Line extending brands

What is important to consumers when line-extending a brand?

The first thing to do when considering to launch a brand extension is to evaluate how your current brand portfolio is satisfying the identified need? Before jumping to the decision to line-extend, maybe you can stretch an existing brand or license a brand.

When you indeed move forward with brand extension you need to evaluate the brand extension fit. There are four underlying constructs which consumer’s evaluate individually, to formulate an overall judgement as to whether or not the brand extension fits with the core brand.

Relevance:

is the extent to which the core brand attributes are relevant or important to the brand extension category. For example; (1) the core brand attributes of Starbucks are clearly relevant to the sale of coffee grinders, but not relevant to the sale of other kitchen equipment such as microwaves or fridges, (2) the core brand attributes of Coca-Cola are relevant to the sale of other soft drinks and sodas but not the sale of fruit juice such as orange juice.

Recognition:

is the extent to which consumers understand the reasoning behind why the brand is conducting the brand extension as well as the logic of the brand extension. For example; (1) the core brand attributes of McDonalds make it easy to understand / logical in the eyes of consumers for McDonald’s to extend its brand into another restaurant concept, however not easy to understand / logical the eyes of consumers for McDonalds to open a chain of grocery stores, (2) the core brand attributes of Nike make it easy to understand / logical in the eyes of consumers for Nike to extend its brand to sell golfing clothing, but not easy to understand / logical in the eyes of consumers for Nike to sell highly fashionable clothing.

Credibility:

is the extent to which the core brand has attributes which are credible and acceptable to conduct and sell the brand extension. For example; (1) the core brand attributes of Sony make it credible and acceptable for Sony to extend the Sony brand into laptops and digital cameras however they are not credible and acceptable to extend the Sony brand into sports clothing, (2) the core attributes of Budweiser make it credible and acceptable for Budweiser to extend the Budweiser into new beers however they are not credible or acceptable to extend the Budweiser brand into wine or spirits.

Transfer:

is the perceived ability of a brand to transfer their skills and experience to the brand extension. For example, (1) the skills and experience of British Airways are transferable into other areas of air transportation such as domestic flights and low cost flights, however British Airways’ skills and experience are not transferable into coach transportation, (2) the skills and experience of American Express are transferable into travel insurance and foreign exchange services, but not transferable into car rental.

The most crucial component of consumers' brand extension fit judgements is the relevance construct. However all the constructs are important and consumers must perceive all constructs to some degree to perceive a brand extension to fit.