You can see the thinking. Riding a Harley (HDI
) is more than a form of transportation, it's a lifestyle. Shouldn't the company take advantage of that by introducing branded products that its fans need in life—such as icing?
But when there's extreme dissonance between a company's core identity and a new product launched to reach untapped markets, corporations risk diluting the power of their brands. Would you buy Bic underwear or Pirates of the Caribbean jewelry?
BRANDING RAZZIES. "Whether an extension is good or bad, logical or illogical, doesn't correlate to success in the marketplace," observes Robert Sprung, CEO of Tipping Sprung, a New York-based brand-extension consultancy. "Just because it sells well doesn't mean it's good for the brand in the long term."
Each year, Tipping Sprung publishes, in conjunction with trade publication Brandweek, a survey of Top Brand Extensions. The survey also includes a booby prize category for the worst extension. And in the latest survey, published in December, 2005, Harley-Davidson's cake decorating kit took that honor.
How quickly tides turn; in 2004 (the first year that Tipping Sprung conducted the survey), Harley-Davidson topped the list of best brand extensions for its move into Harley-branded footwear. The company's precipitous slide illustrates how easy it is for even the most established brand to make a mistake. (When asked about sales of its cake-decorating kit and other spin-off products, Harley-Davidson declined to comment on any brand extensions—good or bad.)
ROCKY ROAD? Tipping Sprung's survey is the result of an e-mail poll of 449 marketing executives at agencies such as McCann Erickson and Grey Worldwide, as well as in-house branding officers at a variety of companies such as American Express (AXP
), Nokia (NOK
), IBM (IBM
), Dell (DELL
We live in an age of relentless co-branding (consider Motorola's ROKR phone, featuring Apple's iTunes software). We're seeing more and more licensing of celebrity names (such as Sylvester Stallone's High Protein Pudding or Trump Cologne) and the requisite movie tie-ins (like Disney Couture's recently launched, $225 Pirates of the Caribbean skull ring, designed by the movie's on-set makeup artist).
In his 2003 book Brand Failures, Matt Haig offers up some reasons why some of these extensions flop. These include "basic mistakes such as setting the wrong price, choosing the wrong name, and getting too paranoid about the competition," Haig writes. These no-nos can cheapen a luxury brand or make a mass-market label seem inaccessible, alienating a loyal audience, or flooding the market and overexposing a brand.
LOW PRICE, HIGH FASHION. Even some brand extensions that seem quite logical don't translate into high sales. Motorola's (MOT
) ROKR was a favorite among those polled for the most recent Tipping Sprung survey. The company shipped 250,000 ROKRs in its first three weeks on the market. While the company said the numbers exceeded expectations, the figures didn't come close to sales of Motorola's popular RAZR—a whopping 6.5 million units were sold in the last quarter of 2005, the same period in which the ROKR debuted.
And some seemingly illogical brand-extensions sell like hotcakes. The clothing line that high-end fashion designer Karl Lagerfeld made for low-priced chain store H&M in 2004 sold out. That his H&M collection was limited edition probably contributed to its sales success, and, from a branding perspective, remained true to the exclusive nature of Lagerfeld haute-couture fashion.
So what should a company do to increase the odds of a successful brand extension? "It's important for a brand to understand its core values, which aren't necessarily tied down by physical features and benefits," says Martyn Tipping, president and director of brand strategy at Tipping Sprung. "And it's also important to know how consumers see the brand." He points to Olay as a brand that's successfully extended beyond face creams into vitamins.
HEAD SCRATCHERS. "At first, you think, no one wants to put Oil of Olay in her mouth," says Tipping. "But the company understood that its core values are about beauty and that its customers see this as well." As long as Olay marketed the vitamins as a beauty product, rather than as a health product, customers didn't find the extension jarring.
Tipping Sprung is currently in the process of compiling its 2006 brand extension survey, to be published in the fall. In the meantime, we've compiled our own list of head-scratching brand extensions. Click here to see the Harley-Davidson Cake Decorating Kit and others.
Jana is a reporter with BusinessWeek.com in New York