Disadvantage of Brand Extensions

On the downside, line extensions may cause the brand name not to be as strongly identified with any product. This is called “line-extension trap”. By linking its brand to mainstream food products such as mashed potatoes, powdered milk, soups, and beverages, Cadbury ran the risk of losing its more specific meaning as a chocolates and candy band. Brand dilution occurs when consumers no longer associate a brand with a specific product or highly similar products and start thinking less of the brand.

If a firm launches extensions consumers deem inappropriate, they may question the integrity and competence of the brand. Different varieties of line extensions may confuse and perhaps even frustrate consumers. Which version of the product is the “right one” for them? As a result, they may reject new extensions for “tried and true” favorites or all purpose versions. Retailers have to reject many new products and brands because they do not have the shelf or display space for them.

The worst possible scenario with an extension is that not only does it fail, but it harms the parent brand image in the process. Fortunately, such events are rare. Marketing failures, where insufficient consumers were attracted to a brand are typically much less damaging than product failures, where the brand fundamentally fails to live up to its promise. Even then, product failures dilute brand equity only when the extension is seen as very similar to the parent brand. The Audi 5000 car suffered from a tidal wave of negative publicity and word of mouth in the mid-1980s when it was alleged to have a “sudden acceleration” problem. The adverse publicity also spilled over to the 4000 model. But the Quattro was relatively more insulated from negative repercussions, because it was distanced from the 5000 by its more distinct branding and advertising.

Even if sales of a brand extension are high and meet targets, it is possible that this revenue may have resulted from consumers switching to the extension from existing product offerings of the parent brand in effect cannibalizing the parent brand. Intra-brand shifts in sales may not necessarily be so undesirable, as they can be thought of as a form of preemptive cannibalization. In other words, consumers might have switched to a competing brand instead of the line extension if it had not been introduced into the category. Tide laundry detergent maintains the same market share now compared as it did 50 years ago because of the sales contributions of the various line extension (scented an unscented powder, tablet, liquid, and other forms).

One easily overlooked disadvantage to brand extensions is that by introducing a new product as a brand extension, the firm forgoes the chance to create a new brand with its own unique image and equity. Consider advantages to Disney of having introduced more adult-oriented Touchstone films; to Levi’s of having introduced casual Dockers pants; and to Black and Decker of having introduced high-end Dewalt power tools.

Success Characteristics: A potential new product extension for a brand must be judged by how effectively it leverages existing brand equity from the parent brand to the new product as well as how effectively the extension in turn contributes to the equity of the parent brand. Crest White Strips leveraged the strong reputation of crest and dental care to provide reassurance in the teeth-whitening arena, while also reinforcing its dental authority image. The most important consideration with extensions is that there is “fit” in the mind of the consumer. Consumers may see a basis of fit for an extension in many ways – common physical attributes, usage situations, user types.

One major mistake in evaluating extension opportunities is falling to take all of consumers’ brand knowledge structures into account. Often marketers mistakenly focus on one or perhaps a few brand associations as a potential basis of fit and ignore other, possibly more important associations in the process.

The French company Societe Bic, by emphasizing inexpensive, disposable products, was able to create markets for non-refillable ball-points pens in the late 1950s; disposable lighters in the early 1970s; and disposable razors in the early 1980s. It unsuccessfully tried the same strategy in marketing Bic perfumes in the United States and Europe in 1989. The perfumes, two for women (“Nuit” and “Jour”) and two for men (“Bic for Men”) were packaged in quarter-ounce glass spray bottles that looked like fat cigarette lighters and sold for $5 each. The products were displayed on racks at checkout counters throughout Bic’s extensive distribution channels. At the time, a Bic spokeswoman described the new products as extensions of the Bic heritage “high quality at affordable prices, convenient to purchase and convenient to use”.

The brand extension was launched with a $20 million advertising and promotion campaign containing images of stylish people enjoying themselves with the perfume and using the tagline “Paris in Your Pocket”. Nevertheless, Bic was unable to overcome its lack of cachet and negative image associates and the extension was a failure.