Let us remember that growth should be built:

l First, by increasing the volume of purchase per capita of present customers of the present product (see
Chapter 9). l Then by new product development and line extension to increase the brand’s relevance
and address the needs of more specific targets or situations. Line extensions are, in fact, proliferating in
modern supermarkets. l By the globalisation of business in countries offering high growth opportunities
(see Chapter 17). l By innovating to modify the competitive situation, create new competitive
advantages or open new markets, thus benefiting from the pioneer advantage. At this time the question
of naming the innovation becomes acute. Should one extend the brand portfolio by adding a new brand
(as when the Coca-Cola Company added Tab to its portfolio) or call it instead by the name of an already
existing brand (Diet Coke, for instance)?

The brand extension perspective introduces two radical modifications. First, it maintains that a brand is
a single and long-lasting promise, but this promise can or should be expressed and embodied in
different products, and eventually in different categories. ‘Palmolive’ represents softness, and from this
perspective it makes sense to have Palmolive hand soap, dishwashing liquid, shaving cream, shampoo
and so on. Second, it asks us eventually to redefine the historical brand benefit by nesting it in a higher
order value. Brand extension exemplifies the move from tangible to intangible values, from a single
product-based promise to a larger brand benefit, thus making the brand able to cover a wider range of
products. Is Gillette simply the best shaving product, or ‘The best a man can get’? as it says in its
advertising baseline? This latter brand definition easily backs up the Gillette Sensor, or Mach 3, aimed at
continually increasing the quality of a man’s shave. It allows also the brand to grow by leveraging its
reputation and trust to introduce a line of male toiletries, a profitable, growing market. In addition,
unlike mere line extensions, brand extensions are associated with diversification, so there is a sizeable
impact on the company as a whole. As a rule, when expensive brands stretch downward, their existing
clients are frustrated. They feel less exclusive, therefore their attitude to the extension is negative

Brand or line extensions?

An extension of the line to enrich the basic promise through diversity (like providing new tastes, new
flavours for a jam brand or a crush brand such as Minute Maid). l A finer segmentation of a need (like
the many variants of each shampoo brand according to the type of hair, age of customer, or kind of
scalp problem). l Providing complementary products. As mentioned in the discussion on line brand
architecture (Chapter 13), a brand might provide all the products involved in solving a specific consumer
problem. A brand fighting hair loss would not limit itself to its first product, a shampoo for instance, but
also provide a gel, a hair dye and so on.

What is noticeable is that through these line extensions, the brand aims at intensive growth. It
deepens its problem-solving ability more or less to the same customers, for the same need and
consumption situation. This is not viewed as a diversification (which involves different clients and
different products).

For Aaker and Keller (1990), brand extension refers to the use of the name of a brand on a different
product category. This was the case when Bic went worldwide from ballpoint pens to disposable
lighters, disposable razors, and even stockings and hosiery in central Europe.

Experimental literature shows that giving the product a different name prevents dilution of the parent
brand image, especially in the case of downward extensions (where the product goes from a premium
price to a mainstream price) (Kirmani, Sood and Bridges, 1999). One should therefore distinguish ‘direct
extensions’ (without a specific name) and ‘indirect extensions’ (with a specific brand name in addition to
the parent brand) (Farquhar et al, 1992).

The limits of the classical conception of a brand

1 brand = 1 product = 1 promise

The brand is no longer the name of a product, but the product itself carries the brand in a sense that it
reveals the exterior signs of an interior imprint. The brand has transformed the product, endowing it
with both objective and subjective features.

Brand extension relies on the ability to create a competitive advantage by leveraging the reputation
attached to the brand name in a growth category, different from the brand’s present categories. This
bold move, which often surprises the competition in the category of extension, makes five crucial
assumptions:

l The brand has strong equities (strong assets): it is strongly associated with a number of customer
benefits (tangible or intangible) and it inspires a high level of trust. l These assets are ‘transferable’ to
the new and attractive destination category, that of the extension. Its buyers will still believe and
acknowledge that the new products (that is, the extension) are endowed with the benefits associated
with the brand. l These benefits and brand values are very relevant to that new category (extension). In
fact, they should segment it in a previously unforeseen way, and leave the competition unable to react
rapidly. l The products and services (extension) named by the parent brand will deliver a real perceived
advantage over the competition, both consumers and the trade. l The brand and company behind it will
be able to sustain competition in this new category over the long run. This refers to the question of
resources needed to acquire leadership in the market in order to remain in it profitably.

Building the brand through systematic extensions: Nivea

The lifespan and growth of this world-leading skincare brand can be explained through two key factors:
the modernisation of the prototype product, Nivea cream, in its round blue box, and systematic brand
extension via daughter brands (which Nivea calls ‘sub-brands’). Each advertisement for a Nivea
daughter-brand now places the emphasis on innovation. But even the prototype has needed an update:
this has been the role of Nivea Soft, with its white box, as modern generations look for a cream which is
less greasy and penetrates the skin more quickly. Nivea Soft is bringing the brand’s foundation up to
date.

care products first, followed by hygiene, then hair products and lastly make-up.

Furthermore, the aim of each extension is to provide not only a deepening of the core competence
(loving care for the skin) and greater penetration of the category, but also specific components of the
overall image. For example, Nivea Sun is where the family and protection aspect is communicated, and
so advertising for Nivea Sun shows mothers and children, and fathers and children, together

Extending the brand to internationalise it

Identifying potential extensions

A simple listing of the image characteristics does not give a full picture of the brand. Defining the prism
of identity requires qualitative investigation. Armed with this information, the second step of the
investigation procedure involves the extrapolation of the brand’s distinctive features in order to assess
their consequences.

Davidson (1987) distinguishes a number of concentric zones around an inner core: the outer core, the
extension zones, and finally the no-go areas (see Figure 12.2). Close-ended questions in surveys provide
information on the immediate vicinity of the brand (the outer core). In-depth qualitative phrases explore
the remote extension zones
The qualitative stage also permits an understanding of the functions of the brand for its users. Is the
brand a sign for itself or for others? Where would consumers like to see the brand signed? This
information is essential for branding.

The economics of brand extension

By capitalising on the brand awareness, the esteem and the qualities attached to an existing brand, the
practice of brand extension can help to increase the chances of success of a new product and lower its
launch costs. These two alleged consequences have been verified. How does extension increase chances
of survival? First, distributors themselves will allocate more space to an already well-known brand than
to a newcomer. But brand extension also has an impact on the consumer

By capitalising on the brand awareness, the esteem and the qualities attached to an existing brand, the
practice of brand extension can help to increase the chances of success of a new product and lower its
launch costs. These two alleged consequences have been verified. As shown in Figure 12.3, only 30 per
cent of new brands survive longer than four years, whereas the rate is over 50 per cent for brand
extensions. How does extension increase chances of survival? First, distributors themselves will allocate
more space to an already well-known brand than to a newcomer. But brand extension also has an
impact on the consumer

The second economic argument put forward to justify brand extension has to do with cost: launching a
new brand would cost more than launching a new product under a well-known brand. Indeed, for
consumer goods one estimate is that, as a result of lower expenses in ‘push’ and in ‘pull’, in promotion
(to consumers and above all to distributors) as well as in media advertising, the savings due to the
choice of brand extension amount to 21 per cent. Since the trial ratio is higher, the

strategy of brand extension proves economical as far as cost per trial is concerned (see Table 12.2).

Why do strong brands hesitate to penetrate young markets? Of course, they would benefit from the fact
that there is no competition yet. But creating a market entails more risks for the creator (Schnaars,
1995) and a negative effect on the brand and its capital. In a young, badly defined market, a brand must
be flexible in order to find the best positioning. Brand extension does not permit such flexibility. The
attributes of the brand must be respected. Furthermore, launching a brand which is specific to a new
market enables the brand to

become the reference on that market, by benefiting from what is called the pioneer advantage
(Carpenter and Nakamoto, 1990). Finally, many new markets are created in reaction to old ones. For
example, the snow surfing market is a counterculture against alpine skiing and its competition-oriented
values; its proponents have their own brands and have refused the surfboards of Rossignol, the
established brand.

Finally, the analysis of success rates of the two launch strategies, depending on the degree of maturity
of the markets, reveals a slight advantage for the new brand strategy in the market creation phase. But
with time, the brand extension strategy seems more successful (see Table 12.3).

What research tells us about brand extensions

Early experimental studies on brand extension
They are sensitive to extensions based on relationships of complementarity or substitutability between
products, which this creates a sense of ‘fit’:

l Uncle Ben’s sauce is complementary to Uncle Ben’s rice; l Nesquik cereals are substitutes for Nesquik
milk chocolate.

In short, the authors hinted at two processes

by which consumers build an opinion on an extension:

l If the brand is mainly functional, the extension is evaluated from the bottom up, according to inherent
links between the category of the original product and that of the extended product. The consumers’
evaluations rest on the degree of perceived similarity between product categories. l If the brand is
symbolic, the concept of the brand creates a link between products which otherwise would not have
one. In this case, the judgements on extension are independent of the physical characteristics of the
products. Each extension is evaluated according to its belonging to the brand concept and to its
coherence with the value syst

Attitudes about brand extension

. The perceived fit is the main variable to emerge from this pioneering research. It measures the
psychological – and thus subjective – gap between the extension and the brand’s typical product (its
prototype). Traditionally, the fit is measured in three dimensions: the degree of perceived synergy
between the extension and the prototype, the degree of perceived substitutability, and the perceived
transferability of know-how.