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Four Lessons on Avoiding a Brand Management Nightmare

by Jens Lundgaard  |  
July 5, 2012
  |  10,514 views

In this article, you'll learn...

  • Examples of successful and unsuccessful brand extensions
  • Four lessons on extending your brand

Clothing and food retailer Marks & Spencer (UK) recently announced plans for brand extension M&S Bank, with branches to be located in its stores. Wholly owned by HSBC, the bank's brand is, nonetheless, fronted by M&S. Some believe the brand extension could be a canny move by the retailer because 15% of its customers already use the M&S credit card.

In contrast, Tesco, a leading supermarket business with several successful brand extensions, such as broadband and telephony, just scrapped its used car sales business, Tesco Cars, in the UK. Opened only a year ago, the business cited a lack of stock availability as the reason for its demise. Was that because consumers couldn't wrap their heads around buying groceries and selling cars via the same retailer, albeit not under the same roof?

Brand extensions can be a great way for a core brand to develop its overall brand equity and reach new customers. We can learn valuable lessons from those who have done it right, and those who haven't.

If you are considering embarking on a brand extension, answer these questions first.

1. Does your brand extension fit in with the strategic objectives of your company?


Richard Branson, founder of Virgin Group, has been highly strategic about how he has grown the Virgin brand. Started as a record company, Virgin now includes mobile telephony, gyms, an airline, and even space travel. The brand is strong across disparate business categories because Branson is inherently part of the brand and imbues each Virgin business with similar values. Consumers recognize what the Virgin brand stands for, and buy into it.

In 2001, Apple made a highly strategic, but also highly risky, move from making computer products to making portable digital music devices and an online music service. More than 10 years later, the phenomenal success of Apple's brand extensions has proven that business decision right.

On the other hand, Heinz made a mistake when it decided to branch into cleaning products, releasing its All Natural Cleaning Vinegar, which was based on its edible version. Consumers didn't want to see the Heinz brand beside their detergent. The brand didn't know its limitations and expanded beyond what consumers would accept, possibly even damaging the parent brand by association.


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Jens Lundgaard is founder and chief executive officer of Brandworkz, a UK-based provider of brand management software and project implementation consultancy.

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Comments

  • by Mediative Thu Jul 5, 2012 via web

    We believe the best way to extend your product portfolio is to find different ways to use products you are already currently using. Many fast food restaurants do this. For instance, Burger King sells burgers and onion rings, so they came out with the Ringer burger - a burger with an onion ring inside. See our take on Brand Management at: http://mdv.to/JduKFT

  • by Dim Mon Jul 9, 2012 via web

    that is a very nice article indeed, it actually sums up every important element that have to be considered when we are talking on brand extension. well done!

  • by stefano Tue Jul 10, 2012 via web

    good article yet I think anyone who want to be rock solid as to add methods and processes about how to be sure to answer the 4 questions.
    how to measure that your brand is rock solid? and foremost what is the perimeter of "trust and authenticity" that your brand + customers will allow as the secure business enlargement to avoid dreaming that anything is possible and loose more money than reasonable on wrong experiments.
    in fact Apple moved to music/phones thanks to the "trust and authenticity" demonstrated about challenging integrated vision of hardware+software industry with their PCs (desks and laps), not because of a romantic vision of an impossible crusade made possible - and also thanks, as for the PC story, to industry leaders that were just asleep because satisfied by their success hence no more in need of challenge

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