. Gillette focused on the personal care side and developed a range of male grooming products around
a vision of "the best a man can get". Wilkinson Sword focused on their technical ability to produce long-lasting high-quality,
sharp blades and moved in tools producing everything from scissors to garden shears.
Brand visioning isn't just about setting out where you could go but defining where you should go. The best brand visions
define parameters, so while the temptation may be to extend your brand ad infinitum brands have to know when to say "No".
Even the biggest brands have limits. It has been reported that just one Disney film launched 20,000 SKUs but having limits is
nevertheless still true for Disney. Everything Disney does under the Disney brand name is suitable for all the family. It is
perhaps the most successful film studio ever but it didn't make and launch 'Pretty Woman' as a Disney film, it was a
Touchstone film. It wasn't a Disney film because it fell outside their brand parameters.
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3. Explore new territories - Will your investment be worthwhile?

Unless your brand extension is creating a completely new market, then it pays to spend some time understanding the market
or sector you might want to enter.
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How big is the pie?


How large is the market? Is it growing? Is it profitable?

Will it be worth competing for a slice?


How strong is the competition? What are the costs of entry? What are the margins like?

Can you 'bake' your own pies or will you need new capabilities or to source them?

What are the existing rules of the market?

Who eats all the pies? (Who doesn't and why not?)

4. What will your brand offer?

You've identified where your brand is now, where you would like to take it and what your first market is going to be, now you
must decide what you will produce or supply in that market place.
Again assuming it is not a whole new space, the key questions you must address are
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Why should existing category buyers buy me instead of what they normally do?

Does my extension deliver a competitive product benefit in the new environment?

Is it something that is better, new or different?

Is it 'true' to my vision

If it's not true to the vision are you sure that your 'brand' really has the strength of equity to jolt people out of their current
behaviour?

Reminder Checklist
The simplest checklist for any brand extension can be summarised as Could, Should, Would:
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Where could your brand go?


Review your brand equity and identity alternative future visions for your brand and the opportunities these visions present

Where should your brand go?


Assess the alternatives in terms of brand fit and attractiveness of market opportunity

How would it enter that market?


Work out how your brand can enter that market in a way that is true to your brand vision, is distinctive and offers a
consume benefit

Case Studies
Virgin - brand-led extension strategy

Virgin likes to do things differently and its approach to brand extension has at times been seen as unconventional and as
paradigm shifting as the brand itself. Its move into airlines in 1984 raised eyebrows while its stretch into financial services in
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1996 caused a furore in the trade and even national press (which is probably exactly what Sir Richard Branson wanted). Many
said that it a brand stretch too far. How could consumer take an entertainment company seriously enough to trust them with
their savings?
However, there is a clear strategy underlining Virgin's development, rather than being product or service led, Virgin's
extensions are very much brand-led.
Virgin's wanted, and wants to be, the anti-establishment consumer champion. In Sir Richard's own words its strategy can be
summed up as "It's about taking on big conglomerates and moving into their territory and seeing if we can shake them up". The
brand believes "someone needs to stand up for the little guy"
Seen in this light, moving into new markets where Virgin and consumer perceived that 'big conglomerates' were dominant but
not necessarily offering consumer good service or recent innovation fits with the brand's purpose.
Virgin's success rate is varied but it is clear that there is a strategy to their development.
Disney extending the idea of "making people happy"

Walt Disney was a man of vision, early on he saw that films were only the tip of the iceberg early on he saw the potential for
the brand to stretch beyond celluloid. Recognising that the brand wasn't just about "films" or indeed "telling stories", the
brand's vision could be 'to make people happy' by creating "a wonderful world of family entertainment".
This redefinition and expansion of the brand vision was the basis for Disney's extension into new categories.
On July 17th 1955 Disneyland first opened its doors. Nowadays the brand stretches into many other categories including
television channels, DVDs, video games, retail stores, holidays and cruises and its famous characters. What's more, the film
and the characters are also licensed and used in many other categories.
Further Reading
Warc Topic Page: Innovation & NPD, brand extensions
Warc Case Studies: Campaign objective: launch a variant
Brand Stretch: Why 1 in 2 Extensions Fail, and How to Beat the Odds, Kindle, David Taylor
The Best (and Worst) Brand Extensions Thinking of nudging your brand name into a new category? Good luck. But please,
read this first Adweek, February 4, 2013, Robert Klara

About the author


Giles Lury is director of strategic brand consultancy The Value Engineers. He is author of four marketing related books most
recently The Prisoner & the Penguin & 75 other marketing stories (published by LID). He has worked in advertising, market
research, design and corporate identity and specialises in brand positioning, brand architecture, brand extension and
innovation.

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