"Brand extension should be an important part of any brand's strategy," says Martyn Tipping, president of New York-based TippingSprung. "It seems more and more brands are doing it. [But] in some cases it's ill-conceived."
In a survey of 785 marketing executives on last year's top brand extensions, those who closely held to what their brands initially stood for tended to receive the highest marks, Tipping says. For instance, PetSmart's Pet Hotel was named the best overall brand extension, with 34.3% of the vote. A Disney licensed line of wedding gowns came in second, favored by 29% of the respondents. In both cases, the extension fit well within the brand's areas of expertise. For Disney, wedding gowns "emerge from the princess fantasy that begins when women are children," Tipping says.
But some extensions just didn't fit the brand's mission, he says. Disney's line of Party Fizz -a non-alcoholic sparkling juice--didn't fare well with respondents. And the Humane Society's Dog Lovers Wine Club was voted the second-worst brand extension by 28.4% of the respondents. (Precious Moments' urns and caskets was voted the worst by 33.9% of the respondents. "You really have to love a brand to want to be buried in it," Tipping says.")
"Sometimes the opportunity for easy revenue is hard to turn down," Tipping says of some of the ill-considered line extensions. "But you have to ask what it does to the overall association for the brand."
Attaching a celebrity's name to a brand extension could be an easy way to introduce it, but sometimes that can be too much of a stretch. A Danny DeVito-licensed Limoncello--the drink the actor allegedly had too much of before making a memorable appearance on "The View"--was considered a bad idea by nearly 70% of the respondents, and a Martha Stewart line of vintage products garnered a "thumbs up" from only half the respondents. Newman's Own, however, remained popular with respondents, with more than three-quarters of them saying they thought an extension into wines was a good idea.
Newman's Own is a prime example of a celebrity endorsement that's been well cared for, Tipping says. From its charitable mission to its well-considered list of products, the "incredibly careful stewardship" of the brand has enabled Newman's Own to be accepted on products as wide-ranging as dog food, microwave popcorn and wine, he says. "It could well be the only brand able to do that."
Several trends emerged from the survey results. One area of growth showed that non-profits are moving into licensed products at an increased rate. For these companies, where a new line of easy revenue can be a draw, Tipping warns against moving outside of the organization's stated mission. The ASPCA's line of pet travel and safety products was named the best extension because the products fit within the ASPCA's image as a protector of pets, Tipping says. The Humane Society's Wine Lover's Club, however, was less focused, he notes.
Another growing area is the direct-to-retail channel. The Food Network received positive marks in the retail category (nabbing 42% of the vote) for its line of kitchenware products licensed exclusively through Kohl's. For non-retail brands, working with a retailer can provide easy distribution of a product line, while the retail can create a premium private label to entice customers and increase revenue, Tipping says. "As you launch a new product, one of the biggest challenges is distribution. With a sizable retail partner, you already have distribution built in," he says. "What those licensed brands are used for [by the retailer] is to create a premium private label."
Pets continue to be a growth area for product extensions, particularly when it comes to services. PetSmart's PetHotel extension is the second time in recent years that a pet line has topped the survey. In 2005, Iams-licensed Pet Insurance was considered the best overall brand extension. As pet extensions move beyond people-focused companies introducing pet lines into more service-oriented categories, Tipping expects the segment to only grow. "What's next in the category? I honestly don't know," he says. "It's a huge market, and the range of options is [vast]. I think we'll see a proliferation of more services."
Finally, Americans' concern with healthy eating is likely to continue, which opens up areas for brand extensions. In the survey's food category, Curves was considered the best extension for its line of cereals, getting 34.3% of the vote. "The fact that a food category was won by a fitness brand--that gets me wondering if there are other brands that could be in the food space," Tipping says, suggesting that other fitness companies may also try to move in.
The popularity of brands moving into areas they're not necessarily known for--like Curves and cereal and a home furniture collection by the Smithsonian--suggests it may be a good idea for marketers to look beyond their areas of expertise when looking at brand extensions. "If you're in products, see what opportunities lie in services. If you're in services, look at what opportunities lie in products," he says. But remember to stay true to what the brand stands for. "You may realize short-term revenue, but you could do long-term damage to your brand."