Branding Basics #10: Law of Extensions

Agenda Marketing - Law-of-Extensions

 

In this tenth article in our Branding Basics series, we’re looking at line and brand extensions.  How far can you go on a good name?

Line Extensions

When a company brings out a new product that’s only slightly different from an existing product line, it is part of a product line extension. The hope is to bring in customers who may not know or already using the standard product line. Think of Dove Soap and its product line extension, “Dove for Men”. The idea is that a product line shows that it meets the needs of one group of customers can easily be extended to meet the same needs of another demographic group. The ladies who trust in Dove soap may purchase Dove for Men skincare products for their husbands. Or, parents who are devoted to Colgate toothpaste might well purchase “Colgate for Kids” toothpaste for their offspring.

Brand Extensions

Calvin-Klein-Underwear-1990s-Ad

What happens when a company is marketing an established product that uses the same brand name in a different product category? You got it – a brand extension.  Once upon a time, Calvin Klein was known as a youthful, understated and upscale clothing line that extended its brand into jeans, fragrances and underwear.  With big ideas to expand its business, in 2002 Calvin Klein Inc., was sold to Phillips Van Heusen Corp (PVH), an American clothing company that owns the licensing rights to many brand names. The deal included licensing rights and royalties linked to revenues. Rumour has it that the deal included an “ongoing personal financial incentive” for Mr. Calvin Klein based on future sales of the Calvin Klein brand. The brand extensions now include:

  • Calvin Klein Collection
  • Calvin Klein White Label (Canada, U. S.)
  • Calvin Klein Platinum (Europe, Asia)
  • Calvin Klein Performance (Athletic)
  • Calvin Klein Jeans
  • Calvin Klein Kids
  • Calvin Klein Underwear
  • Calvin Klein Home
  • Calvin Klein Golf
  • Calvin Klein Handbags
  • Calvin Klein Watches + Jewelry
  • Calvin Klein Fragrance
  • CK One Color Cosmetics

The biggest reason for extensions, supposedly, is to meet customer needs that previous products have not yet addressed.  But in reality, people in the position to make money off a brand often dilute it until the former value associated with it is gone.  You can now find Calvin Klein clothing for bargain prices at COSTCO! So, the luxury undertone and exclusivity that once was so prominent of the brand has diluted, and CK is now perceived as an ‘everyday’ brand in the eyes of consumers.

According to the #10 Immutable Law of Branding – the Law of Extensions – manufacturer logic concludes that it needs more brands to maintain or increase sales. A rise in line or brand extensions is linked to the need to copy the competition.  Greedy companies looking for more, more, and MORE sales, end up putting their name on everything. Which isn’t always a great idea. It’s the difference between building brands and milking them. “How far can we extend the brand?” Most managers want to milk the brand.

Before you think of launching a line extension to “make the most out of the name people already know”, ask yourself what customers of your current brand will think when they see the line extension.  If the market is moving out from under you, stay where you are and launch a second brand.  If it’s not, stay right where you are and continue building your core brand stronger.

 

Take Away from the Law of Extensions

“The easiest way to destroy a brand is to put its name on everything.”

photo via vogue.com