Brands need to grow, continually, to flourish and maintain relevance, but achieving and sustaining profitable growth is a constant challenge. One of a firm’s most valuable resources is its brand equity. Attempting to leverage this asset, an increasing number of companies are extending their brands into multiple product categories through brand extensions, trying to grow the brand beyond its core products. However, many owners of brand strategy struggle with how far they can (and should) stretch their brand’s “bounds of extendibility.”
McDonald’s Mighty Wings
In 2013, McDonald’s launched Mighty Wings as an attempt to ride the wave of the growing demand for lean protein (e.g., chicken). However, after the initial launch of the ill-fated product, “the burger giant had 10 million tons of unsold, frozen chicken wings to get rid of.” Value for the money seems to have been a key issue. CEO Don Thompson admitted that prices were “not the most competitive.” Packs of three wings sold for $3.69, five for $5.59, and 10 wings for $9.69: a dollar per wing was pricey for penny-pinching customers watching their budgets. easyJet’s Easy Cinema The idea of cheap theatre tickets might at first seem appealing. However, easyJet is a business associated with no-frills cheap and cheerful air travel. It’s a budget-friendly way to get wherever you need to travel. Yet, when people go to the movies, they’re looking for an exciting and immersive experience. They want all the bells and whistles – otherwise, they would just stay at home and watch whatever was on Netflix. With easyCinema, easyJet failed to understand its new target market properly. It could not provide a good value product because it failed to capture the customer purchase behavior of the majority of customers (families and 15-24 year- olds).
Reasons Brand Extensions Fail
Play it too safe, and your likely result will be ho-hum, underwhelming line extensions that are short-lived in the marketplace. Wander too far from your brand’s core positioning, and you risk diluting—or even irreversibly damaging—your brand’s valuable equity. Successful brand extensions are a logical step from the flagship product. If not, consumers are left asking, “What were they thinking?”
Market opportunity. No need for the product or service exists, or the need has already been met. The reason for launching new products is simply “because we can.” Companies must properly evaluate the market to understand whether an opportunity and what type, may exist in a category and consumers’ specific unsolved problems.
Brand relevance. The new product or service does not express the critical attributes of the brand and is not a strong fit. The new product category must convey the higher-order, emotional benefits associated with the parent brand, and the attributes must be meaningful to consumers when it moves into the new category. Furthermore, consumers must perceive the brand’s ability to deliver credibly on all the necessary attributes in the new category. Arm & Hammer baking soda claims it is an effective deodorizer for refrigerators, etc. As a result, they extended the brand into other products such as Arm & Hammer underarm deodorant and cat litter deodorizer. Honda’s expertise in reliable engines led to lawnmowers, gas-powered generators, and a variety of other gasoline engine-powered devices. When you think of Harley-Davidson, you think of adventure, free-spirited and rebellious. Other motorcycle brands try to capture that essence. Still, people associate those feelings with Harleys, and they’re willing to spend more money for a Harley than a Kawasaki because of it! However, Cake icing kits conveyed none of the nonconformist values that Harley-Davidson stands for.
Part two of this series will focus attention on building brand relevance and positioning a new product or service to ensure it enhances brand equity. Relevance the limits to which you can extend your brand without compromising credibility involves understanding what your brand is, as well as what it is not.