Tuesday, April 09, 2013

New Thoughts about Brand Extensions

For years, scholars and consultants have argued that companies should stick to brand extensions that fit closely with the core brand image and identity.   The logic goes as follows:  It's ok for Coke to make Diet Coke, but it does not make sense for the firm to offer Coke-branded laundry detergent. 

Researchers Tom Meyvis, Kelly Goldsmith and Ravi Dhar noticed something interesting though.  A few firms did extend their brands successfully in a way that seemed to fit much less closely with the core brand's image and positioning.   If these firms had succeeded, then perhaps the notion of fit needed more clarification.  

The scholars conducted an experiment, and in that study, they found that visual cues make a difference with consumers.  Seeing the physical product, as opposed to just hearing about it, can cause customers to genuinely consider a brand extension that appears to be low fit.  According to Kelly Goldsmith, “When you give people pictures, preferences shift because [people] are focused on quality—they are more interested in quality than fit.  Whereas when you show the brand concept without pictures … the reaction is more focused on fit than quality. Allowing product comparisons leads to the same results.”

Goldsmith explains the practical implications of the study: “If you get your brand-extension concept out of the lab and into the store, all of those [benefits from visual cues and brand comparison] are taken care of.  If you are a brand like Nike or Häagen-Dazs, or one of these very large national brands associated with quality, and you want to make money by extending that very successful brand even further—to new [but] lower-fitting categories—what our research shows is that you really need to show people what that product looks like and show it to them in the context of other brands in that category."

I find the research very interesting.  I still believe firms need to be very attentive to fit when it comes to brand extensions.  However, the notion of offering visual cues, sampling, and physical displays does seem to make sense.  Those tactics certainly do help a consumer understand and appreciate a new product offering that may not seem to fit with a brand's prior identity. 

No comments: