The successful brand extension has “fit” and “leverage.”
What is fit? What categories consumers will accept from a brand? A brand’s stretch-ability or boundaries.
What is leverage? Distinctive properties a brand “owns” that provide a competitive advantage to the brand extension in its new category.
Many companies do not understand what makes a brand extension succeed. In some cases, names are extended just to save money that would be needed to launch a new brand. In other companies, they want to stretch a brand to as many as categories as possible hopes can increase selling. Successful brand extensions occur when the parent brand has favorable associations and consumers perceive a fit between the parent brand and the extension product.
When they win over customers, brand extension will over big rewards, such as get more income, distribution, and better name recognition. Finding success in a new category isn’t that easy like a straightforward popularity contest. Consumers may love your brand and know it’s called, but need a bigger strategy to drive sales in the new category. Reputation is not enough to launch a successful brand extension even the parent brand is widely popular.
As one of the example, consumers accepted the concept of Duracell Flashlights but when asked about Duracell Camera they said no. Duracell didn’t have expertise in their mind. Duracell camera would be at a competitive disadvantage because the brand did not fit well with the parent brand. If the brand extension did not fit the category, it would likely perform poorly or even fail.
You wouldn’t buy a pair of jeans that didn’t fit, so don’t expect consumers to purchase a brand extension that doesn’t feel like a good fit in the new category. The fit is largely a matter of consumers permission. Once the company has figured out where customers will welcome the brand, they still need to know what leverage they have in the new categories. A brand has leverage when it “owns” one or more distinct qualities that make consumers perceive a brand extension as superior to existing competitive products. In other words, leverage gives consumers a compelling reason to choose the new product over what they are buying right now. The company has to figure out what competitive advantage does the brand have.
Both these strategic components are critical for brand extension success, but they do not exactly equal. Fit and leverage will work together, that fit as a pre-qualifier for the name to enter a new category. A company doesn’t stand a chance without it, but the company will fail if they don’t have leverage too. Leverage brings the muscle, which is the reason to buy a product from the company over existing offerings that’s necessary for long-term success. It takes both fit and leverage to make the sale.
