Novelty, clear benefits key for brand extensions

16 August 2010

LONDON: Brand extensions must combine a degree of novelty with clearly discernable benefits for consumers, a new study has argued.

According to figures from HPI, the research firm, there are approximately 9,000 products introduced in the food category every year, each of which hopes to meet the increasingly diverse needs of shoppers.

However, across all sectors, it is estimated that as many as 90% of original offerings fail within two years.

Based on a survey of 1,000 people, HPI found consumers could be divided into distinct groups when it came to attitudes and actual behaviour in this area.

One of these segments was the "Enthusers", who are typically young, experimental in their purchase habits and generally exhibited low levels of brand loyalty.

As such, they are open to trialling new entrants, but there is no guarantee that, having done so once, they will not do so again.

The largest single cohort was the "Evaluators", or 55% of the potential audience, characterised by a considered approach and usually only swayed when individual items provided significant benefits.

Finally, the 26% of "Evaders" tended to be set in their ways, and trusted established brand to the exclusion of lesser-known alternatives.

Overall, a third of the sample had tried the new products featured in HPI's study, with Enthusers making up the biggest portion of this group.

More broadly, 16% made repeat purchases, indicating the scale of the challenge in converting prospects into committed customers.

"This shows that marketers planning a new product shouldn't be seduced by notions of achieving huge penetration levels instantly," said David Iddiols, senior partner at HPI.

"Marketers need to have realistic ambitions in terms of defining what constitutes success and, of course, to make sure their carefully cultivated NPD concepts aren't just targeted at those fickle NPD Enthusers."

Some of the most high-profile extensions that failed to gain traction are a Harley Davidson perfume and Bic underwear, which seemed to go beyond areas where these brands could claim any authority.

The disappointing results experienced by more plausible ideas, like a ready-to-drink variant of Nescafé, prove how difficult it is to predict probable demand.

Factors contributing to favourable outcomes include rolling out goods with a unique positioning, such as McCain's Simply Gorgeous premium potato chips and Birds Eye Simply, cooked in a foil pouch.

Creating buzz is vital, as best demonstrated by Apple's iPhone, while a clear purpose delivered success for Gü, the luxury dessert specialist, and Ubuntu, the fairtrade cola.

Having tested a range of hypothetical extensions, HPI reported that its panel were interested in a Dove Toothpaste, Guinness Chocolate, Virgin Car Rental and L'Oreal Clothing.

"A combination of a novel, genuinely differentiating benefits forged around a well regarded brand is a potent cocktail," said Iddiols.

Data sourced from Marketing Week; additional content by Warc staff