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Leveraging the power of a strong brand by extension

by Nigel Hollis | April 16, 2012

Brand extension is the way to get the best financial return out of a strong brand. By extending a known and much loved brand into new countries and categories, the brand owner reduces risk and maximizes the return on their investment. But extension is not without risks of its own. These days I can’t help wondering if many brands are extended too far, too fast.

Extension into new product categories poses an interesting challenge for a strong brand. There needs to be a good fit between what the brand stands for and what people look for from the new product category. But the fit between the brand and the category does not need to be based on a direct application of the brand’s functional credentials. The fit can be more conceptual. Sometimes this makes for giant leaps into categories not remotely connected to the brand’s origins.

A recent example that comes to mind is the Dirty Jobs heavy duty cleaning products spawned by the “Dirty Jobs" show on the Discovery Channel cable network. In each program, the show’s host, Mike Rowe, explores a dirty job, and attempts to complete the same task as the people whose job it really is. The fit between the well-known TV show and a line of cleaning products makes good sense. After all, Mike doesn’t just get dirty he has to clean up somehow.

A similar “leap of faith” extension would be Wolverine World Wide’s Cat Footwear, the global footwear licensee of Caterpillar® Inc. There is no real functional connection between giant, yellow, earthmoving equipment and footwear, but the connection is there. From durability to traction the benefits of machines and boots have a lot in common. The conceptual linkage has allowed a small collection of work boots to grow into a wide range of casual footwear selling in more than 150 countries worldwide.

And, perhaps not surprisingly, I note that Mike Rowe has also got in on the Cat act. On the Cat Web site is a page dedicated to Mike Rowe Works, which announces that if Mike ever writes a book on lessons learned from people with dirty jobs, chapter one will be “Don’t skimp on your boots.”  

The fit between these brands seems to make good sense to me, but all too often I can’t help wondering if some brands do not extend too far, too fast. Take for example, Ugg Boots. For a while these fur lined boots from Australia seemed to be the “must have” women’s accessory, but now you can buy pretty much anything from sandals to men’s shoes. Many of the new items seem light years removed from the brand’s origins as a boot made with sheepskin. Nor do they have any apparent connection with surfing – the boots were often worn by surfers to keep their feet warm – and yet it was this sport that helped propel the brand to international fame.

Maybe the connection to celebrities that boosted the brand’s visibility in the early 2000s will be enough to sustain the brand’s standing, but I doubt it. While I may be proved wrong (since fashion is not my forte), Ugg seems destined to go from iconic to diluted in the space of a decade.

So what are your thoughts on brand extension? Do you have any great examples to share? And which brands do you believe have been extended too far? Please share your thoughts.

4 comments

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  1. Violetta Ihalainen, April 18, 2012

    Dear Nigel, I strongly agree that brand extension is risky activities in brand management. Recession 2008 proved that health of many luxury and fashion brands were damaged by multiple and wrong extensions. (my knowledge and expertise in this domain). Thus this concept has to be studied, understood and executed correctly.

    I’d like to add a few points to the examples of Catepillar and Ugg.  The former, like other industrial brands, i.e., Yamaha (motorcycles and musical instruments) and Mitsubishi (cars, shipyards or banks) extend or diversify beyond its initial product into different categories. This is usually happened when brands enter markets and use its strong name to put on new products instead of creating a new brand.

    Example of Ugg is when brands extend out of its core product (innovation/R&D not required). Why Ugg is not succeeded doing that, I would say the brand uses stretching within footwear into various types of product, has deviated from its core product (unattractive boots but warm, made out of ship skin, can be used in different weather/environment and comfortable). Succeeding quickly in one product category in certain countries can’t guarantee strong brand name awareness and image worldwide. Thus it’s risky to assume that other products going to be successful. In addition, footwear is a mature market, highly competitive and has high barriers of entry. Another thing, the brand perhaps hasn’t got clear vision and idea in long term too. Although, shoes stand for footwear same as Ugg boots, modern shoes have little to do with the original Ugg boots concept. If new products can’t borrow anything from the brand, awareness, loyalty etc is affected. The brand also promotes Italian craftsmanship for their shoes which is licensing on one hand and negative impact on customers’ perceptions of country-of-origin on the other hand. If the brand highlights heritage and ‘made in Australia’, making shoes in Italy in this case damages brand identity.

    I think Armani and Ralph Lauren are brilliant examples extending and stretching their brands using different models.

  2. Mats, April 17, 2012
    I have a model that I use to discuss this, which starts with analyzing what a brand's "anchor point" is. Is it primarily a product, a category, a competence or an attitude brand?

    Product brands are difficult to extend as by definition they are characteraised by the product itself and its key benefits. Most FMCG brands fall into this category; line extensions are fine in terms of similar product characteristics, but that is about it. Category brands are broader, such as most financial services and many car brands - they offer a variety of products and services but within a common framework (Mercedes is about German quality engineering in both cars and trucks, and BMW similarly in cars and motorcycles for example).

    Typical competence brands in my model would be Apple (user interaction) and Disney (family fun), who successfully use their brand across a variety of products and services, but all share the common trait that the anchor point represents. There are not many attitude brands that have extended their brands across categories, but Virgin and (here in Sweden) MTG (media house) would be two examples. Both challenge "fat cat" market leaders with a vibrant entrepreneurial spirit.

    The challenge for any brand extension is of course to stay true to the core. But that core need not be a product, it could equally be a category, a competence or an attitude. And of course, the more you want to claim, the bigger the challenge to stay consistent across all activities.
  3. Russell, April 17, 2012
    Hi Nigel, on UGG boots, they seem to have fantastic momentum and huge cache here in China. I just mentioned to my landlord I am going back to Australia and she asked I bring back 2 pairs for her as it is so hard to get the originals over here. I think there is a clear association of quality with UGG which has translated well in China and that should be able to be successfully extended into non-sheepskin formats in this market as well.

    However it's the classic sheepskin that is the focus in this market at the moment and I don't see that being diluted in the medium term at least.
  4. Jorge, April 16, 2012
    Hi Nigel,
    I agree that brand extension is a double edged sword. By pure chance, perhaps, today's blog post from Al Ries was about expansion of Burger King's menu. Same old Ries' party line, but interesting nonetheless.
    I think that Dove for Men is a mistake. An essentially feminine brand launching a complete line for men?

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