Critical steps to avoid brand extension failure.

Brand extensions, you’ll find them just about everywhere you shop. Some brand extensions make sense (thank you Tide-to-Go Stain Eraser for saving me from embarrassing spills) while others leave you wondering— what on earth were they thinking? For
instance, Cheetos Lip Balm and it’s short-lived time on the market back in 2005 leaves us all scratching our heads in disbelief.

Still, even the less extreme of brand stretching will battle the odds for success. According to Ernest & Young, brand extensions have a whopping 84% failure rate in some categories, and further studies show that only 50% of brand extensions survive
past the first three years.

Knowing these sobering facts, why then are 80% of new products in any given year part of a brand extension? Call it “delusions of brandeur?” Well, maybe. Brands overly confident in their name recognition mistakenly enter into markets they
simply don’t belong. Too financially tempting to resist, these brands capitalize on their brand equity by jumping into a brand extension destined for failure.

While some brand extension flops are infamous, such as New Coke, others may completely surprise you. Ever heard of Colgate Kitchen Entrees? That’s right, frozen dinners from the same makers of that toothpaste that sits on your bathroom counter. Sounds
delicious right? Even Richard Branson – master of successful brand stretching – was a contributor to the brand extension hall of shame, with a bridal gown line called Virgin Brides.

It all makes you wonder, why didn’t these brands take the time to conduct the necessary due diligence? Quite possibly, the wrong research was conducted. When marketers are so hyper-focused on understanding the reward of an opportunity and overlook the
“brand fit” of an extension, the warning signs are sorely missed.

“Line extensions are always riskier than they look because you think the worst outcome is that the extension will fail, but the worst outcome actually is that it hurts the underlying brand. Brands are successful because they’ve become an expert
at something, but line extensions can dilute that expertise.”

—David Vinjamuri, author of Accidental Branding

Critical Questions to Ask When Considering a Brand Extension

John Parham, a well-known brand extension expert, outlines the “three pillars of a winning brand extension.” If you’re considering a brand extension, start by asking yourself the following questions:

• Fit – Does it make sense for your brand to extend in this way? Knowing enough about your buyer persona that they will grant you “permission to play” in this new area
• Opportunity – Is there an opportunity, or is the market completely saturated? Will becoming a new player in the market allow you to get a large enough piece of the pie to make it worth your time and expense

• Leverage – What is it about your brand that would convince your customer to buy your product over an existing product? Do you have a compelling enough reason to change their existing buying habits?

Both experts reinforce a critical fact – brands that stay true to why they do what they do and align themselves with their ideal customer, have a greater chance of a successful brand extension.

At (matter), we follow these fundamentals by first and foremost collaborating with our clients to identify and craft each of their buyer personas – this becomes our road-map when creating a client’s brand message and marketing strategy to attract their ideal customers. Feel free to reach out to us and schedule a time to chat; we welcome a conversation centered around solutions to help you with your brand.