Oct 29, 2018
In a hyper competitive global market, more and more marketers are looking to brand extension as a way of leveraging the value of their core brand. Yet maintaining underlying purpose when making the switch is crucial. While some brands are successful in their extension strategies, many famous names have launched odd or inappropriate products that—predictably and often hilariously—didn’t go anywhere. Harley Davidson wine coolers anyone?
It’s crucial for brands to understand their consumers, the different population segments that comprise the addressable market, their purchasing behavior and motivations. Brands need to be strategic in determining how much of their growth is being driven by mere trends and how much by authentic customer connection to the brand story. This is critical for grasping whether there will be room to grow through brand extension.
Transformational marketers must convey strong purpose—through the use of the why, what, and how of good storytelling—if they want to attract young markets. Companies risk becoming irrelevant if they don’t. That’s where the use of the buyer persona comes in. Using sophisticated quantitative and qualitative research, marketing teams must develop a detailed dossier based on demographic attributes and use it to create an ideal target buyer—known as a “persona.” Marketers use this to examine each demographic segment’s affinity for the brand and how it differs from others, then quantify the likelihood of future growth. By looking at it from the specific perspective of each buyer persona, companies can identify ideal opportunities to connect with a new product through brand extension.
Robust strategies are vital to maintaining relevance in today’s market. To a large degree, brand extension represents the most logical way to achieve profitable growth. Predictably, however, many companies struggle with how far to go and how to ensure success. Colgate kitchen entrees, for instance, were not the best choice available for that brand. However, Crest’s move from toothpaste into general oral care (mouthwash, floss, whitening products) made perfect sense and continues to be successful. The difficulty of seeing beyond your own brand and making the best and most relevant decision perhaps explains why the brand extension success rate is so low—around 10 or 20 per cent.
The game is a tricky one. Playing it too safe leads to short-lived extensions that disappoint consumers, while straying too far afield and diluting your image will harm consumer trust. Essentially, extended brands should be a logical step from the flagship product, not a Hail Mary into the great blue yonder.
While traditional methods of consumer brand extension may involve developing new products, some firms extend their brands into a service. This type of transformational brand extension can be beneficial for B2C companies looking to stay ahead of evolving consumer preferences.
Shifting the Delivery
In 2016, Kellogg’s opened a “cereal café” in New York City, stirring up a lot of enthusiasm from breakfast lovers. The idea was simple: the café offered bowls of cereal topped with fresh fruit, nuts, or candy and began selling them for around $8 each. The cafe allowed fans to experience their favorite cereals in a new way with one of the consumer packaged goods (CPG) industry’s most iconic brands. Eventually, the concept was so successful that the company had to expand the store space to accommodate demand.
“We are thrilled and humbled by the response we have received with Kellogg’s NYC,” said Aleta Chase, Kellogg’s Marketing Director. “We are happy to expand on the experience and look forward to making it even more amazing in downtown NYC later this year.”
And the trend is growing. Pure Leaf opened a tea cafe in New York City this year, Chobani already operates two stores in New York, and Nutella has plans to open similar stores across the United States. These examples prove that transforming not just what you offer but how you offer it can be as good a brand extension as any—perhaps better. The central benefit is that brand loyalists get what they want, yet the new experience transforms how they feel about the product, and this expands the horizons for future and perhaps more daring extensions.
Leveraging Your Expertise
Consumers trust a brand that has special knowledge or experience in a single category. Too often, brands with no experience with a line of products leap into an unrelated industry, and predictably fail because of it. Above all else, it’s critical that a brand take the time to determine whether their extension is appropriate, basing the judgment on how relevant the new concept is to the parent brand.
In my view, Weber Grill made an excellent choice by opening a chain of restaurants. The brand name is already synonymous with great outdoor cooking, and Weber leveraged this expertise to launch not just a restaurant but companion products such as cookware, grilling tools, kitchen textiles, and seasonings. It’s not difficult to see how all of these items—different as they may be—are comfortably suited to the central story that Weber is telling its buyers about outdoor grilling and good cooking.
After years of success, Weber Grill has opened more restaurant locations, now operating across the Midwest in Chicago, St. Louis, Indianapolis, and other cities. To this day the restaurants embrace the outdoor cooking tradition and only prepare food on authentic Weber charcoal kettles. As with everything Weber does, it all goes back to their central founding story, not playing it to safe but never swerving to far from their core ideas about great outdoor cooking.
Leveraging Your Brand’s Customer Base
But can Hello Kitty—a global name brand having nothing to do with food—make a café work in the same way? Maybe that’s too much of a reach.
But maybe not. The iconic Hello Kitty—whose image graces everything from purses and watches to kitchenware and clothing—is actually behind a popular and successful fast-casual restaurant. Sanrio, the global lifestyle name behind Hello Kitty, recently opened the first Hello Kitty Grand Cafe inside the Irvine Spectrum Center in Irvine, California.
“Hello Kitty Cafe is an integral extension of the Hello Kitty brand as we continue to evolve and diversify our consumer touchpoints,” said Craig Takiguchi, COO of Sanrio.
So how did this work? The moral of the story, it seems to me, is that even if the brand doesn’t own a specific product category or benefit, sometimes it can leverage the trust it has built up with its customer base. Leveraging the strength of a brand’s customer relationships can lead to success in a separate category—but only if the marketing team is perceptive enough to know what new products can really work. That decision is harder than it looks. But Hello Kitty nailed it.
Not Giving Up
Brand extensions are the central way for companies to enter new categories and expand a customer base. It is the most efficient method of gaining distributional reach, name recognition, and global acceptance as a name brand. But as I’ve discussed, a successful concept requires an authentic story and proper strategy and will often involve extending a brand not into a new product but into a relevant service. But failing to see the importance of shifting delivery, buyer personas, core brand story, and authenticity could get you on that long and terrible list of failed brand extensions.
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