Avoiding Brand Extension Failures

Do you remember Smucker’s Ketchup? How about Kleenex Diapers? The two sound bizarre, but both were once serious products on retail shelves. What about Red Bull Cola? When first introduced, industry insiders speculated that it could either be the brand rollout of the year or a major disappointment. It was the latter. 

These products are examples of risks a company takes when it decides to extend its brand into a new product or price category. The intentions are right – to raise revenues and improve brand image – but the downfalls can have seriously negative repercussions to the parent company’s brand. 

And it’s not just consumer products. Those in the B2B sector also know that making this transition involves walking a fine line. Companies that have fared well have done intensive due diligence to ensure the success of their extensions. 

Take for example, B2B business Caterpillar. For over three generations, the Caterpillar name was synonymous with heavy-duty industrial machinery. In 1994, the company made a bold move by extending its brand into footwear. Many thought the transition would be a huge mistake, but today heavy-duty Cat Footwear is available in over 150 countries, making it one of the largest non-athletic footwear brands in the world. 

For Caterpillar, the success of its brand extension didn’t have much to do with its products, but instead how consumers perceived the company. Caterpillar uncovered and articulated the definition of the Caterpillar brand perceived by its customers, and it used this information to create new products that fit within this viewpoint. In fact, the company’s website features a bold statement communicating how its footwear products fit within the overall Caterpillar brand: 

“At Caterpillar, we build the machines that help our customers build a better world. The boots and shoes we build are made with the same commitment.”

So where did Red Bull go wrong? Red Bull built its brand on providing a caffeinated beverage that would carry its target market – energetic young adults – through the day and night. Young adults drink Red Bull not because they like the taste – they like the extra caffeine boost and energy it gives them. But when Red Bull developed its Cola product, it missed this key point and just tried to create another soft drink. It failed to really recognize what its brand means to its target and it tried to create a product that didn’t jive with its identity. Another energy product would have likely been more succesful for the brand. 

Extending the brand should never be trial and error. The idea, the research, the customers’ perception and the execution tactics should all be in alignment. If not, we could end up with another Cheetos-Flavored Lip Balm. Ick!

You’ve surely seen your share of brand extensions gone bad. Share below!