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Brand extensions can strengthen equity

News, 01 July 2016

LONDON: Brand extensions are a lower-cost, lower-risk alternative to new brand development which, far from damaging the brand, can strengthen its equity, according to an industry figure.

In a Warc Best Practice paper, How to extend a brand, Giles Lury, director of strategic brand consultancy The Value Engineers, says the notion that a brand name is like a rubber band – "the more you stretch it, the weaker it becomes" – is outmoded.

Even Procter & Gamble, who for years seemed to be the last bastion of the single-product brand, now recognises the value of extensions, he points out; the FMCG giant is now focusing on fewer brands, more sub-brands and wider product portfolios.

"Brand extension allows a company to leverage the existing equity of its brands," Lury says, with Disney an early example of this, moving into theme parks from films back in 1955.

He identifies two modes for achieving this. SWEATing the brand is a short-term option that may mean applying that brand name to almost any product in any category, while SWOTing is a longer term strategy that involves investing from a position of strength as a means of entering either new and/or growing markets, and of building on the existing relationships and perceptions of consumers.

"If properly aligned, the different range can benefit from a coherent master brand positioning and, where desired, range or master brand advertising," he says.

But while the benefits are clear, creating a successful brand extension is not necessarily a simple task and marketers need to first ensure they properly understand the product benefits and emotional values associated with the current brand.

Beyond that they will need to overcome "marketing myopia" and consider the brand in a wider context. So, for example, "Disney is not in the film business but the family entertainment business", a mindset that has facilitated moves into many other sectors.

Lury summaries the checklist for any brand extension as Could, Should, Would. Where could your brand go? Where should your brand go? How would it enter that market?