In this presentation on brand-building, I focus on brand extensions, and discuss types of brand extensions, what to ensure when extending a brand as well as corporate brand extensions that are rarely discussed. I explain brand extensions and why companies resort to them, and I also outline the dangers of over-extension. More importantly, I urge companies to put their brand and customers at the centre of all brand extensions.

1. A presentation on brand-building by Geeta Sundaram
Brand Extensions

2. Companies are known to extend brands, in order to leverage their equity and strength in
new product lines and businesses.
Unfortunately, very often they over-extend their brands in an attempt to capitalize on the
brand’s strengths, and end up eroding the brand’s value over time.
Many companies also extend their corporate brand into new areas of business as they
diversify and grow. However, this is not seen as a brand extension.
In the following slides, we will examine what brand extensions are, how product brand
extensions differ from corporate brand extensions, what to keep in mind when extending
product and corporate brands and what are the pitfalls of over-extending brands.

3. Brand extensions are ways in which companies extend their brand beyond its
existing product or business line into a new product/business category, in order
to leverage their brand’s equity.
They resort to brand extensions usually in order to gain entry into a new product/
category, with a headstart, since a well-established brand would give them an
advantage, rather than starting with a new brand.
There is obviously also a cost advantage to brand extensions, since launching a
completely new brand would require greater time, budgets and investments.
Brand extensions are different from line extensions, where a product line is
expanded through the launch of new variants.
What are brand extensions?

4. There are four types of brand extensions:
- Product brand extension, where a product brand is extended
beyond its category/line of business
- Corporate brand extension, where a company diversifying into a
new area of business extends its corporate brand
- Corporate brand being extended into product brands, which is
what we know as sub-branding
- Product brand being extended into a corporate brand, where a
well-known product brand is used to start a new business or
company, often quite unrelated to the original brand
Types of brand extensions

5. - Product brand extensions are very common in consumer packaged goods, and
are driven by product category, product attributes and brand values
- They make sense when the new product category is connected with the existing
category and where the brand’s attributes and values can play a significant role in
the new product line
- For example, Maggi, a soup brand has been extended into instant noodles,
ketchup and sauces, with possibilities for future extension
- Dove soap has been extended into shampoo and body wash
- They make sense in cases where the transference of brand values and attributes
is immediate and where there are cost gains to be had.
Product brand extensions

6. - That the new product category is closely linked to the existing one, for
the brand values and attributes to be immediately transferred in
consumers’ minds
- That the extended brand will be able to survive and take on competition
in a new category
- That the core of the consumer base for the extended brand will come
from existing consumers
- That the existing brand does not suffer as a result of the extension, but
in fact, gains from it
- Only then do we have a successful brand franchise that gains in value
across categories
What to ensure in product brand extensions

7. - This is a strange one, since companies don’t see themselves as brands,
to start with
- However, if you look at the way companies diversify in order to grow, it
is hard to dispute that what they are in effect doing is extending their
corporate brand to new businesses
- That said, there are subtle differences between a product brand being
extended and a corporate brand extension
- If companies begin to see their diversification, not just as a growth
strategy or an additional revenue stream, but as an extension of their
corporate brand, how might it change things for the better?
Corporate brand extensions

8. - That the corporate brand values are immediately transferrable to
the new company/business
- That the core competencies are maintained and the track record
speaks for itself
- That the same corporate culture travels across group companies
- That the extended corporate brand adds value to the overall brand,
even as it addresses a different set of customers.
What to ensure in corporate brand extensions

9. - A product brand extension is driven by product attributes, brand attributes and values
- It is usually between closely connected product categories, based on functionality
- The product is still at the centre of the brand extension
- Corporate brand extensions are driven by corporate brand values, core competencies and
people
- The new lines of business might not be related or connected with the original one, and the
extension works on the basis of values and competencies
- The product or business is a step removed from the corporate brand extension, with the
company at the centre of the extension.
Difference between product and corporate brand extension

10. - This type of brand extension is quite common, when a company extends its
corporate brand to a new product line
- Many of us know it as sub-branding of a kind, where the corporate brand works
as a prefix to the product brand
- In this case, the values of the corporate brand get transferred and associated
with the product brand
- This practice is to be found in almost all industries, from FMCG to automotive,
and other consumer products. Seagram extending its corporate brand to a range
of whiskies first introduced in India is an example
- This is clearly done when the company wishes to strongly convey the bond with
the particular product brand. In such cases, we’ll find that the product attributes
are secondary to the corporate brand’s values
Corporate brand extended to new product brand

11. - This has to be the most unusual of the four types of brand extensions and I
can’t think of any international examples for this
- In India, however, we have a very successful cigarette brand from ITC called
Wills which was then extended into fashion as Wills Lifestyle
- We also had India’s largest selling beer brand from United Breweries,
Kingfisher, extend its brand to an airline, owned by the same promoter
- Can't say if this kind of brand extension led to the downfall of Kingfisher
Airlines. I must say that in the case of Wills Lifestyle, the company’s decision
might have been prompted by their desire to diversify away from cigarettes,
given how hard it is for the industry to operate in the country
- The Wills Lifestyle brand is not being built in any concerted manner, so one
wonders how serious ITC is about this venture
Product brand extended to new company/business

12. While brand extensions are a good way for companies to extend the equity of their
brands in new directions and grow their businesses, there are pitfalls in over-
extending brands that one must avoid
- The first is extending a brand to a distant and unconnected product line, which
harms both the existing brand as well as the extended avatar, eg. Dove launching a
moisturizing lotion, when it is at heart a cleansing product
- The second is in extending the brand to too many product categories, where the
original brand begins to lose its value and all that it stands for, eg. Titan extending
its brand beyond watches to eye-care and Fastrack, originally a sub-brand of Titan,
now also selling accessories,
Dangers of over-extension

13. - The dangers of over-extending a corporate brand are obviously greater than a
product brand, and undoing the damage is doubly hard, eg, Sara Lee and its
checkered history
- While extending a corporate brand to a product brand gives it strength
through corporate backing at the start, withdrawing it can be tricky
- The reasons for all the above have mainly to do with customers’ perceptions
and beliefs, since brands are relationships that they have with companies and
their products
Dangers of over-extension (contd)

14. - Brand extensions need to be studied more and the last word on them
hasn’t been spoken yet
- Brand extensions that are the result of frequent mergers and
acquisitions are the worst affected
- To extend or not to extend? Ask yourself these questions:
o Do the benefits of extension outweigh the costs?
o How will the original brand be impacted?
o What does the customer – the final arbiter on brands – think of the
idea?
Corporate diversification necessarily means corporate brand extension,
and more companies need to acknowledge it as such
In conclusion

15. For more on brand-building, check out my other presentations on Slideshare and
visit the Business and Brands page on my blog, www.peripateticperch.com