Brand Stretch

What is it?

Brand stretch (also known as brand extension) is a proven way for brands to grow by extending into new product or service areas. It is a major potential growth avenue for any companies with strong brands.

The potential for brand stretch depends on the brand positioning in customers minds – what other products/services does it have customers’ “permission” to offer them? The new product or service has to fit the core brand, or the resulting dissonance will undermine the core brand. Ideally, the brand can be stretched into areas that not only are profitable, but also enhance the brand’s equity. For example, the extension of Vaseline into skincare products has rejuvenated the core brand.

If the company lacks important competences to capture the adjacent market, an alliance or licencing agreement can be arranged with companies with these competences. The key requirement is for the brand owner to retain enough control to protect the core brand.

It is possible for brand stretch to be the fundamental idea of a company. Virgin are the poster child for this “have brand, will travel” strategy, leveraging their irreverent, challenger brand across music, airlines, trains, telecoms and even banking.

When is it useful?

If you have a brand with strong franchise, you should definitely evaluate brand stretch as a possible growth avenue when you are creating strategic alternatives.

An Example?

Disney brand stretchDisney is the poster-child for brand stretch. From founding in the 1920s through to 1955, they were a pure movie company. In 1955, the first Disneyland opened in California. After this, the company has stretched and stetched again. Today you can almost live a “Disney Life”.

Its acquisitions of the Marvel and Star Wars franchises provide new fuel for this formidable brand stretch machine.

Many other brands have followed this path, through few as successfully as Disney. Dunhill has stretched from cigars to a luxury male clothing brands. Caterpillar stretchedits rugged brand to shoes. Dettol stretched from disinfectant to a full range household and personal hygiene brand. Virgin have stretched to everything.

There are examples of brands that stretched unsuccessfully and did damage to the core brand. Xerox never stretched successfully from copiers to computers. Levi suits were probably not the company’s finest moment. And a rare mis-step from a company that is superb at stretching its brand – would you wear Harley-Davidson perfume?

How do you do the analysis?

It helps to think of brand stretch as a staircase. Customers initially may only give permission for you to stretch your brand to the first step. After they get comfortable with the extended brand, you can extend the brand to a second step. the problems come when you try to jump too many steps, creating a disconnect in the customers mind.

  1. Market research can identify the “natural” extension that fits with the brand today. Given what the brand stands for, what product would also fit with this brand essence? One obvious place to start is complementary products/accessories.
  2. Likely candidates can be analysed to determine the most attractive profit pools to target.
  3. Finally, the skills and resources to capture the opportunity can be assessed and based on the gaps the company can decide the best entry route:
  • Fully organic, contracting out some areas of the value chain
  • Hybrid-JV
  • Licencing, just providing the name, leaving the rest of the value chain to the licencee.

I want to know more

Article from IMD Professor Dominique Turpin

 

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