Page 288 - Marketing Management

CREATING BRAND EQUITY | CHAPTER 9 265

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A successful extension may also generate subsequent extensions. During the 1970s and 1980s,
Billabong established its brand credibility with the young surfing community as a designer and
producer of quality surf apparel. This success permitted it to extend into other youth-oriented
areas, such as snowboarding and skateboarding.

DISADVANTAGES OF BRAND EXTENSIONS On the downside, line extensions may
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cause the brand name to be less strongly identified with any one product. Al Ries and Jack Trout
call this the “line-extension trap.” 86 By linking its brand to mainstream food products such as
mashed potatoes, powdered milk, soups, and beverages, Cadbury ran the risk of losing its more
specific meaning as a chocolate and candy brand. 87 Brand dilution occurs when consumers no
longer associate a brand with a specific or highly similar set of products and start thinking less of
the brand.
If a firm launches extensions consumers deem inappropriate, they may question the integrity
of the brand or become confused or even frustrated: Which version of the product is the “right
one” for them? Retailers reject many new products and brands because they don’t have the shelf or
display space for them. And the firm itself may become overwhelmed.
The worst possible scenario is for an extension not only to fail, but to harm the parent brand in
the process. Fortunately, such events are rare. “Marketing failures,” in which too few consumers
were attracted to a brand, are typically much less damaging than “product failures,” in which the
brand fundamentally fails to live up to its promise. Even then, product failures dilute brand equity
only when the extension is seen as very similar to the parent brand. The Audi 5000 car suffered
from a tidal wave of negative publicity and word of mouth in the mid-1980s when it was alleged to
have a “sudden acceleration”problem. The adverse publicity spilled over to the 4000 model. But the
Quattro was relatively insulated, because it was distanced from the 5000 by its more distinct brand-
ing and advertising strategy. 88
Even if sales of a brand extension are high and meet targets, the revenue may be coming
from consumers switching to the extension from existing parent-brand offerings—in effect
cannibalizing the parent brand. Intrabrand shifts in sales may not necessarily be undesirable if
they’re a form of preemptive cannibalization. In other words, consumers might have switched to
a competing brand instead of the line extension if the extension hadn’t been introduced. Tide
laundry detergent maintains the same market share it had 50 years ago because of the sales con-
tributions of its various line extensions—scented and unscented powder, tablet, liquid, and
other forms.
One easily overlooked disadvantage of brand extensions is that the firm forgoes the chance to
create a new brand with its own unique image and equity. Consider the advantages to Disney of
having introduced adult-oriented Touchstone films, to Levi’s of creating casual Dockers pants, and
to Black & Decker of introducing high-end DeWALT power tools.

SUCCESS CHARACTERISTICS Marketers must judge each potential brand extension by
how effectively it leverages existing brand equity from the parent brand, as well as how effectively,
in turn, it contributes to the parent brand’s equity. 89 Crest Whitestrips leveraged the strong
reputation of Crest and dental care to provide reassurance in the teeth-whitening arena, while also
reinforcing its dental authority image.
Marketers should ask a number of questions in judging the potential success of an extension. 90

• Does the parent brand have strong equity?
• Is there a strong basis of fit?
• Will the extension have the optimal points-of-parity and points-of-difference?
• How can marketing programs enhance extension equity?
• What implications will the extension have for parent brand equity and profitability?
• How should feedback effects best be managed?
To help answer these questions, Table 9.5 offers a sample scorecard with specific weights and
dimensions that users can adjust for each application.
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Table 9.6 lists a number of academic research findings on brand extensions. One major
mistake in evaluating extension opportunities is failing to take all consumers’ brand knowledge
structures into account and focusing instead on one or a few brand associations as a potential
basis of fit. 92