Brand extensions: Leverage or self-trap?

Leveraging the available success to expand the brand into other areas is a right direction or a risk? The reality of the market has the answer, but the volatility of consumer’ psychology is another challenge.

According to the general theory of marketing, the four basic elements of marketing mix are product, price, place and promotion. Product is the most important factor of strategic marketing system; it is also the basis for the implementation and development of other strategies. Thus, firm need to pay attention to every stage of the product to devise appropriate strategies. One of the strategies to be applied more is “Brand Extensions” (create new brands or sub-brands based on the reputation of the available brand)
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Common mistakes in Brand extensions :

Most businesses often suffer risks when conducting their product expansion into new product lines because they do not have the reasonable connection between their well-known brands and their new product lines. Dominique Turpin (2014), President at IMD stated that the number one, simple reason why a lot of firms failed in brand extensions was “they don’t bring enough meaningful value to the consumer”.  Value to customers are good prices, quality, quantity and so on, but the new product line cannot meet the customer’ expectation. Thus, it leads to lose in brand loyalty of the leading products, sometimes it also causes to the collapse of the brand.  Although brands have their own power, they are only in an environment where they have been identified. Once out of this environment, they will lose their attraction and the power inherent.

After a period of success in certain areas, with capital and brands, many firms added business lines and adventured into new fields. They thought “I was successful in field A, and it would happen in field B because of higher capital and their available brands. Nevertheless, launching so many products just made them more confused.

Moreover, as a brand name has been attached to a commodity, consumer’ sentiment is hard to accept that brand expanded into another area. Sometimes creating something new backfires, reduces the value to the brand and leads to lose credibility in consumers. However, many big brands have accepted “feeding brand” plan which using big brands to support the new brands.

Featured products of the brand are traditional product lines which have customers’ loyalty and customer’ attraction. If firms have more products bearing the brand name, their brand’ growth will be reduced.

Typical Examples:
In fact, many brands succeeded in a field, but they failed in other areas.

Zippo The Woman Perfume

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Zippo is a well-known, global brand of lighters. Nonetheless, in 2012, Zippo launched a new product line: – Zippo The Woman Perfume. The scent is called fruity; it also looks like a lighter. So, Ladies, Do you want to smell as a lighter fluid?
A lot of people will think that smell of the perfume is as a smoker or lighter fluid. Yes! This campaign is all about perception and it is not a logical extension as well (McLean n.d)

Harley Davidson

Harley Davidson is a famous American motorbikes brand.  The motorbike maker has cleverly developed into the product lines such as: gloves, holsters, belts, T-shirts, socks, bandanas and decorative items for motorbikes.

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Because of the success of these products’ sale volume, the leader of Harley Davidson adventurously stepped into other fields: perfume, shaving cream and wine container with the available brand: Harley Davidson. Nevertheless, Harley Davidson’s image has stuck with featured products for strong, wild character. That’s why Harley Davidson perfume is impossible to be familiar with close Harley Davidson’s customers.

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They think that company’ boss has gone too far and the boss seemed to think nothing their thought. Those products of Harley Davidson quickly broken off and it was such as a comedy as well as a lesson in their business.

There are also many examples of firm’ failure in brand extensions such as Adidas Perfume, Pierre Cardin wine, Levi’s Shoes, New Coke and so on.
Recommendation:

According to marketing experts, expanding the brand successfully is not only based on existing brand, it is also about behavioral, psychological research process of targeted consumer groups. There are many firms which predict customer’s needs to expand the brand. This is a risky job because it’s highly subjective , limp and firms want to impose on the other’s needs.

 

Published by:Tung Nguyen
ID: 215024311

References:

Turpin, D 2014, “The No. 1 Reason Why Brand Extensions Fail”, Pulse, Retrieved 8th April 2016, <https://www.linkedin.com/pulse/20140122142620-3458678-the-no-1-reason-why-brand-extensions-fail>

McLean,D n.d, “Brand Extensions Gone Wrong”, beneath the brand, Retrieved 8th April 2016, http://www.talentzoo.com/beneath-the-brand/blog_news.php?articleID=16856

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