Top 5 Risks of Brand Extensions
August 27, 2007 by Susan Gunelius
Filed under Marketing
Yesterday, I posted the Top 5 Reasons to Extend Your Brand. I promised a follow-up about the risks associated with extending your brand, so here we go.
Using a chapter about brand extensions from Kellogg on Branding by Bridgette Braig and Alice Tybout, I created the following list of the top 5 risks associated with extending your brand:
- Too many brand extensions can dilute your brand overall. By oversaturating the market, customers can become confused about which product to pick within your brand and will look to another brand with fewer, simpler choices.
- Brand extensions can take resources away from other projects that could provide higher long term gains. Don’t be tempted by the easy, short term gain brand extension (particularly, line extensions).
- Brand extensions can have a negative effect on market share. Introducing a new product within the same line can cannibalize market share for existing products within that line.
- Brand extensions can have a negative effect on shelf space. With limited shelf space available at the retail level, a line extension could cannibalize your extising products’ shelf space.
- If a brand extension doesn’t live up to the existing expectations for the brand created by pioneer products, negative experiences with the new product can hurt the brand overall.
Remember, brand extensions can be an effective marketing strategy to help build your business, but be sure to consider the risks associated with them before you jump in.
Can you think of any other risks associated with brand extensions?
Generally I don’t like brand extensions for these very reasons. My favourite example of #3 is when Coke debuted Diet Coke to compete with Diet Pepsi — unfortunately, in the process they totally killed their own Tab brand. A better approach would be to introduce (or maintain) a new brand the way Heineken introduced Amstel Light to exist in the light beer arena.
I also hate when brands extend to an area that makes no sense. CAT makes messenger bags and boots, which are quite different from industrial farming and mining equipment. Somehow, in that case it works. But I would never drink Microsoft Soda, for instance.
I can’t think of anymore but I agree smack on with your #1. That’s a big reason I won’t use a brand — I don’t have time to sit around a store with a six year old trying to figure out what’s what. I’ll go with one that offers me one or two choices. I agree with the comment above too. Brands that all of a sudden make something new and weird for their name freaks me out. Oh. Like that green shampoo bottle, Fruitress or something? (I can’t remember the name) I use organic haba stuff so it doesn’t matter; but I did see the ads for their new face cream line and all I kept thinking was, “that’s hair stuff, why would I put it on my face?”
Prescott and Jennifer, I completely agree that the worst brand extension is when a company extends a brand into a category that makes no sense. It often turns me off of the brand entirely, too.
I’m planning to write a post on my recent purchase of a Sealy Posturepedic office chair. Wait, isn’t that a mattress? Yes, it is.