Are　brand　extensions　as　sure　a　success　as　they　seem?　Helen　Wing　reveals　the　hidden　risks　of　extension　–　and　how　to　avoid　them.　
Brand　extensions　dominate　product　launches　in　the　00s.　Unofficial　websites　like　snackspot.org　find　new　packaged　goods　ranges　every　day.　Google’s　Gmail　brand　extension　made　front　page　news　in　April.　If　the　big　theme　of　marketing　in　the　90s　was　understanding　the　core　lessons　of　branding,　this　decade　has　been　about　seeing　just　how　far　brands　can　reach.　
The　result　is　a　riot　of　new　products　but　very　few　fresh　brands.　Only　2%　of　marketing　directors　think　that　new　brands　will　be　their　main　launch　method　in　the　next　few　years.　Research　International　data　suggests　that　as　few　of　15%　of　volume　forecasting　tests　are　on　entirely　new　brands.　We’ve　also　found　that　extensions　which　get　launched　did　no　better　in　research　than　rejected　ones.　In　other　words,　companies　are　so　keen　on　brand　extensions　that　they　will　ignore　research　results.　
This　recklessness　reflects　an　increased　confidence　in　the　power　of　parent　brands　to　influence　consumers.　But　it　also　reflects　financial　reality.　Conventional　wisdom　has　it　that　extension　launches　are　cheaper　and　less　risky　than　bringing　a　whole　new　brand　to　market.　
But　what　if　conventional　wisdom　is　wrong?　
No　product　launch　is　without　risk.　Extensions　or　not,　the　majority　of　new　launches　fail.　The　bad　news　from　our　product　and　concept　test　databases　is　that　extensions　are　actually　more　likely　to　fail　than　new　products.　The　good　news　is　that　we　can　work　out　why　that　happens　and　how　to　avoid　it.　
Brand　extensions　often　research　well　but　fail　at　market.　They　do　show　much　higher　purchase　intention　than　new　brands　–　12%　more　on　average　-　but　this　is　misleading.　A　larger　proportion　of　extension　launches　than　new　launches　are　‘dead’　by　the　end　of　their　first　year,　according　to　a　study　by　Ernst　&　Young.　That　fact　doesn’t　help　if　you’re　the　owner　of　a　failed　extension,　though　–　the　question　is　why?　The　answers　aren’t　pleasant.　
We’ve　identified　three　key　reasons　why　brand　extensions　fail.　They’re　not　as　distinctive　as　they　should　be.　They’re　not　good　enough　products.　And　they’re　not　being　given　the　right　kind　of　marketing　support.　
It’s　easy　to　be　seduced　by　purchase　intention　and　not　worry　about　how　unique　a　brand　is.　But　uniqueness　turns　out　to　be　a　critical　factor　in　predicting　actual　sales　for　new　products,　only　slightly　less　important　than　intent　to　purchase.　So　the　apparently　strong　research　results　are　a　little　deceptive　–　most　extensions　fail　to　score　well　on　this　vital　uniqueness　metric.　
Extensions　might　not　be　distinctive　–　but　people　still　like　them,　surely?　Well,　not　really.　The　scores　for　liking　consumers　typically　give　to　an　extension　are　hardly　better　than　those　they　give　new　brands.　People　still　buy　extensions,　but　it　turns　out　that　the　relationship　between　liking　a　new　concept　and　trying　it　out　is　weaker　for　them　than　for　new　brands.　Trialling　well　is　never　a　guarantee　of　longer-term　success.　
People　say　they　will　buy　extensions　because　the　extensions　trade　off　the　heritage　of　a　parent　brand.　That’s　a　good　thing,　but　it　can　too　easily　serve　as　an　excuse　to　bring　sub-par　products　to　market.　It　can　also　have　repercussions　for　the　parent　brand　itself.　An　extension　launch　may　seem　like　a　low-risk　exercise　but　really　it’s　a　gamble　–　and　the　stake　is　its　parent’s　precious　equity.　
An　extension　is　cheaper　to　launch　than　a　new　brand　–　but　this　is　partly　down　to　low　marketing　support.　Our　MicroTestSM　database　tells　us　that　new　launches　receive　double　the　advertising　support　of　extensions　within　the　parent’s　category.　The　parent　brand　is　again　expected　to　do　the　work.　
But　extensions　desperately　need　differentiation,　and　‘piggyback’　marketing　can　harm　their　prospects.　Data　from　Millward　Brown　suggests　that　the　ad　awareness　of　extensions　is　much　lower　than　that　of　new　brands.　In　fact　for　half　of　extension　adverts　the　product　is　incorrectly　identified　as　the　parent!　
We’re　not　saying　brand　extensions　are　a　bad　idea　-　they　can　be　a　great　idea.　It’s　just　that　they　need　to　be　handled　in　the　right　way.　Treating　them　as　low-risk　easy　options　can　severely　backfire.　
So　what　is　the　right　way　to　market　and　research　extensions?　
Sales　volume　prediction　is　the　traditional　way　of　assessing　innovation.　We　believe　that　combining　it　with　a　brand-centred　approach　is　the　best　way　to　minimise　the　risks　of　extension　launches.　We　see　brand　strength　as　a　combination　of　a　brand’s　functional　performance　and　its　emotional　affinity　with　consumers.　Superbrands,　the　strongest　brands,　draw　their　equity　very　heavily　from　affinity　–　the　image　they　project　and　the　connections　they　make　with　people.　
That　looks　like　good　news　for　extensions.　They　come　onto　the　market　with　an　affinity　close　to　established　products　and　higher　than　new　brands.　But　there’s　a　big　problem　-　performance　is　lacking.　Almost　two-thirds　of　new　brands　have　stronger　performance　than　affinity.　For　extensions　that　drops　to　below　half;　much　lower　than　existing　brands.　
Companies　seem　to　launch　extensions　because　they　think　the　parent’s　strength　can　overcome　any　weakness　in　the　product.　Extensions　are　born　with　silver　spoons　in　their　mouths,　but　the　market　is　hard　to　fool.　
What　makes　a　strong　brand?　Partly　it’s　people　agreeing　on　what　it　stands　for.　We　know　this　from　measuring　the　degree　of　consensus　among　respondents.　But　too　many　extensions　can　jeopardise　this　consensus.　In　the　mid-80s　Crest　toothpaste　had　over　fifty　extensions　on　its　books　and　was　struggling.　“No　toothpaste　should　have　more　stock　keeping　units　than　teeth　in　one’s　mouth.”,　said　their　consultants.　Crest　took　heed,　cut　down　its　product　line　and　saw　its　market　share　recover.　
If　you’re　hoping　to　launch　an　extension　you　need　the　parent’s　equity　to　work　in　your　favour.　By　finding　out　exactly　what　a　parent　stands　for　emotionally,　you　can　make　sure　the　extension　doesn’t　clash　with　the　category.　And　by　understanding　the　performance　needs　that　exist　in　the　market,　you　can　make　the　extension　distinctive.　Add　more　focussed　and　memorable　ad　support　and　you’ve　got　a　better　chance　of　launching　a　winner.　
Real　brand　extensions　succeed　all　the　time,　but　more　of　them　fail.　As　Nobel　Laureate　Linus　Pauling　said,　“The　trick　to　having　good　ideas　is　to　come　up　with　a　lot　of　ideas,　and　then　throw　out　the　bad　ones.”　We’d　humbly　advise　that　throwing　out　the　bad　ideas　happens　before　you　market　them!　

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extracted　from　www.research-int.com