Human beings are generally risk averse, but we also like to try new things. This has led to an interesting dynamic in which we look to existing brands (that we know and trust) to introduce new and different products. And brands often have to introduce new products to stay competitive. To capitalize on brand equity, companies will often launch new products as brand extensions using an existing brand name, as opposed to creating a new brand.
As with most things in branding, there are examples of successful brand extensions and examples of brands that got it all wrong. Many factors come into play when making any brand strategy decision. Here are a couple to consider when deciding whether to extend a brand or create a new brand.
Is there a “sweet spot” market opportunity?
Having a well-known brand with positive associations in addition to the expertise to develop a new product are two key ingredients for a successful brand extension. However, the most successful brands are those that optimize three key variables to find a sweet spot for the brand:
Different: The new brand is differentiated from competitive offerings.
Meaningful: It is something that the target audience values and is willing to pay for.
Credible: The target audience believes the brand can deliver on the brand promise.
Each of these variables is important in its own right, but if a product can deliver on all three, it has a good chance of being a success—assuming the market size is big enough and the target market has the means to purchase the product.
Here are two examples of brands that had the brand equity and product development ability but with very different market opportunities.
1. Pond’s Original Fresh Towelettes
Unilever’s Pond’s brand has been around since 1864 and is well-known for its cleansing cold creams. More recently, Pond’s introduced makeup-removing towelettes. The product was different at the time. According to Unilever, the Pond’s Original Fresh Towelettes were the first to make removing dirt, makeup and impurities as easy as one simple swipe1. It’s clear from the proliferation of similar products that the product is meaningful to the target audience as the market has expanded. Finally, Pond’s solid reputation in cold creams made the towelettes a credible product. People could believe that the product could deliver on the promise.
2. Cheetos-flavored lip balm
Yes, this was a thing! I think we can all agree that it was different, but things get shaky with respect to credibility. Really, what could mimic the taste of that unnaturally delicious snack food?! Even if the lip balm did taste as good as Cheetos, the product was definitely not something the target audience valued and was willing to pay for. The extension also did not fit the criterion of “meaningful”: Lip balm is something that is applied to and ultimately absorbed by the lips, but by making it smell and taste like a snack, the product is sending the cue that it is meant to be eaten. This was the inverse problem for Ben-Gay aspirin.
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Does it align with the existing brand?
A brand is a mental construct consisting of people’s perceptions, beliefs, feelings, memories and attitudes. Brand extensions seek to leverage that existing mental construct. If a brand has strong, established perceptions in a certain type of product, it can be difficult to expand perceptions to a different kind of product, even if it’s related.
Late in 2015, Kimberly-Clark quietly launched a new Kleenex line called Kleenex Facial Cleansing. The line of products ranges from cleansing wipes to exfoliating pads and shine-blotting sheets. It makes rational sense that Kleenex, already well-established in the facial tissue business, would offer such products. However, I’m a little reluctant to cleanse my face with a product I associate with nasal congestion. Apparently I’m not alone. One blog post commenter had this to say:
“For all the elegant, effective cleanser options made by reputable skincare companies, it’s puzzling to me why anyone would trust their cleansing needs to a tissue company?!?…I’m not trusting my cleansing needs to Kleenex. That’s what skincare lines are for2.”
In fairness, most other commenters said they’re intrigued by the brand and would be likely to try it. I guess time will tell whether this brand extension is a success.
On the flip side, a new product that aims to have very similar brand associations may be a good candidate for a brand extension. NyQuil is a successful, well-established product associated with alleviating cold symptoms and helping people fall asleep. When Vicks introduced its sleep aid ZzzQuil, it already had the primary desired brand perception of helping people fall asleep built in. Essentially the product keeps the sleep aid properties of NyQuil and has removed the cold symptom medicine. This strong brand alignment complements the existing product and provides credibility for the new product.
Leveraging brand equity to introduce new products can provide instant positive brand equity to the new product and elevate the existing brand equity. However, the brand extension route is not the best choice for every new product introduction. Marketers should start with a clear brand strategy, inclusive of target market definition, for both the existing and new products, determine the desired brand perceptions and evaluate the brand fit for both products.