Earlier this week, I wrote a post that described the argument FOR brand extensions. Today, I’m going to take a look at the other side of the brand extension argument and discussing why extending your brand can cause problems for your brand and business overall.
Consider these risks of brand extensions:
Confusion: If you over-extend your brand, you run the risk of diluting that brand’s power. I’m sure most of us have been in an aisle at a supermarket at some point and had trouble finding the exact product we were looking for amid the many products a specific brand offers. Some brands have so many extensions that finding the one you want is like looking for a needle in a haystack.
Loss of Focus: Having too many products under the same brand umbrella typically requires over-extending your resources. As employees spend less time on each brand, consumers will do the same, and your overall business will suffer.
Consumer Shift: While adding another product might seem like a quick way to increase profits, when that product comes under an existing brand umbrella and within an existing product category, a company runs the risk of simply shifting market share from the existing product to the new one without actually gaining new customers. Rather than helping the business overall, a shift like this simply hurts the existing product.
Negative PR: One mistake within a single brand umbrella can hurt every product with that brand name attached to it. Think Tylenol. Of course, Tylenol eventually recovered, but there was a time some 20 or 30 years ago when the Tylenol team was struggling to survive after negative publicity related to product tampering nearly destroyed the brand and the company.
The lesson to learn is this – while brand extensions can seem like a quick and easy way to guarantee success of a new product, marketers need to be aware of the inherent risks in brand extensions and carefully plot a strategic course for success rather than blindly slapping a successful brand name on one new product after another.
What do you think about brand extensions?
Photo: Flickr
Lucy is Editor at Corporate Eye
Susan, great article! You are exactly right in that brand extensions DO over-saturate the market, but it also does something else. It over-saturates he senses of the consumer. I have been there many times: There is my favorite product on the shelf, but there are also dozens other. My senses are so over-stimulated that I just tend to ignore the colorful packaging and the way the products “scream” out at me. I zero in on what I want (which is what I always buy) to save time and stay focused. Consumers are busy people. We just want what we want and want to get out as quickly as possible.
I feel that Coca Cola and Pepsi’s strategy of not doing brand extensions has worked very well for them. There’s only 1 Coke and thats what I want nothing else (Diet Coke is OK because it’s still Coke but for the fatties….oops fat conscious. Every other product is branded separately although its does carry “Coca Cola product” in small print to assure me of the quality).
I think Absolut/Smirnoff have a lesson to learn here, I feel they have over extended their brand which diluted it’s appeal. Can you imagine something else that’s Jack Daniels, just doesn’t make sense.
Bridget, I have been in that situation at the grocery store countless times. When consumers are given too many choices (as over-extending a brand can do), they cease looking and may even turn their backs on a brand.
I completely agree with you on the Absolut example, Sachendra. Specialty and luxury brands that are over-extended definitely lose a great deal of appeal in the marketplace. Those are two areas where brand extensions should be handled very carefully!