Question:How do I decide whether or not to extend my brand to a new product?

Answer:A successful brand extension depends largely on the psychological fit between the parent brand concept and the new product. If consumers associate the brand extension with anything undesirable, they are not likely to buy it, no matter how favorable the parent brand name is.

For this reason, it is imperative that the marketer determine a good fit between the parent and the child products before putting the extension out on the market.

How do you do this?

First, think about the associations consumers have with the parent brand and category and think about whether these associations will work in the extension category. Heinz is associated with what, "thick" and "ketchup," "hamburgers and hotdogs," and "you can find it everywhere."

These associations work well if Heinz is going to extend to a category where thickness is good and tomato flavor is desirable (e.g., Heinz spaghetti sauce), or where the usage context involves a complementary product also used with hotdogs and hamburgers (e.g., Heinz relish, hot dog buns), but may lead to less than pleasant associations if the firm extended to grape juice, a product where thickness, tomato like flavor, or meals on the grill is irrelevant or undesirable.

There are many ways -- attributes, benefits, uses, users, usage situations, distribution channels, price -- that a brand extension may or may not fit with the parent brand—similar. Each needs to be considered. And don’t forget to do consumer testing. Invariably consumers will think up some associations that you didn’t and that might need to be considered in developing ads.

Academic research has also shown us that the affect or attitude that consumers attach to the parent brand is another big determinant of how much they like the brand extension. If they love the brand, they will likely love the extension (assuming fit, of course). If they’re not too crazy about the parent brand, chances are they’ll react in a lukewarm manner to the brand extension.

Research also shows us that how far away we can go from the parent brand depends on the kind of brand concept it has.

Think about the differences between a brand like, say Maytag, Cross, and Pepsi. Maytag stands for durability and reliability in washing machines. It has, what we might call, a very functional brand concept. The brand is designed to solve problems (clean our clothes) and not create new problems (by breaking down, overflowing, or ripping our clothes). Arm and Hammer, Crest, and Dell are other examples of brands with functional concepts.

Cross, on the other hand, stands for prestige, style, exclusivity. It is designed to say something about the user. Hugo Boss, Rolex, and Polo Ralph Lauren are other examples. It’s concept is primarily symbolic—saying something about who the user is and what makes them unique or different from other consumers. Starburst stands for great tasting, gushy flavor and fun. It has an experiential concept. Disney, Pepsi, and Ben and Jerry’s are other examples.

If you have a functional concept, it is more difficult for you to stray from your center. Arm & Hammer might be able to extend to other functional categories, particularly those that are very central to deodorizing and cleaning, but it will never make it further than that. On the other hand, Polo might be able to extend to lots of very different categories—shoes, clothes, eyeglasses, sheets, home appliances, and so on. Brand with functional concepts are more constraining.

Finally, some research has shown that whether consumers like a brand extension and whether they think it is going to be a high quality brand depends on whether the parent category is higher or lower priced than the extension category.

Say a maker of microwave ovens decides to make a toaster oven. They would be pursuing a downward price extension because the price of the brand extension category (toaster ovens) is much less expensive than the price of parent category (microwaves). If on the other hand, the same company decided to make a full sized convection oven, they would be pursing an upward price extension because the brand extension category (convection ovens) is more expensive than the parent category (microwave ovens).

Consumers tend to infer that brand extensions are of higher quality and are higher priced and have higher quality when a downward vs. an upward extension are used. They also like the brand extension better (perhaps because they think it’s quality is better). On the other hand, a downward extension tends to hurt consumers’ quality image of the parent brand. It seems like consumers wonder, "why are they making a cheaper product? Maybe they aren’t as good as I thought they were".

So if you are going to make an upward or downward price extension it seems like either the parent brand or the brand extension will be hurt. The question becomes, which do you want to hurt least?

Obviously, brand extension decisions are complicated. But hopefully, they are better informed and have fewer adverse effects on the equity of the brand if these issues are considered.