Not everybody can brand it like Bieber (courtesy of Entertainment Earth)
Brand extensions and brand stretching are commonly used by companies wanting to expand into new product categories. According to this source, they are defined as follows:
“Brand extensions refers to the use of a successful brand name to launch new or modified products in a same broad market“ while “brand stretching refers to the use of an established brand name for products in unrelated markets“.
There are many examples of both in the consumer world.
Celebrities like Justin Bieber and Donald Trump have employed the strategy of brand extension fairly successfully. Bieber has released his own line of headphones, nail polish, and even scented dog tags, while Trump’s name appears on vodka, health products, mattresses, furniture, cuff links, shirts, ties, and a seminar company.
The most famous example of brand stretching is the Virgin group started by Richard Branson, which ventured from music to airlines, bridal businesses, soft drinks, telecommunications, and more. While some of its forays like Virgin Atlantic have succeeded, others like Virgin Cola haven’t done as well (remember Virgin Mobile’s quick death in Singapore?).
Hybrids of brand extension and stretching also exist. An example is NTUC Fairprice, which have created its own housebrands of household products and food items. While the business of manufacturing is quite different from supermarket retail, their general customer groups are similar.
Cheap and good is what NTUC stands for (courtesy of Manali Pattnaik)
Why are certain brands more elastic, stretching to totally unrelated categories, while others are less flexible? Branding Strategy Insider provides a good insight to this question:
“Before one extends a brand into a new product or service category, one must be clear on what the brand stands for, what people associate it with and what its personality is. Then, one must assess if these qualities will be beneficial (and not problematic) in the new product or service category. Conversely, one must determine what entering the new product or service category will do for (or to) the brand. Ideally, it will enhance its perception and broaden its appeal, not damage its perception or limit its appeal.”
Beyond consumer perceptions, one should also examine existing strengths or weaknesses in areas like logistics, distribution channels, and merchandising.
In the example of Bic’s doomed foray into disposable women’s underwear, their existing sales force, distribution channels and production technology weren’t suited for lingerie.
Meanwhile, Virgin Cola’s inability to gain a foothold in the soft drinks market in the UK was due to Coca Cola and Pepsi blocking Virgin from getting crucial shelf space. This happened despite Virgin Cola’s huge PR blitz featuring its celebrity larger-than-life boss Richard Branson.
Branson’s PR stunt failed to bring down beverage giants Coke and Pepsi (Source)
This can perhaps be boiled down into two areas, namely “Fit” and “Leverage” as defined by Brand Extension Research:
Fit: What categories consumers will accept from a brand. A brand’s stretch-ability or boundaries.
Leverage: Distinctive properties a brand “owns” that provide a competitive advantage to the brand extension in its new category.
The moral of the brand extension and stretching story?
Trying to forcefeed a square brand into a round hole isn’t going to work for you, unless your brand can pass the tests of believability and complementarity. And as any experienced marketer would tell you, branding is a lot more than just advertising and PR.
