Balancing identity and adaptation to the extension market segments

Brand extension capitalises on the brand’s ‘assets’. It hopes that there will be a transfer of these ‘assets’ between the parent category and the extension category, given the perceived subjective proximity between the two categories. It is therefore a question of capitalizing on identity: the intended result is an identity based brand.

However, the success of an extension depends on its ability to deliver value to the client. In what way are these assets relevant? What makes them superior to the competition? This presents the problem of the extension’s ability to exploit a genuine opportunity or real consumer insight in its market.

There is therefore always a balance to be struck between these two (equally legitimate) requirements. Since a name is a promise, the brand cannot make different promises with different products; but at the same time, unsuitability for the target market is the number one reason that new products fail: each market has its own ‘drivers’ and customer preference levers.

An extension category may be chosen for its contribution towards building the future brand. Nivea, for example, owns a raft of daughter brands, each positioned on extensions that have a highly specific role in building the Nivea brand over time. The hygiene and beauty market – as the name suggests – consists of hygiene and care on one side, and make-up on the other. Why would a brand such as Nivea, positioned on skincare and having successfully offered all possible skincare permutations worldwide, use Nivea Beauty to enter the world of seduction, play and appearance against such well-established giants as Maybelline, Max Factor and Bourjois?

As always, the answer has to be growth, image and profitability. After all, the make-up market is a rich seam of double-figure growth. Furthermore, it attracts new young customers. This fashion aspect lends the brand image a very modern appearance. And lastly, it is a profitable category.

However, Nivea still had to acquire legitimacy in this unexpected area. The first advertising campaign of Nivea Beauty was a failure; during extension, brands are often (naturally enough, perhaps) more preoccupied with their brand identity than with the customers in the target market. Nivea relied on bad insights. The sub-brand’s positioning was ‘All the colours of care’ – but to a young target audience in the mass retail channel, this is not a relevant promise.

At a chemist’s it would have been a different story, hence the existence of La Roche Posay and Roc cosmetics. The brand repositioned its beauty line on the market expectations and the long-term weaknesses of the competition. The new promise was, ‘The most beautiful me’.

As we can see, this promise is no longer a straightforward translation of the essence of the brand (loving care for the skin), but neither is it inconsistent with the brand’s equities. Nivea Beauty’s promise is that it preserves a woman’s natural beauty. This capitalizes on Nivea’s fundamental intangible values: respect, humanity, love, naturalness, simplicity.

The promise derives from a consumer insight as a reaction against the totalitarian line taken by many make-up, cosmetics and beauty products brands, urging women to look like top models and stars. This time around, the relaunch was a success. In terms of extension, the challenge lies in the balance between market appropriateness and faithfulness to the brand’s identity: it is created through successive adjustments.

The McCain example provides another illustration of the difficulty inherent in brand extension. McCain is a Canadian company, operating worldwide, with three branches: frozen fries (it supplies McDonald’s throughout the world), frozen pizzas, and soft drinks. In 1998, noting the rising popularity of tea-based drinks in the soft drinks market, it decided to launch an ice tea, Colorado by McCain.

The firm justified its choice of an endorsing brand architecture by the overprominence of the ‘raw’ product’s image (in light of the previous launch of McCain fries and pizzas in the relevant countries). Consumers were therefore intended to ask for the Colorado tea drink, with its intangible youthful Tex-Mex connotations, thus fitting it into the overall American brand identity.

The marketing team was not limiting itself to image. Mindful of the competitive nature of the market, it also created a highly differentiated product embodying an essential McCain identity trait: generosity. As a result, the can of tea contained 33 cl instead of the competitors’ usual 25 cl.

This decision was based on sound logic: it differentiated the extension in terms of the brand’s equities, both intangible and tangible. Sadly, this was also one of the causes of the extension’s failure. In reality, this differentiation, embodying the brand’s spirit of generosity (and thus larger portions, as befits the stereotypical American), proved to be a problem. The can, being taller than other standard cans in the category:

  • was unsatisfactory to retailers, who like to keep storage issues as simple as possible;
  • was rarely drunk in full by customers, who thought it contained too much;
  • appeared more expensive in terms of its retail price, even though the per litre price was the same.

Paradoxically, then, this differentiation generated long-term dissatisfaction – a fundamental error in the cut-throat environment of this double-figure growth market.

The most serious problem faced by this extension was probably the fact that it was up against Lipton, the world’s number one in tea products, aggressively pushing its two megabrands (Lipton Ice Tea and Liptonic), with their associated promotional expenditure, to capture this market. Not even Nestea could compete, despite a strategic alliance with the Coca-Cola Company which ensured the distribution of its drink in all Coca-Cola vending machines. In the hypermarket – and thus the home consumption market – Nestea was powerless against Lipton.

At this point we should take another look at why strategic analysis is a higher priority than marketing analysis for the extension.

Strategic Brand Management Related Practice Tests

Strategic Management Practice Tests
Brand Equity In Question What Is A Brand? Differentiating Between Brandassets, Strength And Value Tracking Brand Equity Goodwill: The Convergence Of Finance And Marketing How Brands Create Value For The Customer How Brands Create Value For The Company Corporate Reputation And The Corporate Brand Strategic Implications Of Branding What Does Branding Really Mean? Permanently Nurturing The Difference Brands Act As A Genetic Programme Respect The Brand ‘contract’ The Product And The Brand Each Brand Needs A Flagship Product Advertising Products Through The Brand Prism Brands And Other Signs Of Quality Obstacles To The Implications Of Branding Brand And Business Building Are Brands For All Companies? Building A Market Leader Without Advertising Brand Building: From Product To Values, And Vice Versa Are Leading Brands The Best Products Or The Best Value? 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Brand Diversity: The Types Of Brands Luxury, Brand And Griffe Service Brands Brand And Nature: Fresh Produce Pharmaceutical Brands The Business-to-business Brand The Internet Brand Country Brands Thinking Of Towns As Brands Universities And Business Schools Are Brands Thinking Of Celebrities As Brands The New Rules Of Brand Management The Limits Of A Certain Type Of Marketing About Brand Equity The New Brand Realities We Have Entered The B To B To C Phase Brand Or Business Model Power? Building The Brand In Reverse? The Power Of Passions Beginning With The Strong 360° Experience Beginning With The Shop The Company Must Be More Human, More Open Experimenting For More Efficiency The Enlarged Scope Of Brand Management Licensing: A Strategic Lever How Co-branding Grows The Business Brand Identity And Positioning Brand Identity: A Necessary Concept Identity And Positioning Why Brands Need Identity And Positioning The Six Facets Of Brand Identity Sources Of Identity: Brand Dna Brand Essence Launching The Brand Launching A Brand And Launching A Product Are Not The Same Defining The Brand’s Platform The Process Of Brand Positioning Determining The Flagship Product Brand Campaign Or Product Campaign? Brand Language And Territory Of Communication Choosing A Name For A Strong Brand Making Creative 360° Communications Work For The Brand Building Brand Foundations Through Opinion Leaders And Communities The Challenge Of Growth In Mature Markets Growth Through Existing Customers Line Extensions: Necessity And Limits Growth Through Innovation Disrupting Markets Through Value Innovation Managing Fragmented Markets Growth Through Cross-selling Between Brands Growth Through Internationalisation Sustaining A Brand Long Term Is There A Brand Life Cycle? Nurturing A Perceived Difference Investing In Communication No One Is Free From Price Comparisons Branding Is An Art At Retail Creating Entry Barriers Defending Against Brand Counterfeiting Brand Equity Versus Customer Equity: One Needs The Other Sustaining Proximity With Influencers Should All Brands Follow Their Customers? Reinventing The Brand: Salomon Adapting To The Market: Identity And Change Bigger Or Better Brands? From Reassurance To Stimulation Consistency Is Not Mere Repetition Brand And Products: Integration And Differentiation Specialist Brands And Generalist Brands Building The Brand Through Coherence Defining The Core Identity Of The Brand Confirming The Presence Of Brand Core Facets In Each Product Identifying The Role Of Each Product Line In The Construction Of The Brand Graphically Representing The Overall System Of The Brand Checking The Coherence Worldwide The Three Layers Of A Brand: Kernel, Codes And Promises Respecting The Brand Dna Managing Two Levels Of Branding Growth Through Brand Extensions What Is New About Brand Extensions? Brand Or Line Extensions? The Limits Of The Classical Conception Of A Brand Why Are Brand Extensions Necessary? Building The Brand Through Systematic Extensions: Nivea Extending The Brand To Internationalize It Identifying Potential Extensions The Economics Of Brand Extension What Research Tells Us About Brand Extensions Avoiding The Risk Of Dilution Balancing identity and adaptation to the extension market segments Assessing What Should Not Change: The Brand Kernel Preparing The Brand For Remote Extensions Keys To Successful Brand Extensions Is The Market Really Attractive? An Extension-based Business Model: Virgin How Execution Kills A Good Idea: Easycar Brand Architecture The Key Questions Of Brand Architecture Type And Role Of Brands The Main Types Of Brand Architecture The Flexible Umbrella Brand The Aligning Umbrella Brand (masterbrand) Choosing The Appropriate Branding Strategy New Trends In Branding Strategies Internationalising The Architecture Of The Brand Some Classic Dysfunctions What Name For New Products? Group And Corporate Brands Corporate Brands And Product Brands Multi-brand Portfolios Inherited Complex Portfolios From Single To Multiple Brands: Michelin The Benefits Of Multiple Entries Linking The Portfolio To Segmentation Global Portfolio Strategy The Case Of Industrial Brand Portfolios Linking The Brand Portfolio To The Corporate Strategy Key Rules To Manage A Multibrand Portfolio The Growing Role Of Design In Portfolio Management Does The Corporate Organization Match The Brand Portfolio? Auditing The Portfolio Strategically A Local And Global Portfolio – Nestlé Handling Name Changes And Brand Transfers Brand Transfers Are More Than A Name Change Reasons For Brand Transfers The Challenge Of Brand Transfers When One Should Not Switch Analysing Best Practices Transferring A Service Brand How Soon After An Acquisition Should Transfer Take Place? Managing Resistance To Change Factors Of Successful Brand Transfers Brand Turnaround And Rejuvenation The Decay Of Brand Equity The Factors Of Decline Distribution Factors When The Brand Becomes Generic Preventing The Brand From Ageing Rejuvenating A Brand Growing Older But Not Ageing Managing Global Brands The Latest On Globalisation Patterns Of Brand Globalisation Why Globalise? The Benefits Of A Global Image Conditions Favouring Global Brands The Excess Of Globalisation Barriers To Globalisation Coping With Local Diversity Building The Brand In Emerging Countries Naming Problems Achieving The Delicate Local–global Balance Being Perceived As Local: The New Ideal Of Global Brands? Local Brands Can Strike Back The Process Of Brand Globalisation Globalising Communications: Processes And Problems Making Local Brands Converge Financial Valuation And Accounting For Brands Accounting For Brands: The Debate What Is Financial Brand Equity? 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