Anupama Wagh-Koppar, Head - Customer Segmentation, TataTele Services
“A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, co-operate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects.” said Robert Heinlein. But that … is only true for human beings.
To extend wisely without going on an ego trip is a challenge many a marketer faces. Especially, today when the single most agenda for any business is growth, not just organic growth but leapfrog growth.
Globally Brand extensions and expansions are the most used strategy for growth. Extensions are when a brand or business extends its equity within the same category and expansion means when a brand ventures outside its core category by extending its core values. 58 per cent of UK consumers would be more likely to try a new product from a brand they knew, versus only 3 per cent for a new brand.
Closer to home… Brand proliferation and stretching is evident in the numbers quoted in some ACN data that I was reading:
Significant growth in the FMCG space has been driven by new line extensions and new brands.
Why is it so tempting to stretch??
Enablers of Brand stretch
Extensions are an attractive option but also a double edged sword. A closer look at the dynamics of stretching. Outlined are the moments of temptation when you as a marketer are likely to give into the temptation and the caution that one needs to take before giving in.
Tempt appeal # 1 You have created a high brand equity and its Pay back time
#2 Getting an elephant to dance. Your brand growth is stagnant
#3 Reloaded- you feel the need to revitalize your long standing Brand
#4 To be relevant to changing consumer needs
Examples of Brands who were proactive, Dettol- liquid hand wash- Dettol skincare
Lifebuoy-liquid wash- gold vs Baygon, who lost relevance with consumers due to lack of proactive innovation.
# 5 The new opportunities are compelling
One such example is Virgin, who went on a Brand ego trip when it stretched into too many offerings, some which were not lending themselves to its philosophy of being an irreverent fighter for value and in some cases like apparel, the company had Poor understanding of the ‘new’ consumer and ‘new’ market and did not play by the rules of engagement relevant to that category.
# 6 Feel need to leverage your competency, both backward and forward
An example would be ITC, which has extended into various new businesses that leverage its strengths and has been successful because of a cultural shift in its mindset.
# Tempt appeal 7 - Your business definition allows you to
Satisfy a key driver in that category?
Example-One Brand that has done it well is Saffola who is attempting to move from a heart care oil to heart care foods
Of course, extending and expanding can be hugely profitable if done right. Generally when the Rule of affinity is followed, that is when the consumer reacts “Well I thought that they already made it” Consumer’s mental shelf was already set up even before the shelf at the super market displayed the product” then that stretch is likely to be the most successful.
So the next time the management says lets have a new baby, Do give in to the temptation, as long as the approach is like a marathon not a race, you have Preset the goals and path forward clearly, you keep reminding yourself that the stakes are high, and you use Brand relevance as an important filter.