Careful Extension
February 10, 2009
By Phil Federspiel
Imagine yourself a brand manager at a major CPG company – 25 years ago. Managing a brand then, while fraught with challenges critical at the time, pales in comparison to what a brand manager and brand team face today. Instead of a small set of extensions, sub-brands, manufacturing partners, retail channels and a straightforward brand strategy; the brand steward today faces a host of complex issues. There are issues ranging from continuously evolving retail dynamics; the rising sophistication of store/private label brands; market fragmentation; globalization; an explosion of media outlets; sourcing contract manufacturers; pressures to develop new products; and leveraging the brand carefully to ensure each new product or extension aligns with the brand promise.
And, that’s just the world of bricks and mortar. Add Web-related brand touch points: consumer ordering and fulfillment; social networks that at a moment’s notice can provoke a PR opportunity or a PR disaster; and so much more.
With so much to think about, let’s focus on the complexities and concerns about just one major brand initiative: brand extensions. The potential pitfalls to brand extensions have been well documented but merit close review in terms of how they relate to the contract-manufacturing model.
Noting the Winners and Losers
Successful brand extensions are legion. Among them Jello pudding, seamlessly and naturally extended out from what else — Jello; and Crayola markers, pens and paints extended out from crayons. Unfortunately, unsuccessful extensions are plentiful, as well. Bayer “aspirin-free” conflicted with Bayer’s primary association with aspirin; and Volvo’s 850 GLT sports sedan pitting “sports” unsuccessfully against Volvo’s primary association with safety, for example. What is important about all of these examples are the lessons to be learned: There are major risks when extending into a category in which the brand adds nothing of value other than its identity. A brand that is everywhere and nowhere at the same time is often the result of opportunistic brand licensing without regard for the brand’s true equities and strengths as perceived by consumers. A brand reach that simply is not believable, poorly executed or not thought through in relation to the full brand-relationship spectrum, dilutes the overall power of the brand.
Brand Architecture as Dictator
To help cope with the complexities of maintaining a strategic brand management system, brand architecture has been developed as a discipline to help keep the development process aligned. The process keeps brand managers focused on the brand’s goals and consumer promises. This underlying structure organizes the relationships between brands, sub-brands, endorsed brands and extensions. A well-conceived architecture typically takes shape as a result of targeted research with consumers, the trades, channels and all that comprises the brand’s “community of interest” — those who touch, impact, consider and buy. Whatever form brand architecture might take, it is the brand’s very foundation.
Extending With Outsourcing
There are two significant challenges in extending your brand through resources outside of your organization. For one, there is the need for controls to protect ownable manifestations of your brand. And second, there is a need to develop a set of clear standards to ensure executions are performed in accordance with the brand architecture. In essence, you will need to turn over the keys to your brand, figuratively speaking, in order for your manufacturing partner to fully understand brand relationships. As specific as line weights, color breaks, logo placements and everything in between, brand standards must be concise and understood. Access and two-way communication are the keys to clarity — consider putting yourself or a delegate on the ground at the manufacturers’ locale during the vetting and production stages. Without clear standards, your production partner will be at an immediate disadvantage in converting the objectives of the extension into a successful execution. However, this knowledge transfer should not occur without a hefty dose of due diligence. Vetting manufacturers today is not quite the same process that our brand manager of 25 years ago faced. Then it may very well have been a production house literally down the street experienced with your brand and working within a relationship settled by a handshake. Today you may be working with a company that could very well be manufacturing something for a competitor in a factory on the other side of the world. Such situations may be rare but the seemingly immediate presence of knock-offs in the market attests to the fact that information often slips into the “gray” market.
The Right Choice
Brand extensions make perfect sense given the right circumstances and the right approach. When matched with explicit brand oversight, approval mechanism and guidelines for sub-brands, extensions and their interrelationships, extensions are strong counterparts to leading brands.
And in a scenario with a manufacturing partner that offers insights based on expertise, there are opportunities for cost savings, innovation and true partnership. A secure relationship and defined brand guidelines can create a level of comfort reminiscent of a (relatively) simpler time.
Phillip P. Federspiel is Group 4’s principal and chief executive officer. He is a consultant to companies such as Schering-Plough, Panasonic and Kraft, with Industrial Design Awards and Package Design Council Gold Awards to his company’s credit. He was the president emeritus of the Brand Design Association and served on the executive board. He can be reached at pfederspiel@groupfour.com.
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