It’s an irresistible temptation for marketers to see how far their brands can stretch. In the endless search of brand growth, extending into new categories as a master brand can seem like a slam dunk.

As the brand consultancy Prophet put it:

“Most companies can simultaneously manage budgets and invest in their growth by strategically extending their master brands into new categories. Why? For one, the assurance of a familiar brand provides comfort and inspiration in times like these. Plus, consumers are seemingly more comfortable letting brands extend into new categories than most brand managers are. Finally, investing in a master brand is typically more efficient for the business than allocating limited budgets across a stable of brands.”

Yet the marketing world is littered with misguided line extensions, including Cosmopolitan Yogurt, Levi’s Suits, Colgate Ready Meals, Land Rover Coffee, Bic Perfume, and Harley Davidson Cake Kits.

David Taylor calls this phenomenon Brand Ego Tripping. Marketers tend to breath our own exhaust. It’s easy to get so excited about a new business opportunity on a two-by-two matrix that we lose sight of what consumers actually want. We lose sight of what our brand actually stands for. If we’re not careful, we get distracted from our core.

Not every brand is destined to become a master brand. Sometimes, it’s better to do one thing well. I’d love to hear your thoughts on when and how to extend a brand into new categories.

(Marketoonist Monday: I’m giving away a signed print of this week’s cartoon. Just share an insightful comment to this week’s post by 5:00 PST on Monday. Thanks!)

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11 Comments

  1. Svend Haugaard says:

    Very thoughtful post. I think brand extension should be done when it makes sense to customers, not just to the organization itself. I.e. having a brand story to tell and develop further. How to do it could e.g. be by Harley Davidson making cool bicycles. Related to the 2 wheels of the original brand but a story on its own.

  2. Tom says:

    My favorite way of summing this up is the term adjacencies. Brands can grow and expand organically by shifting into neighboring white-space.

    A good example of this was SC Johnson who started out selling parquet flooring and, as an afterthought, made some wax for the customers who asked for it. Over time the brand morphed to follow the consumer demand eventually getting completely out of the flooring business and into wax. From there they launched into wood treatment products like Pledge, then to adjacent cleaning areas (kitchen, bathroom, etc), then to other adjacencies like air-cleaning products. The emulsion technology from Pledge led them into bug spray and so on and so forth.

    Brands morph as the market changes and technology platforms enable new innovation. The combination of existing competencies coupled with new market potential drives brand growth and movement.

    Why does Gerber baby food sell life insurance and educational savings accounts? Because the brand means babies, life, family and all the responsibility that goes with it. Honestly I would not be surprised to see Girl Scouts offering insurance. My University does.

  3. Kevin McFarthing says:

    Hi Tom – very good post. As you say, marketeers should have a very clear view on what the brand stands for. Any extension should add to the brand equity, i.e. build on what the brand stands for. If an extension simply uses the brand’s awareness, and doesn’t enforce the existing positioning, then it should be avoided. Longer term dilution of brand equity is the hidden enemy lurking in the shadows of the new campaign.

    Virgin is often cited as the reason why brands can extend laterally into almost anything. The reason they can do this is because, unusually, the brand stands for the “disruptive category upstart”; the category is less important to their brand. There aren’t many brands like Virgin.

  4. Tracy Carlson says:

    A great cartoon and some great comments! I agree with Tom’s comment on brand adjacencies and Kevin’s remark about Virgin’s stance as “disruptive category upstart” allowing it greater freedom to enter non-adjacent categories.

    To these I would add that sometimes a remarkable brand can leverage its brand equity to leap into seemingly odd areas that nonetheless make intuitive sense. For example, IKEA is (or soon will be) selling solar panels in the UK and has also developed flatpack refugee shelters. Both are nonlinear moves, but they make sense as they combine both left-brain functional/operational excellence (low-cost, flatpack expertise) and a right-brain holistic approach (good corporate citizenship).

  5. Jim H. says:

    I think there is another aspect to extending a brand beyond its limits. That is damaging the brand name itself. If the extension is “out there” and doesn’t resonate with the customer as making sense re: the perceptions of what the brand is, there is the chance of dilution of the name. That is the consumer can get disoriented/confused as to what the brand is and where it fits in the market with negative impact on consumer decision making relative to the brand. Companies work hard at establishing where a brand fits in the market and maintaining that position and to take a chance on brand name dilution because of wanting to cash in on brand name equity could end up being costly. There is the theory. Now I need an example.

  6. Venkatesh R says:

    I think the key principle is whether it reinforces / builds on something that the brand is well known for. And hence the notion of adjacencies (building on the functional benefit of the core) seems to make sense. I think brands that are emotional or that rely on their ‘emotional’ benefit to strech and extend are more likely to get it wrong. Even for a brand that supposedly has relied on it’s emotional cachet to strech/extend e.g. Virgin – 50 % of the TO comes from the airlines and a host of the extensions have been failures especially when they have not been backed up my a great product/business model. Do check out this insighful post on the Virgin’s extensions from David Taylor. http://wheresthesausage.typepad.com/my_weblog/2007/03/virgin_the_wors.html

  7. Sam G says:

    The idea of master brands is an interesting one, because there’s an argument for & against.Some companies started with having everything under one house, like Tesco or Facebook, but they’re starting to transition away from that position, perhaps due to increased competition and a general feeling of indifference – at least in comparison to Virgins & Amazons of the world. Like Tom said, the consumer will tell you what they want, it just depends if you’re listening.

  8. ale BERDO+ says:

    Hi Tom,
    I’m a fun of both, humor and marketing, that’s why I love your cartoons.
    I’m convinced that brands are like human beings, both have (or should have) a certain look,both have a way of thinking, a way to communicate with people, a personality, values and therfore both stands for something (amongst other aspects).
    Having said that, brands should be able to evolve as people can do (no matter is not an easy task…some people won’r never change but it can be done). So if brands should be able to evolve is not just about thinking brand stretching as potential areas you could extend considering what the brand is/stands for today…is about thinking and planning what you want your brand to become in, analyzing its current reality and roots and therefore understand if your brand is able to evolve in that route, how long will take and which steps you should make it to give (and in which order).
    Brand streching requires planning and strategy…is like a chess game, you might not be able to extend your brand into category X right now, but if you extend first into category C and D, then extending to X will make more sense.
    On the other hand, there are different kind of brand stretching, the extensions related with what your brand stands for (i.e. Head extending from skiing into tennis) while other extensions are related to brand cult or coolness and only few categories and brands can play in this area(you are willing to buy a harley davidson’s jacket or even a stylograph because it shows what your life philosophy is…it talks about you, while it might be difficult someone is able to pay for a CocaCola t-shirt).

  9. Hugh H says:

    As evident from posts, opinion abounds, matched by doubt/undertainty. Who can tell me something about how to calibrate adjacency limits – using methods that make sense to a C-Suite inclined to extend or not? I am particulalry focussed on FMCG/grocery. I am able to go some way using shopper panel data and to a lesser extent home-panel data. I feel a need to supplement the above with other ‘scientific’ methods.

  10. Concetta says:

    Tom, I’m going to challenge you a bit here. Harley Davidson cake kits. Yes, it might seem silly. But did anyone actually ask the consumers? All the research I can see call the HD kits a failure cite “Tipping Sprung, a New York based consulting firm” who said that “this extension really did not fit with Harley Davidson’s core values”.

    Yet the kits are still on the market and I can see the value in them, because they are trying to extend their brand into a family brand, beyond the macho outlaw image. I guess because I get their flyers all the time (as a scooter and motorcycle family owning member, and scooter rider) I can see the change in brand, and just how much that cake decorating kit fits in with the women of the HD families. HD regularly does family events at their locations and the rides they do encourage children to come in the Chicago area. The cake kits would fit right in with a brand arguing that it is the lifestyle for the whole family, including kids products, fashion products, and alcoholic beverages that are quite popular.

    Has HD made some doozy mistakes? Yes. HD wine coolers or perfume, anyone? LOL. But the cake kits I would argue are not one of them. Sometimes a brand extension might not fit with what we see of the brand, but that doesn’t mean its wrong for its customers.

    PS there are some great modern extension failures that I think would be better to talk about than the 80s ones like Cosmo yogurt. What about Chicken Soup for the Pet Lover’s Soul Pet Food, Samsonite outerwear, Zippo perfume, Dr. Pepper marinades, Virgin Cola, Virgin Vodka, Virgin water purifiers, Virgin Bridges, Virgin Clothing, Virginware, Virgin Vie, Virgin Flowers, Virgin Digital, Virgin Pulse, VirginStudent, etc…

  11. Stefanie says:

    This reminds me of when Axe body spray launched Axe for women. I’m a marketing teacher, and my class had a great discussion on this decision: is it better to miss out on half of your potential market but stay a brand that is loyally purchased by males or risk diluting your brand to possibly pick up a few more customers (while potentially losing a lot of your core customers). It must be difficult for brands to dance the fine line of growing without being greedy.

    Your website was introduced to me by a former student who’s college professor uses your cartoons often in lecture…I have begun using myself at the high school level, they are a great way to open a lesson. This is another great post – thanks again.

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