A brand extension is when a business or organisation that already has a well developed product or service and leverages their well-known brand name to launch a product or service in a different business category or industry sector. By using this strategy, the brand can increase its equity.
Let’s take a look at a global brand who has used brand extensions really well, but where, in one instance, it went terribly.
That brand is Colgate.
Successful Brand Extensions
Colgate has been around for over 200 years, and quickly became a household name in the toothpaste market. Colgate were the first company to put toothpaste in tubes in 1873. Up until then, it would be contained in tins and glass jars. So you can thank Colgate for being the innovators of the modern day toothpaste tube.
We all know that to brush your teeth you need more than just toothpaste, you also need a toothbrush. So, an obvious move for Colgate was to extend their brand and start manufacturing their own branded toothbrushes to complement their toothpaste. This was a phenomenally successful brand extension and massively increased the brand's equity. For consumers who already had huge trust in their toothpaste, buying a Colgate branded toothbrush was a no-brainer.
On the back of that success they then also extended their brand into other areas such as mouthwash and dental floss.
In 2017, Colgate had the third largest slice of a 28-billion-dollar oral hygiene market at the time thanks to these expansions, among others.
When Brand Extensions Go Bad
But this does not mean that successful global brands like Colgate can't drop the ball when it comes to brand extensions. Far from it. In fact, Colgate has had one of the biggest brand extensions fails in history.
Back in 1982, Colgate thought it would be a FANTASTIC idea to enter the food market with a range of frozen ready meals.
Here is an example of one, the Colgate Beef Lasagne...ewwww!
Now, I don't know about you, but whenever I see the Colgate logo my first thoughts are toothpaste and minty fresh.
And that really is not how I like my lasagne to taste!
How about you?
Well, I am going to guess that like me, and pretty much everyone else on the planet, they thought that Colgate ready meals was a stupid idea and it failed.......hard!
What Went Wrong?
Why did Colgate think this was going to work?
Well, the first reason is that they most likely thought that their brand name was so well known, that they could not possibly fail. That they could enter any market and their brand name would be enough to make it a success.
Never. Assume. Anything.
The perception of Colgate from their customers was too heavily tied to oral hygiene, that the thought of eating a ready meal made by Colgate was simply not appetising and it felt...strange.
Minty beef pasta is not at the top of my food wants list, and I am confident it isn't at the top of anyone else's.
If Colgate had done even the most basic amount of market research then I am confident that this ready meal line would not have seen the light of day.
When brand extensions go well, they can be an immense boost to a brand, but when they fail, it can crush a brand.
Colgate were fortunate in that they were able to weather the failed frozen foods experiment due to their size, but a smaller brand would most likely not have fared as well.
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Do Your Research
If you have a sudden brainwave about a possible brand extension idea for your brand, PLEASE do an appropriate amount of market research before launch. You could save yourself from ending up in the Museum of Failure.
Yes, that is a thing, and you should go check it out. In there you will see many more examples of brands who, let me just say, didn't really think things through...
Brand extensions need to be carefully thought out, strategised and market tested before full implementation. As we have seen from the above, even the biggest brands can mess things up.
It is important that you use your existing customer base to get their feedback on any potential new brand offering. Especially if it is something that is outside of your sector.
If you have an idea to extend your brand products or services and would like some help, I have a Brand Power Hour service where I can give you brand strategy advice and guidance to make sure that you don't have a lasagne incident.