Tauber (1986) identified three factors for successful brand extension to new categories.
- Competitive Leverage – The new product should be comparable with a superior to other competing products in the category. (Palmolive toilet soaps did not offer anything new to consumers.)
- Benefit Transfer – Consumers want a new Product to offer the same benefit offered by the parent brand. (The extension of Boost energy drink to Boost energy biscuits is a good example of benefit transfer. However, the extension of Horlicks to biscuits did not have the same effect. Horlicks should have,perhaps, moved to Horlicks milk biscuits and highlighted the ‘milk’ concept.)
- Perceptual Fit – The consumer must perceive the new product to be consistent with the parent brand. (Nirma bath soap does not offer a perceptual fit with Nirma washing powder.)
Ries and Trout (1981) express their apprehensions about the brand extension strategy. According to them, a brand name is like a rubber band. It will starch, but not beyond certain point. Furthermore, the more you starch a brand name, the weaker it becomes (just the opposite of what one might expect).
Following guidelines can be used to decide when to use a family brand name and when not to.
- Expected Volume – Potential winners should not bear the family name; small volume product should.
- Competition – In a vacuum, the brand should not bear the family name. In a crowded field, it should.
- Advertising support – A big budget brand should not bear the family name. A small budget brand should.
- Significance – Breakthrough products should not bear the family name. Commodity products such as chemical should.
- Distribution – Off-the-shelf item should not bear the family name. Item sold by sales representative should.
Consumers perceive brands to be in three categories: premium, popular and economy. A premium brand can be extended to another premium product category, or to a popular one. But a popular brand cannot be extended to a premium product category (Xavier 1992). Nirma is a popular brand name, and Nirma Chemical’s effort to promote a premium toilet soap under the Nirma name has not been very successful. Surf is a premium brand and we have to wait and watch whether its extension, as Surf Ultra, into a super premium category will work. In the mind of many housewives Surf is a bulky packet of 500g sold at Rs.20. Now, suddenly, if half the quantity of Surf is to cost double the price, then it is likely to cause disharmony in the consumers’ minds.