Understanding the way in which consumers evaluate whether or not a brand extension fits or is consistent with the core brand is central to the success of the brand extension. But the method by which consumers form brand extension “fit” judgements is often poorly understood.
Here's the latest thinking of what factors to consider and what process to go through.
Why Extend Your Brand?
Brand extensions are a familiar way of capitalizing on a brand's equity to sell new products or services, for example; Nike golfing clothing, Oakley shoes, Sony digital cameras and Evian clothing etc. But although there are obvious benefits of pursuing a brand extension strategy like utilizing brand equity, business growth and cementing core brand attributes, there are also significant downsides of a brand extension strategy. Specifically, if a brand extension does not fit with the core brand; the core brand may not add any value to the brand extension product or service resulting in the failure of the brand extension, core brand attributes may well be diluted and negative attributes may be associated with the core brand.
The key to successful brand extensions is to determine if the brand extension fits or is consistent/congruent with the core brand. However, more often than not, managers utilise their own perceptions of the core brand as the benchmark to determine if a brand extension has the potential to fit with the brand.
These perceptions of the brand are frequently in contrast with those of consumers. To further complicate matters, managers do not fully appreciate or understand consumer's brand extension fit judgements and therefore it is difficult for them to consider all the aspects consumers use to determine if a brand extension fits with a brand.
What's Important to Consumers?
When considering brand extension fit, there are four underlying constructs which consumer's evaluate individually, to formulate an overall judgement as to whether or not the brand extension fits with the core brand.
- RELEVANCE is the extent to which the core brand attributes are relevant or important to the brand extension category. For example: (1) the core brand attributes of Starbucks are clearly relevant to the sale of coffee grinders, but not relevant to the sale of other kitchen equipment such as microwaves or fridges, (2) the core brand attributes of Coca Cola are relevant to the sale of other soft drinks and sodas but not the sale of fruit juice such as orange juice.
- RECOGNITION is the extent to which consumers understand the reasoning behind why the brand is conducting the brand extension as well as the logic of the brand extension. For example: (1) the core brand attributes of McDonalds make it easy to understand/logical in the eyes of consumers for McDonalds to extend its brand into another restaurant concept, however not easy to understand/ logical the eyes of consumers for McDonalds to open a chain of grocery stores, (2) the core brand attributes of Nike make it easy to understand/logical in the eyes of consumers for Nike to extend their brand to sell golfing clothing, but not easy to understand/logical in the eyes of consumers for Nike to sell highly fashionable clothing.
- CREDIBILITY is the extent to which the core brand has attributes which are credible and acceptable to conduct and sell the brand extension. For example: (1) the core brand attributes of Sony make it credible and acceptable for Sony to extend the Sony brand into laptops and digital cameras however they are not credible and acceptable to extend the Sony brand into sports clothing, (2) the core attributes of Budweiser make it credible and acceptable for Budweiser to extend the Budweiser into new beers however they are not credible or acceptable to extend the Budweiser brand into wine or spirits.
- TRANSFER is the perceived ability of a brand to transfer their skills and experience to the brand extension. For example: (1) the skills and experience of British Airways are transferable into other areas of air transportation such as domestic flights and low cost flights, however British Airways' skills and experience is not transferable into coach transportation, (2) the skills and experience of American Express is transferable into travel insurance and foreign exchange services, but not transferable into car rental.