Why brand extensions fail

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Visit the complete Everline Future 50 list Name:? What Peter Jones looks for from young entrepreneurs and their business plans. Posted on 20 Apr by Guy Cookson. The idea behind brand extensions is simple enough.

You take the name of a successful existing product and attach it to a new one. After spending vast amounts of time and money building up a brand that people recognise, value and buy into, why not leverage it too? It is certainly much easier than starting afresh.

And when it works, it can really fly. Virgin is the most obvious example. There are plenty of others. Persil will clean your clothes or your dishes; Disney will entertain you on the screen or in a theme park; Bic will sell you a disposable lighter, pen or razor. Successful brand extensions can seem perfectly natural even when they are not obvious. Brand extension can be as obvious as offering the original product in a new form.

For example, the Boston Market restaurant chain launched a line of frozen dinners under its own name, offering similar fare. Another form of brand extension combines two well-known products. Breyers ice cream with Oreo cookie chunks is a matchup that relies on consumers' loyalty to either or both original brands.

Brand extension also may be applied to a different product category. Google's core business is a search engine, but it has an assortment of other non-advertising related products and services including the Play Store, Chromebooks, Google Apps, and the Google Cloud Platform.

In the best examples, the brand extension is natural and arises from a recognized positive quality of the original product. Ghirardelli Chocolate Company sells a brownie mix. The creation of complementary products is a form of brand extension. The many varieties and flavors of Coca-Cola are an example.

The cost of introducing a product through brand extension is lower than the cost of introducing a new product that has no brand identity. The original brand communicates the message. However, brand extensions fail when the product lines are a distinct mismatch. The brand name may even cast a disagreeable light on the new product. Before launching a new product, brand managers need to keep their target audience in mind and consider which products fit well under their company's brand.

After years of poor sales, the company discontinued the line. The company couldn't overcome consumers' perception of the brand as one associated with rugged casual wear and not business attire. However, Levi's learned from its mistake and in introduced Levi's Dockers, a line of casual khaki pants and other men's apparel that has since been a consistent top seller for the company.

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