Are you stretching your brand too far? Brand extension do's and don'ts...
Red Bull is the world's #1 energy drink brand; but it didn't work in shots. Colgate is huge in toothpaste, but its move into kitchen entrees was (perhaps more predictably) a bit of a stretch. So how do you know if your brand will extend effortlessly into other categories?
Mary Ann Somers, general manager and senior vice president for Coca-Cola's water, tea, and coffee businesses, admitted that Coke didn't always get it right, noting that Dasani Plus had not been a success, for example.
"Brands are elastic, but are you stretching the rubber band too far?"
That said, timing is everything, she added, noting that e-cigarettes and ready-to-drink brewed coffee - both rapidly growing categories today, had failed to impress consumers in the 1990s.
Before taking the plunge, beverage companies should consider the following questions, Somers told delegates:
1 - What does your brand stand for?
2 - Will a brand extension attract new customers (and incremental growth to your business and the category)?
3 - Will a brand extension have a halo effect or will it distract your attention from your core business at a time when you should be focusing on one thing at a time?
4 - Is the brand extension going to be margin accretive or dilutive?
5 - Is it better to be a fast follower than a first mover?
Finally, if your brand is not firing on all cylinders in the first place, extending it may create more problems than it solves, she observed, likening it to a couple hoping a baby will save a troubled marriage: "Don't be afraid to say no."
