<font color="#ff0000">Guest Article: </font> Anupama Wagh-Koppar: Brand extensions - Stretching your brand without breaking it

"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.

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; while expansion happens when a brand or business ventures outside its core category by extending its core values. Consider that 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 home, brand proliferation and stretching are evident in the numbers quoted in AC Nielsen data. More than 1500 new brands have been launched in the FMCG space in the last three years. And more than 1400 line extensions of existing brands have also been launched in the last three years. Significant growth in the FMCG space has been driven by new line extensions and new brands.

Why is it so tempting to stretch your brand? Here are a few reasons:

• It is extremely expensive to build brands, coupled with a high failure rate of new brand launches

• Research says that consumers are more open to the familiar. So, extending an existing brand is a better option to launching a new brand and spending huge money on familiarizing the consumer with it.

• Self construal theory states that markets where consumers are more interdependent accept extensions better. This is said to be true of Eastern cultures, which are high context cultures. So, countries such as Japan and India are more 'open' to brand extensions

• Extensions help to convey a broader brand meaning to consumers

• Research tools are available to plan and test acceptance of extensions

Extensions are an attractive option; but also a double-edged sword.

Every marketer faces moments of temptation, when you are likely to go in for a brand extension. Here are some such situations and the caution that you need to exercise in stretching your brand.

Temptation 1: You have created a high brand equity and it's payback time.

When the brand's equity is strong; you want to start using it to make money. You want return on the investment that you have made on building the brand. You are very confident about the elasticity of the brand equity and want to achieve the stretch rapidly.

Or, the brand is between the growth and maturity stage in its lifecycle; the brand- product relationship has reversed. The brand's equity has become more 'values' based -- that is when most businesses want to make the emotional stretch through a wide variety of extensions.

Caution: Just because you can, doesn't mean you should. A strong brand doesn't guarantee success; there has to be a significant value addition along with the brand fit. The extension offer value cannot be substituted by equity value.

Moreover, even with a high equity, dormant brands need to roll out extensions in a planned manner.

Therefore, stretch selectively. Ensure you have a well defined product DNA and brand DNA; and stay true to what made you famous in the first place -- the brand's core. A case in point is Dove. The brand waited for 40 years, before it started to stretch. It began with offering more soap bar options; then moved into adjacent personal wash categories; and then into deodorants and hair wash products. But it kept the moisturizing story through its stretch.

Temptation 2: Getting an elephant to dance; your brand growth is stagnant.

You have a large brand. The economy is showing growth, competition is growing; newer categories are also taking market share from your brand. Therefore, the growth curve is flat. Everyone says the fastest turnaround is possible if you launch an extension.

Caution: Don't assume an extension will solve the problem that stems from a lack of growth of the core product. The inherent weak links of the core product need to be strengthened before attempting the stretch.

Temptation 3: You feel the need to revitalize your long standing brand.

The brand has a large share in the market; in most cases, it is a market leader with consistent communication, but is losing sheen. The brand does not have a contemporary look and is in danger of fast losing share to new entrants.

Caution: Before stretching, strengthen and update your brand. And look only at extensions that fill the equity, not borrow from it. Create a halo effect that gives your brand width and strength.

Temptation 4: You want to make the brand relevant to changing consumer needs

The brand is a market leader; it sets the rules of the category. However, you can see consumer needs are changing with times; and challenger brands are hovering around with newer offerings. You strongly feel stretching is the answer.

Caution: Don't be reactive; be proactive. Ideally, you should have a new product development team, which thinks ahead. When you do come up with new offerings, the relevance of the brand's core to the new extension is critical.

Among brands that were proactive is Dettol, which stretched to Dettol liquid hand wash and Dettol Skincare. Another one is Lifebuoy, which brought out extensions such as liquid wash and Lifebuoy Gold. Compare these with Baygon, which lost relevance with consumers due to lack of proactive innovation.

Temptation 5: The new opportunities are compelling.

A growing middle class, a young country, rising income levels, changing lifestyles -- all this translates to new opportunities in products and services and rapidly growing markets.

Moreover, most organizations set ambitious growth targets on brands which are large, but haven't experimented with extensions. There is usually pressure from top management / holding companies that have been very successful at what they do.

Caution: Never expect success in one area to guarantee success in another. Ask yourself a few honest questions, especially if yours is a corporate brand. Is the stretch within your grasp? Do you have the core competency; or even if you decide to acquire it, does your brand equity lend itself to the new business? Will the corporate house be able to break the business model? A lot of times, the proposition and fit are good; but the company is culturally not geared for the business. Will you be trying something so different that it will take your focus away from the core business?

One such example is Virgin, which went on a brand ego trip when it stretched into too many offerings -- some of which did not lend themselves to its philosophy of being an irreverent fighter for value. In some cases such as 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.

Temptation 6: You feel the need to leverage your competency, both backward and forward.

For instance, you manufacture the bulk raw materials and have complete control on the backend supply chain; you know value addition will dramatically increase profitability.

Or, you have channel presence with a widely distributed consumer product; and you want to juice your distribution muscle. It is one of the most difficult parts of a business to build and you have made years of effort to do so.

Caution: Expanding your mindset and company culture will determine your success. Different categories that sit on the same shelf have different rules of engagement; you have to respect the category codes. Moreover, you have to gear your company to change from manufacture led thinking to consumer led thinking

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.

Temptation 7: Your business definition allows you to extend.

How a brand defines the business it is in determines how much and how easily it can adapt and stretch. If you have defined wisely, it is very inviting to launch everything that is within the business definition.

Caution: Ask yourself -- is the business definition an ego trip? Even when the business technically falls in your definition, does your brand satisfy a key driver in that category?

An example here would be Saffola, which is doing well in its attempt to move from 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, "I thought that they already made it" -- it means that the consumer's mental shelf was already set up even before the shelf at the supermarket displayed the product. A stretch that achieves this is likely to be the most successful.

So, the next time the management says, "Let's have a new baby," do give in to the temptation. But do ensure that the approach is like a marathon not a race; and you have preset the goals and the path forward clearly. Remind yourself continuously that the stakes are high; and use brand relevance as an important filter.

(The writer is vice-president and strategic planning director at JWT India.)