How far can you stretch your brand?

Every year companies spend millions trying to create and build groundbreaking ways to move into new or different markets. And every year, some of the most promising new ideas fail to meet their potential for expanding the customer base and revenue streams.

Brand extensions can be valuable

However, there is no doubt that brand extensions can be valuable. Success stories range from John Deere who branded merchandise, Honda branded lawnmowers, Nike branded eyewear and Ralph Lauren branded linens, which all leveraged successful brands to expand the user-base and increase revenues. In each case, a brand that was well recognised in one category made a strategic and sound move to another.

Brand extensions will succeed if consumers feel that the new category fits the brand. This means it is vital for brands to understand consumer's perceptions of the brand's personality and attributes.

Focus on core products

Companies have realised that the core products are often more profitable - the core business being one that the company has mastered due to many years of experience. Also as the brand is well-known and trusted in its core area it may need less marketing support compared to products where the brand is entering a new market.

Apple's successful expansion from the PC business to media players, iPhones and now iPads is the pure example of companies using an existing strong brand to promise a new product, however the success rate for most companies is somewhat bleak as less then 50% of the brand stretching projects survive after three years.

Support the values of the core brand

Brands need to think twice as the new product or service could end up in the over-crowded brand stretch hole alongside the likes of Cosmopolitan Yoghurt, Virgin Vodka and Levi's suits, which became too big for their brand boots and underestimated the challenges of successfully stretching into a new market. Extensions that work best are those that support the values of the core brand.

Drinks companies are more likely to rely on extensions to boost sales and awareness as opposed to brands such as Ferrari and Cosmopolitan that have launched or endorsed products in areas beyond their core market. Gillette successfully moved into male grooming products while one of the least appropriate stretches was Dell making liquor.

How can a company be everything to everyone? Are the extensions that work best those that support the values of the core brand? That's the question the ANC needs to ask itself after the party launched a range of 19 leather jackets in black, green and gold in a bid to keep its leaders and supporters clothed in threads that are stylish but is exclusive fashion the right extension in which the political party should be moving? Shouldn't they rather stick to ANC T-shirts, banners and caps?

Balancing act

Growing the core can make what is strong even stronger but it does require as much, or even more creativity than launching innovation into new markets. It requires a balancing act between remembering what made you famous and refreshing the brand to keep you relevant. Don't make the mistake of spending endless amounts of time and money on looking at future trends and then miss looking back at what really made you famous in the first place.