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Successful Brand Extension
March 2014
American Marketing Association
American Marketing Association
SUBSECTION TITLE
2
Brand Extendibility Hall of Shame
Unfortunately, brand extendibility examples like the ones below are far more common
than we realize
Burger King Boxers
Harley Davidson PerfumeHooters Air
Dr. Pepper Marinade Chicken Soup for Dog Lovers
Arizona Tea Nachos ‘n
Cheese Dip
American Marketing Association
SUBSECTION TITLE
3
The Case for Brand Growth
Why So Many Brand Extensions Fail
Identifying Market Needs
Developing Inspiring Solutions
Determining Brand Relevance
Executing with Excellence
American Marketing Association
SUBSECTION TITLE
4
Brand Extendibility Defined
The Case for Brand Growth
Brand extendibility is one of three ways to drive organic growth, representing essentially
the intersection of an established brand and new product or service development
Existing Brands
Brand Extendibility
Base Business
New Products
New Brands
Sources of Organic Growth
American Marketing Association
SUBSECTION TITLE
5
The Need for Growth
The Case for Brand Growth
Driving business growth through new products and services is a a top priority for CEOs
0
20
40
60
Product/Service
Innovation
Increase Share in
Existing Markets
Mergers &
Acquisition
New Geographic
Markets
New JV/Strategic
Alliances
% of U.S. CEOs Citing Area as a Source for Growth
Source: PwC 17th Annual Global CEO Survey (2014)
36 37
14
10
3
American Marketing Association
SUBSECTION TITLE
6
The Elusive Nature of Growth
The Case for Brand Growth
…Yet over half of CEOs feel they need to change/improve their capabilities in this area
Source: PwC 17th Annual Global CEO Survey (2014)
0
20
40
60
No Need to Change Considering or Planning Change Change is Underway or
Complete
% of U.S. CEOs Citing Their Product Development &
Innovation Capabilities as Follows
20
54
26
American Marketing Association
SUBSECTION TITLE
7
Various Types of Growth
The Case for Brand Growth
Growth can be divided into two broad categories—organic and inorganic. Both categories
have well-defined sub-strategies and tactics for driving desired results
American Marketing Association
SUBSECTION TITLE
8
The Benefits of Brand-driven Growth
The Case for Brand Growth
Brand-driven growth (brand extendibility) tends to be more incremental than merely
driving base business, and less expensive and risky than launching new brands
Products&Services
Brands
ExistingNew
Existing New
Market
Penetration
Brand
Extendibility
Portfolio
Extendibility
New Product
Development
Higher
Risk
Typically Less
Impactful
American Marketing Association
SUBSECTION TITLE
9
The Case for Brand Growth
Why So Many Brand Extensions Fail
Identifying Market Needs
Developing Inspiring Solutions
Determining Brand Relevance
Executing with Excellence
American Marketing Association
SUBSECTION TITLE
10
Just the Facts…
Why So Many Brand Extensions Fail
Although a desirable means for driving business growth, successfully extending existing
brands (even very strong ones) is not easy
0
20
40
60
80
100
Brand Extension Failure Rate* Brand Extension 3-year Survival Rate**
Brand Extendibility Track Record
*Ernst & Young, 2003; **David Talyor, Brand Stretch (2004)
84
54
American Marketing Association
SUBSECTION TITLE
11
Top Barriers to Successful Brand Extendibility
Why So Many Brand Extensions Fail
When brand extendibility fails it can often be attributed to one or more of the following…
No Meaningful
Market Need
Demand
There is a Need,
but the Solution is
Uninspiring
Supply
There is a Need
and an Inspiring
Solution, but the
Brand is Wrong
Brand
Relevance
Everything Makes
Sense Strategically,
but the Execution
is Poor
Execution
American Marketing Association
SUBSECTION TITLE
12
1) No Meaningful Market Need (Demand)
Why So Many Brand Extensions Fail
When there is no customer need for a new product or service, and little ability to create
the need, a brand extension has very little chance for success
Demand Supply
Brand
Relevance Execution
Track plant growth and
watch an entire growing
cycle in seconds!
PlantCamTM
Example
!   Addressing the need is not profitable
Underlying Components:
!   No need; difficult to create need
!   Satisfactory solutions already exist
!   The unmet need is too niche
American Marketing Association
SUBSECTION TITLE
13
2) Uninspiring Product or Service Solution (Supply)
Why So Many Brand Extensions Fail
Even with an identified customer need, if the proposed solution is uninspiring or otherwise
sub-optimal, the brand extension will struggle to succeed
Smokeless Cigarettes…
“produced a flavor and a
smell so offensive that it
left users retching…”
Example
Demand Supply
Brand
Relevance Execution
!   “Flavor of the Day” offering
Underlying Components:
!   Solution not aligned with need
!   Lack of imagination/creativity
!   “Side effects” or other drawbacks
American Marketing Association
SUBSECTION TITLE
14
3) Lack of Brand Relevance
Why So Many Brand Extensions Fail
When there is an identified need—and an attractive solution to address it—there still
needs to be a solid fit with brand under which the product or service is launched
EBay selling goods at
fixed prices made no
sense for the brand or
to consumers…
EBay Express was a
confusing and
contradictory concept
Example
Demand Supply
Brand
Relevance Execution
!   Base brand “baggage”
Underlying Components:
!   Lack of credibility
!   Inconsistent persona
!   Contradictory price/value relationship
American Marketing Association
SUBSECTION TITLE
15
4) Poor Execution
Why So Many Brand Extensions Fail
Even when everything makes sense strategically, poor execution will almost always doom
a brand extension to failure
Example
Demand Supply
Brand
Relevance Execution
Community-specific news,
information and
engagement platform…
•  Flawed business model
•  Overly-ambitious launch
•  Poor content quality
!   Lack of clarity on goals/path forward
Underlying Components:
!   Lack of senior-level commitment
!   Culture gets in the way
!   Capabilities are not up to par
American Marketing Association
SUBSECTION TITLE
16
The Case for Brand Growth
Why So Many Brand Extensions Fail
Identifying Market Needs
Developing Inspiring Solutions
Determining Brand Relevance
Executing with Excellence
American Marketing Association
SUBSECTION TITLE
17
Developing an Outside-In Perspective
Identifying Market Needs
The outside-in perspective is important as always. Business objectives for brand
extendibility should guide exactly who’s perspectives “outside” matter most
Primary Objective:
More Deeply Penetrate Existing
Base
Solicit Input and
Participation from
Current
Customers
Primary Objective:
Acquire New Customers for
the Brand
Solicit Input and
Participation from
Current &
Prospective
Customers
Primary Objective:
Fail Miserably in Brand
Extendibility
Solicit Input and
Participation from
Only Senior
Management
American Marketing Association
SUBSECTION TITLE
18
Start Specific… Go Broad
Identifying Market Needs
A common mistake during needs identification is to focus too narrowly on the category in
question, without enough consideration to the broader context
Personal Values
Relaxation/Recharging
Role of Friends & Family in Life
Movies on
DVD/Blu-ray
Role of Entertainment in Life
Home Entertainment
Dimensions for
Understanding Consumers
Attitudes Toward Free Time
Broad
Specific
American Marketing Association
SUBSECTION TITLE
19
The Latency Effect
Identifying Market Needs
Although “talking to the customer” is important, it’s not as simple as merely asking them
what they want/need
“If I had asked customers what they wanted,
they would have told me a faster horse.”
−Henry Ford
!   Customers are often unaware they even
have a particular need (latent)
!   Customers may be aware of a need, but
have trouble articulating it (tacit)
!   Some of the most successful new products
and brand extensions in history were not
inspired by an articulated customer need
None of these products
addressed a widely recognized
problem that any of us had
American Marketing Association
SUBSECTION TITLE
20
The Importance of Precision
Identifying Market Needs
Especially when attempting to identify problems, it is important to be very specific about
the nature of the problem, and what in particular needs to be addressed
“If you don’t know where you’re going, any road
will take you there.”
−Lewis Carroll
!   When attempting to understand customer
needs, it is important to be as specific and
granular as possible
!   Big problems and challenges are often
comprised of smaller component challenges—
each of which has different ideal solutions
!   Performance—Is it about productivity?
Accuracy? Throughput? Speed?
!   Convenience—Is it about speed? Ease?
Simplicity? Portability?
How can a 9-hour solution
solve the problem of dinner
preparation taking too long?
American Marketing Association
SUBSECTION TITLE
21
Beyond Problems… Opportunities
Identifying Market Needs
Focusing only on solving problems is limiting. Many successful new products do not solve
a problem…they create an opportunity or deliver a better experience
“Effective innovators don’t wait for problems to
arise. They fix what isn’t broken and improve
things that have no apparent deficit.”
−Dennis Stauffer, Thinking Clockwise
While the world is full of problems, it’s also full of
opportunities…many of which do not solve a
particular problem
!   Uncovering opportunities that are not inherently
problem-solving in nature requires a different
approach
!   It’s less about asking customers what
they think/want…
!   It’s more about observing what customers
actually do— “and connecting the dots”
Consumers weren’t exactly sitting
around thinking to themselves, “Gee, if
only I had a tablet…”
American Marketing Association
SUBSECTION TITLE
22
A Reality Check
Identifying Market Needs
When seeking to identify unmet needs it is important to consider your core competencies.
Identifying needs that you have little chance for successfully addressing is futile
Brand Extendibility Playing Field
Market
Opportunity
Company
Capabilities
American Marketing Association
SUBSECTION TITLE
23
Cost-effective, DIY Techniques
Identifying Market Needs
There are a number of techniques that are designed specifically to uncover customers’
unmet needs, and ultimately, business growth opportunity
Bulletin Boards/
Threaded Discussions
Community-building threaded
discussions in which we can
observe consumer-to-
consumer (or B2B customer-
to-customer) dialogue
Be Your Own Ethnographer/
Day-in-the-Life Observation
Spend a day in the customer’s
shoes. Shadow and observe
them closely. Selectively ask
“why” questions to understand
underlying motivations
American Marketing Association
SUBSECTION TITLE
24
The Case for Brand Growth
Why So Many Brand Extensions Fail
Identifying Market Needs
Developing Inspiring Solutions
Determining Brand Relevance
Executing with Excellence
American Marketing Association
SUBSECTION TITLE
25
Sources of Inspiration
Developing Inspiring Solutions
Inspiration to fuel potential solutions can come from numerous, diverse sources
Core Competencies
Cross-BU Collaboration
R&D and Contracted
Partnerships
Supplier Collaboration
Company
R&D
Vendors
Universities
JVs/Alliances
Analogies & Metaphors Product /
Technology
Business Model Levers
Best Practices
Case Studies
Delivery Channels
Service Models
Business
Model
Functional Attributes
Emotional Benefits
Core Values
Personality
Brand Levers
Brand
Customer Insights
Global Trends
Need Platforms
Digital Ideation
Customer Participation
Customer
American Marketing Association
SUBSECTION TITLE
26
Defining Your Frame of Reference
Developing Inspiring Solutions
When thinking about potential solutions, it is important to consider and define your
brand’s frame of reference (What business is it in? What business should it be in?)
Workout
T-shirts
Sporting
Goods
Athletic
Apparel
Lifestyle &
Fitness
Health &
Wellness
Pedometers
Running
Shoes
Jerseys
Shorts
Socks
Sweatshirts
Footballs
Golf Clubs
Hockey Skates
Basketballs
Tennis Balls
Soccer Nets
Knee Bands
Trail Maps
Hiking Gear
Mountain
Climbing
Camping Gear
Prepared
Meals
Physician
Network
Wellness
Website
Nutrition
Plans
Fitness
Bands
Heart
Monitors
American Marketing Association
SUBSECTION TITLE
27
Identify Ways to Cluster
Developing Inspiring Solutions
Look for ways to logically bundle products, categories, industries and sectors…
Original
Accessories
•  Mobile
•  merchandise
Gaming Hardware
•  Consoles, devices, PCs
•  Gaming gear
Home Appliances
•  Sci Fi inspired
smart appliances
Ready to Assemble
•  Changeable
Living Spaces
HH of tomorrow
Architectural
Lighting
•  Illuminated
wallpaper
Technology enabled
apparel & jewelry
•  Multi-function
wearable device
Multiple IPTV
channels
Service
Provider
Content Extensions
•  ringtones &
Ring backs
•  Wallpaper
•  Text Alerts
Hotels & Resorts
•  Fantasy
Destinations
Amusement
Parks /
•  Fantasy
Destinations
•  Arcades / FECs
•  Conventions
Gaming Software
•  Video Games, Online Games,
Mobile Games, Computer games
•  Interactive Role Play Game
•  Creativity Game
Home Storage,
Org. Products, &
accessories
Audio Video
Equipment
•  Media Wall
•  Immersion
pods
Internet / Digital
Music Distribution
& Downloads
UGC
•  Online
story-building
Aggregation
Cable TV
Broadcast
TV
Production &
Distribution
Motion Picture
Production &
Distribution
(long format)
Travel
Services
•  Staged events
Leisure
MusicMedia
Consumer
Products
(non-retailing)
Commemorative
Products
Television
Film &
Video
Book
Publishing
Periodicals
•  Online story-
building
Trading Cards
& Comic Books
Digital Content
Distribution
Publishing
Consumer
Electronics
Toys &
Games
House wares
Home
Furniture
Lighting
Appliances
Apparel &
Jewelry
Lodging
Entertainment
Restaurant & Cafes
Training
Services
(support)
Mobile
American Marketing Association
SUBSECTION TITLE
28
The Power of Convergence
Developing Inspiring Solutions
An effective way of inspiring new thinking is to consider how one new solution can
address multiple needs (i.e., that are currently being addressed through multiple solutions
American Marketing Association
SUBSECTION TITLE
29
Cross-Pollinating the Unlikely
Developing Inspiring Solutions
To simulate lateral, out-of-the-box thinking, it is also useful to combine things that are
typically thought to be completely unrelated to see where the combination leads you
Mash-ups
+
Using the same design as a weed whacker with
a motor on one end and an impeller at the other,
a miniature computer-controlled heart pump has
been designed to help patients waiting
on the transplant list.
How Would X Approach Y?
+
If Google were in the business of manufacturing
nuts and bolts, how would they go about it? In
what ways would their nuts and bolts be different
from others on the market today? Why would
they be different and better?
American Marketing Association
SUBSECTION TITLE
30
The Case for Brand Growth
Why So Many Brand Extensions Fail
Identifying Market Needs
Developing Inspiring Solutions
Determining Brand Relevance
Executing with Excellence
American Marketing Association
SUBSECTION TITLE
31
Brand Extendibility Footprint
Determining Brand Relevance
A Brand Extendibility Footprint defines what your brand stands for today across multiple
dimensions, and helps you determine where it can potentially go (and not go) in the future
Brand Footprint
Dimension 1
Dimension 3
Dimension 2
Dimension 4
Dimension 5
Dimension 6
Dimension 7
Dimension 8
American Marketing Association
SUBSECTION TITLE
32
Illustrative Dimensions/Axes
Determining Brand Relevance
Categories
Spices Seasonings Appetizers Main EntreesSide Dishes
Segments
Toddlers Young Kids Tweens Young AdultsTeens
Price Points
Entry Value Mid-Price LuxuryHigh-End
Occasions
Breakfast Snack Mini-Meal DinnerLunch
Emotions
Meditative Calming Relaxing StimulatingEnergizing
American Marketing Association
SUBSECTION TITLE
33
Example—Extending Along Categories
Determining Brand Relevance
Categories
Desktop
Software
Cloud
Solutions
Subscriptions
/ Licenses
Value-added
Reseller
Consultative
Services
TODAY
Not doing today, but there
is high customer
permission…seen primarily
as new platforms
Credible
“stretch;” but
would likely
require some
convincing
Off-brand;
Not able to
span from a
‘mass’ to
‘custom’
Company:
Financial Planning
Software Developer
American Marketing Association
SUBSECTION TITLE
34
Example—Extending Along Occasions
Determining Brand Relevance
Everyday/
Routine
Crunched
for Time
Portable/
On-the-Go
Seek Different
Experience
Special
Occasion
TODAY
Lack of drive-thru window
makes these occasions a
bit more challenging, but
still have ‘permission’
Basic food
fare makes
this a big
stretch; would
need to
significantly
alter cuisine/
menu offering
Off-brand;
Highly
functional
nature of
brand is a
disconnect
Occasions
Company:
‘Fast Casual’
Restaurant Chain
American Marketing Association
SUBSECTION TITLE
35
The Power of the Intangibles
Determining Brand Relevance
In general, extending across intangible dimensions such as emotional benefits, persona,
etc. gives the brand more permission and leeway to extend in a meaningful way
“At Caterpillar, we build the machines that help
our customers build a better world. The boots
and shoes we build are made with the same
commitment.”
“Excellence is a continual quest at the Tata
group and Tata companies are supported in
their efforts to achieve world-class standards in
all aspects of operations...”
American Marketing Association
SUBSECTION TITLE
36
The Case for Brand Growth
Why So Many Brand Extensions Fail
Identifying Market Needs
Developing Inspiring Solutions
Determining Brand Relevance
Executing with Excellence
American Marketing Association
SUBSECTION TITLE
37
What About Execution?
Executing with Excellence
“I’m all in favor of it!”
—John McKay
Head Coach of the 0-14 Tampa Bay Buccaneers (1976)
…when asked how he felt about his team’s execution
American Marketing Association
SUBSECTION TITLE
38
The Four C’s of Execution
Executing with Excellence
Executing with
Excellence
CULTURE
CLARITYCAPABILITY
COMMITMENT
Every aspect of the brand
extension/launch needs to be
clearly articulated, leaving
nothing no ambiguity or room for
misinterpretation
Internal Brand, Marketing,
Insights, Sales, and Product
Development functions need to
be staffed by capable talent
with relevant experience
Senior management has to believe in
brand extensions, and financially and
publically back their marketplace launch
and ongoing support
The organization’s values, visions,
norms, systems, beliefs, and habits
all tend to influence the extent to
which it executes successfully
American Marketing Association
SUBSECTION TITLE
39
Commitment
Executing with Excellence
The top two reasons brand extendibility—and growth in general—do not succeed relate
to senior management commitment and level of support
1 Success has not been defined and agreed upon upfront and at the top –
failing to set up adequate expectations and measures for evaluation
2 Incorrect level of support – insufficient funds are allocated at critical
moments of the development process
3 Financial performance is inconsistent with general financially accepted
results in the company – resulting in misguided financial assessment
4 Use of incorrect testing methodology – either through erroneous results or
testing wrong measure results in early failure determination
5 Organizational misalignment – structure or lack of staff capabilities and
seniority hinder the process
American Marketing Association
SUBSECTION TITLE
40
•  Bureaucratic
•  Short-term focused
•  Fear
•  Hierarchical
•  Slow-moving
•  Lacking shared purpose
•  Rule-oriented
•  Cautious
•  Reactive
•  Inefficient
•  Stressful
•  Trust
•  Open to new ideas
•  Willingness to experiment
•  Disciplined execution
•  Risk-taking
•  Diversity of thinking
•  Passion
•  Collaboration
•  Flexible
•  Team-oriented
•  Achievement-oriented
Culture
Executing with Excellence
Closely related to senior management commitment, cultural dynamics also impact the
extent to which brand extendibility is successful
Inhibit Growth/Expansion Facilitate Growth/Expansion
American Marketing Association
SUBSECTION TITLE
41
Clarity
Executing with Excellence
It is important to have complete clarity on the process to be followed, the roles of each
team member, and the ways key decisions will be made
Process Maps
Role Descriptions
Decision Rights
American Marketing Association
SUBSECTION TITLE
42
Capability
Executing with Excellence
It is important to ensure your company has the right capability in place, by critical function
Level 1
Basic
Level 2
Competent
Level 3
Proficient
Level 4
Advanced
Level 5
World Class
Company
Benchmark
—Illustrative—
Strategic Planning
R&D
Sales/ Channels
Manufacturing
Marketing
Innovation
American Marketing Association
SUBSECTION TITLE
43
1603 Orrington Ave. Suite 600
Evanston, IL 60201
T 312.239.8985
mduckler@fullsurge.com
www.fullsurge.com

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Successful Brand Extension

  • 1. Successful Brand Extension March 2014 American Marketing Association
  • 2. American Marketing Association SUBSECTION TITLE 2 Brand Extendibility Hall of Shame Unfortunately, brand extendibility examples like the ones below are far more common than we realize Burger King Boxers Harley Davidson PerfumeHooters Air Dr. Pepper Marinade Chicken Soup for Dog Lovers Arizona Tea Nachos ‘n Cheese Dip
  • 3. American Marketing Association SUBSECTION TITLE 3 The Case for Brand Growth Why So Many Brand Extensions Fail Identifying Market Needs Developing Inspiring Solutions Determining Brand Relevance Executing with Excellence
  • 4. American Marketing Association SUBSECTION TITLE 4 Brand Extendibility Defined The Case for Brand Growth Brand extendibility is one of three ways to drive organic growth, representing essentially the intersection of an established brand and new product or service development Existing Brands Brand Extendibility Base Business New Products New Brands Sources of Organic Growth
  • 5. American Marketing Association SUBSECTION TITLE 5 The Need for Growth The Case for Brand Growth Driving business growth through new products and services is a a top priority for CEOs 0 20 40 60 Product/Service Innovation Increase Share in Existing Markets Mergers & Acquisition New Geographic Markets New JV/Strategic Alliances % of U.S. CEOs Citing Area as a Source for Growth Source: PwC 17th Annual Global CEO Survey (2014) 36 37 14 10 3
  • 6. American Marketing Association SUBSECTION TITLE 6 The Elusive Nature of Growth The Case for Brand Growth …Yet over half of CEOs feel they need to change/improve their capabilities in this area Source: PwC 17th Annual Global CEO Survey (2014) 0 20 40 60 No Need to Change Considering or Planning Change Change is Underway or Complete % of U.S. CEOs Citing Their Product Development & Innovation Capabilities as Follows 20 54 26
  • 7. American Marketing Association SUBSECTION TITLE 7 Various Types of Growth The Case for Brand Growth Growth can be divided into two broad categories—organic and inorganic. Both categories have well-defined sub-strategies and tactics for driving desired results
  • 8. American Marketing Association SUBSECTION TITLE 8 The Benefits of Brand-driven Growth The Case for Brand Growth Brand-driven growth (brand extendibility) tends to be more incremental than merely driving base business, and less expensive and risky than launching new brands Products&Services Brands ExistingNew Existing New Market Penetration Brand Extendibility Portfolio Extendibility New Product Development Higher Risk Typically Less Impactful
  • 9. American Marketing Association SUBSECTION TITLE 9 The Case for Brand Growth Why So Many Brand Extensions Fail Identifying Market Needs Developing Inspiring Solutions Determining Brand Relevance Executing with Excellence
  • 10. American Marketing Association SUBSECTION TITLE 10 Just the Facts… Why So Many Brand Extensions Fail Although a desirable means for driving business growth, successfully extending existing brands (even very strong ones) is not easy 0 20 40 60 80 100 Brand Extension Failure Rate* Brand Extension 3-year Survival Rate** Brand Extendibility Track Record *Ernst & Young, 2003; **David Talyor, Brand Stretch (2004) 84 54
  • 11. American Marketing Association SUBSECTION TITLE 11 Top Barriers to Successful Brand Extendibility Why So Many Brand Extensions Fail When brand extendibility fails it can often be attributed to one or more of the following… No Meaningful Market Need Demand There is a Need, but the Solution is Uninspiring Supply There is a Need and an Inspiring Solution, but the Brand is Wrong Brand Relevance Everything Makes Sense Strategically, but the Execution is Poor Execution
  • 12. American Marketing Association SUBSECTION TITLE 12 1) No Meaningful Market Need (Demand) Why So Many Brand Extensions Fail When there is no customer need for a new product or service, and little ability to create the need, a brand extension has very little chance for success Demand Supply Brand Relevance Execution Track plant growth and watch an entire growing cycle in seconds! PlantCamTM Example !   Addressing the need is not profitable Underlying Components: !   No need; difficult to create need !   Satisfactory solutions already exist !   The unmet need is too niche
  • 13. American Marketing Association SUBSECTION TITLE 13 2) Uninspiring Product or Service Solution (Supply) Why So Many Brand Extensions Fail Even with an identified customer need, if the proposed solution is uninspiring or otherwise sub-optimal, the brand extension will struggle to succeed Smokeless Cigarettes… “produced a flavor and a smell so offensive that it left users retching…” Example Demand Supply Brand Relevance Execution !   “Flavor of the Day” offering Underlying Components: !   Solution not aligned with need !   Lack of imagination/creativity !   “Side effects” or other drawbacks
  • 14. American Marketing Association SUBSECTION TITLE 14 3) Lack of Brand Relevance Why So Many Brand Extensions Fail When there is an identified need—and an attractive solution to address it—there still needs to be a solid fit with brand under which the product or service is launched EBay selling goods at fixed prices made no sense for the brand or to consumers… EBay Express was a confusing and contradictory concept Example Demand Supply Brand Relevance Execution !   Base brand “baggage” Underlying Components: !   Lack of credibility !   Inconsistent persona !   Contradictory price/value relationship
  • 15. American Marketing Association SUBSECTION TITLE 15 4) Poor Execution Why So Many Brand Extensions Fail Even when everything makes sense strategically, poor execution will almost always doom a brand extension to failure Example Demand Supply Brand Relevance Execution Community-specific news, information and engagement platform… •  Flawed business model •  Overly-ambitious launch •  Poor content quality !   Lack of clarity on goals/path forward Underlying Components: !   Lack of senior-level commitment !   Culture gets in the way !   Capabilities are not up to par
  • 16. American Marketing Association SUBSECTION TITLE 16 The Case for Brand Growth Why So Many Brand Extensions Fail Identifying Market Needs Developing Inspiring Solutions Determining Brand Relevance Executing with Excellence
  • 17. American Marketing Association SUBSECTION TITLE 17 Developing an Outside-In Perspective Identifying Market Needs The outside-in perspective is important as always. Business objectives for brand extendibility should guide exactly who’s perspectives “outside” matter most Primary Objective: More Deeply Penetrate Existing Base Solicit Input and Participation from Current Customers Primary Objective: Acquire New Customers for the Brand Solicit Input and Participation from Current & Prospective Customers Primary Objective: Fail Miserably in Brand Extendibility Solicit Input and Participation from Only Senior Management
  • 18. American Marketing Association SUBSECTION TITLE 18 Start Specific… Go Broad Identifying Market Needs A common mistake during needs identification is to focus too narrowly on the category in question, without enough consideration to the broader context Personal Values Relaxation/Recharging Role of Friends & Family in Life Movies on DVD/Blu-ray Role of Entertainment in Life Home Entertainment Dimensions for Understanding Consumers Attitudes Toward Free Time Broad Specific
  • 19. American Marketing Association SUBSECTION TITLE 19 The Latency Effect Identifying Market Needs Although “talking to the customer” is important, it’s not as simple as merely asking them what they want/need “If I had asked customers what they wanted, they would have told me a faster horse.” −Henry Ford !   Customers are often unaware they even have a particular need (latent) !   Customers may be aware of a need, but have trouble articulating it (tacit) !   Some of the most successful new products and brand extensions in history were not inspired by an articulated customer need None of these products addressed a widely recognized problem that any of us had
  • 20. American Marketing Association SUBSECTION TITLE 20 The Importance of Precision Identifying Market Needs Especially when attempting to identify problems, it is important to be very specific about the nature of the problem, and what in particular needs to be addressed “If you don’t know where you’re going, any road will take you there.” −Lewis Carroll !   When attempting to understand customer needs, it is important to be as specific and granular as possible !   Big problems and challenges are often comprised of smaller component challenges— each of which has different ideal solutions !   Performance—Is it about productivity? Accuracy? Throughput? Speed? !   Convenience—Is it about speed? Ease? Simplicity? Portability? How can a 9-hour solution solve the problem of dinner preparation taking too long?
  • 21. American Marketing Association SUBSECTION TITLE 21 Beyond Problems… Opportunities Identifying Market Needs Focusing only on solving problems is limiting. Many successful new products do not solve a problem…they create an opportunity or deliver a better experience “Effective innovators don’t wait for problems to arise. They fix what isn’t broken and improve things that have no apparent deficit.” −Dennis Stauffer, Thinking Clockwise While the world is full of problems, it’s also full of opportunities…many of which do not solve a particular problem !   Uncovering opportunities that are not inherently problem-solving in nature requires a different approach !   It’s less about asking customers what they think/want… !   It’s more about observing what customers actually do— “and connecting the dots” Consumers weren’t exactly sitting around thinking to themselves, “Gee, if only I had a tablet…”
  • 22. American Marketing Association SUBSECTION TITLE 22 A Reality Check Identifying Market Needs When seeking to identify unmet needs it is important to consider your core competencies. Identifying needs that you have little chance for successfully addressing is futile Brand Extendibility Playing Field Market Opportunity Company Capabilities
  • 23. American Marketing Association SUBSECTION TITLE 23 Cost-effective, DIY Techniques Identifying Market Needs There are a number of techniques that are designed specifically to uncover customers’ unmet needs, and ultimately, business growth opportunity Bulletin Boards/ Threaded Discussions Community-building threaded discussions in which we can observe consumer-to- consumer (or B2B customer- to-customer) dialogue Be Your Own Ethnographer/ Day-in-the-Life Observation Spend a day in the customer’s shoes. Shadow and observe them closely. Selectively ask “why” questions to understand underlying motivations
  • 24. American Marketing Association SUBSECTION TITLE 24 The Case for Brand Growth Why So Many Brand Extensions Fail Identifying Market Needs Developing Inspiring Solutions Determining Brand Relevance Executing with Excellence
  • 25. American Marketing Association SUBSECTION TITLE 25 Sources of Inspiration Developing Inspiring Solutions Inspiration to fuel potential solutions can come from numerous, diverse sources Core Competencies Cross-BU Collaboration R&D and Contracted Partnerships Supplier Collaboration Company R&D Vendors Universities JVs/Alliances Analogies & Metaphors Product / Technology Business Model Levers Best Practices Case Studies Delivery Channels Service Models Business Model Functional Attributes Emotional Benefits Core Values Personality Brand Levers Brand Customer Insights Global Trends Need Platforms Digital Ideation Customer Participation Customer
  • 26. American Marketing Association SUBSECTION TITLE 26 Defining Your Frame of Reference Developing Inspiring Solutions When thinking about potential solutions, it is important to consider and define your brand’s frame of reference (What business is it in? What business should it be in?) Workout T-shirts Sporting Goods Athletic Apparel Lifestyle & Fitness Health & Wellness Pedometers Running Shoes Jerseys Shorts Socks Sweatshirts Footballs Golf Clubs Hockey Skates Basketballs Tennis Balls Soccer Nets Knee Bands Trail Maps Hiking Gear Mountain Climbing Camping Gear Prepared Meals Physician Network Wellness Website Nutrition Plans Fitness Bands Heart Monitors
  • 27. American Marketing Association SUBSECTION TITLE 27 Identify Ways to Cluster Developing Inspiring Solutions Look for ways to logically bundle products, categories, industries and sectors… Original Accessories •  Mobile •  merchandise Gaming Hardware •  Consoles, devices, PCs •  Gaming gear Home Appliances •  Sci Fi inspired smart appliances Ready to Assemble •  Changeable Living Spaces HH of tomorrow Architectural Lighting •  Illuminated wallpaper Technology enabled apparel & jewelry •  Multi-function wearable device Multiple IPTV channels Service Provider Content Extensions •  ringtones & Ring backs •  Wallpaper •  Text Alerts Hotels & Resorts •  Fantasy Destinations Amusement Parks / •  Fantasy Destinations •  Arcades / FECs •  Conventions Gaming Software •  Video Games, Online Games, Mobile Games, Computer games •  Interactive Role Play Game •  Creativity Game Home Storage, Org. Products, & accessories Audio Video Equipment •  Media Wall •  Immersion pods Internet / Digital Music Distribution & Downloads UGC •  Online story-building Aggregation Cable TV Broadcast TV Production & Distribution Motion Picture Production & Distribution (long format) Travel Services •  Staged events Leisure MusicMedia Consumer Products (non-retailing) Commemorative Products Television Film & Video Book Publishing Periodicals •  Online story- building Trading Cards & Comic Books Digital Content Distribution Publishing Consumer Electronics Toys & Games House wares Home Furniture Lighting Appliances Apparel & Jewelry Lodging Entertainment Restaurant & Cafes Training Services (support) Mobile
  • 28. American Marketing Association SUBSECTION TITLE 28 The Power of Convergence Developing Inspiring Solutions An effective way of inspiring new thinking is to consider how one new solution can address multiple needs (i.e., that are currently being addressed through multiple solutions
  • 29. American Marketing Association SUBSECTION TITLE 29 Cross-Pollinating the Unlikely Developing Inspiring Solutions To simulate lateral, out-of-the-box thinking, it is also useful to combine things that are typically thought to be completely unrelated to see where the combination leads you Mash-ups + Using the same design as a weed whacker with a motor on one end and an impeller at the other, a miniature computer-controlled heart pump has been designed to help patients waiting on the transplant list. How Would X Approach Y? + If Google were in the business of manufacturing nuts and bolts, how would they go about it? In what ways would their nuts and bolts be different from others on the market today? Why would they be different and better?
  • 30. American Marketing Association SUBSECTION TITLE 30 The Case for Brand Growth Why So Many Brand Extensions Fail Identifying Market Needs Developing Inspiring Solutions Determining Brand Relevance Executing with Excellence
  • 31. American Marketing Association SUBSECTION TITLE 31 Brand Extendibility Footprint Determining Brand Relevance A Brand Extendibility Footprint defines what your brand stands for today across multiple dimensions, and helps you determine where it can potentially go (and not go) in the future Brand Footprint Dimension 1 Dimension 3 Dimension 2 Dimension 4 Dimension 5 Dimension 6 Dimension 7 Dimension 8
  • 32. American Marketing Association SUBSECTION TITLE 32 Illustrative Dimensions/Axes Determining Brand Relevance Categories Spices Seasonings Appetizers Main EntreesSide Dishes Segments Toddlers Young Kids Tweens Young AdultsTeens Price Points Entry Value Mid-Price LuxuryHigh-End Occasions Breakfast Snack Mini-Meal DinnerLunch Emotions Meditative Calming Relaxing StimulatingEnergizing
  • 33. American Marketing Association SUBSECTION TITLE 33 Example—Extending Along Categories Determining Brand Relevance Categories Desktop Software Cloud Solutions Subscriptions / Licenses Value-added Reseller Consultative Services TODAY Not doing today, but there is high customer permission…seen primarily as new platforms Credible “stretch;” but would likely require some convincing Off-brand; Not able to span from a ‘mass’ to ‘custom’ Company: Financial Planning Software Developer
  • 34. American Marketing Association SUBSECTION TITLE 34 Example—Extending Along Occasions Determining Brand Relevance Everyday/ Routine Crunched for Time Portable/ On-the-Go Seek Different Experience Special Occasion TODAY Lack of drive-thru window makes these occasions a bit more challenging, but still have ‘permission’ Basic food fare makes this a big stretch; would need to significantly alter cuisine/ menu offering Off-brand; Highly functional nature of brand is a disconnect Occasions Company: ‘Fast Casual’ Restaurant Chain
  • 35. American Marketing Association SUBSECTION TITLE 35 The Power of the Intangibles Determining Brand Relevance In general, extending across intangible dimensions such as emotional benefits, persona, etc. gives the brand more permission and leeway to extend in a meaningful way “At Caterpillar, we build the machines that help our customers build a better world. The boots and shoes we build are made with the same commitment.” “Excellence is a continual quest at the Tata group and Tata companies are supported in their efforts to achieve world-class standards in all aspects of operations...”
  • 36. American Marketing Association SUBSECTION TITLE 36 The Case for Brand Growth Why So Many Brand Extensions Fail Identifying Market Needs Developing Inspiring Solutions Determining Brand Relevance Executing with Excellence
  • 37. American Marketing Association SUBSECTION TITLE 37 What About Execution? Executing with Excellence “I’m all in favor of it!” —John McKay Head Coach of the 0-14 Tampa Bay Buccaneers (1976) …when asked how he felt about his team’s execution
  • 38. American Marketing Association SUBSECTION TITLE 38 The Four C’s of Execution Executing with Excellence Executing with Excellence CULTURE CLARITYCAPABILITY COMMITMENT Every aspect of the brand extension/launch needs to be clearly articulated, leaving nothing no ambiguity or room for misinterpretation Internal Brand, Marketing, Insights, Sales, and Product Development functions need to be staffed by capable talent with relevant experience Senior management has to believe in brand extensions, and financially and publically back their marketplace launch and ongoing support The organization’s values, visions, norms, systems, beliefs, and habits all tend to influence the extent to which it executes successfully
  • 39. American Marketing Association SUBSECTION TITLE 39 Commitment Executing with Excellence The top two reasons brand extendibility—and growth in general—do not succeed relate to senior management commitment and level of support 1 Success has not been defined and agreed upon upfront and at the top – failing to set up adequate expectations and measures for evaluation 2 Incorrect level of support – insufficient funds are allocated at critical moments of the development process 3 Financial performance is inconsistent with general financially accepted results in the company – resulting in misguided financial assessment 4 Use of incorrect testing methodology – either through erroneous results or testing wrong measure results in early failure determination 5 Organizational misalignment – structure or lack of staff capabilities and seniority hinder the process
  • 40. American Marketing Association SUBSECTION TITLE 40 •  Bureaucratic •  Short-term focused •  Fear •  Hierarchical •  Slow-moving •  Lacking shared purpose •  Rule-oriented •  Cautious •  Reactive •  Inefficient •  Stressful •  Trust •  Open to new ideas •  Willingness to experiment •  Disciplined execution •  Risk-taking •  Diversity of thinking •  Passion •  Collaboration •  Flexible •  Team-oriented •  Achievement-oriented Culture Executing with Excellence Closely related to senior management commitment, cultural dynamics also impact the extent to which brand extendibility is successful Inhibit Growth/Expansion Facilitate Growth/Expansion
  • 41. American Marketing Association SUBSECTION TITLE 41 Clarity Executing with Excellence It is important to have complete clarity on the process to be followed, the roles of each team member, and the ways key decisions will be made Process Maps Role Descriptions Decision Rights
  • 42. American Marketing Association SUBSECTION TITLE 42 Capability Executing with Excellence It is important to ensure your company has the right capability in place, by critical function Level 1 Basic Level 2 Competent Level 3 Proficient Level 4 Advanced Level 5 World Class Company Benchmark —Illustrative— Strategic Planning R&D Sales/ Channels Manufacturing Marketing Innovation
  • 43. American Marketing Association SUBSECTION TITLE 43 1603 Orrington Ave. Suite 600 Evanston, IL 60201 T 312.239.8985 mduckler@fullsurge.com www.fullsurge.com