Testing Your Brand Limits

More than 30,000 new product introductions (SKUs) will be launched into the marketplace this year, the vast majority of which will represent extensions of existing brands, according to Information Resources Inc. (IRI). Fewer than 25% of those will ever achieve an annual retail sales level of $7.5 million.

Why do so many new products and services fail to survive, much less meet or exceed the expectations of their respective organizations? A significant contributing factor is that most organizations don’t have a comprehensive, strategically sound approach to identifying and evaluating high-potential new product or service opportunities for their existing brands.

Specifically, a comprehensive and strategic approach is one that accounts for three important factors: (1) organizational capabilities, (2) marketplace opportunity, and (3) brand relevance. We refer to this strategic framework as the “credibility footprint.” (See Exhibit 1 on page 30.) Most organizations today are relatively adept at the first two factors, but surprisingly few invest the time or resources required to fully understand their brands and truly determine the “brand relevance” component in their brand extendibility efforts. All too often, the result is brand extensions that are inconsistent with, or worse, detrimental to the current brand equity.

Exhibit 1: Brand credibility footprint

Unlike most brand extendibility articles that have focused on the other two components of the credibility footprint, this one will concentrate solely on brand relevance. It will provide a fourstep approach for determining the types of new product or service offerings that are a strong fit with your brand, along with specific tools and techniques for conducting that assessment. When combined with the other two components of the credibility footprint, the approach will provide a more comprehensive approach for identifying and launching new products and services.

How extendible is your brand?

A four-step road map can help find the answer.

Executive briefing

Most companies know how to extend their brands by leveraging organizational competencies and determining unmet customer needs. However, surprisingly few have a strategic approach in place to ensure that potential new product areas are consistent with a brand’s identity. This article provides a four-step road map to ensure that future new products or services complement, and ideally enhance, the current equities of the brand.

Is Your Brand Extendible?

The four-step approach for determining brand-relevant extendibility is as follows: (1) determine brand and category associations, (2) develop brand extendibility proxies, (3) conduct brand extendibility research, and (4) create brand extendibility guidelines. This approach enables brand managers to clearly articulate which of countless potential new product or service areas make the most sense with what their brand stands for in the market and the degree to which it stretches its current equities in new directions.

The result of this approach is a road map to guide future brand extendibility work and ensure that any new opportunity identified and pursued is not only consistent with organizational capabilities and marketplace opportunity, but also with customer perceptions of the brand’s core equities. Additionally, it helps ensure that brand extendibility decisions are made in a more objective and less emotional manner (e.g., adhering to pre-defined guidelines vs. choosing the president’s “pet” idea).

Step 1: Determine key associations. The first step in determining brand relevance is to begin with a comprehensive assessment of what your brand and those of key competitors in the category currently stand for in the minds of customers.

Even an outstanding new product concept, satisfying a significant unmet customer need, will not succeed in the market if it is launched under a brand identity for which it is a poor fit. The foundation of this assessment is qualitative customer research (e.g., focus groups and in-depth interviews), which provides the richness and depth of response needed to construct an accurate portrait of your brand and the category. The research should focus on uncovering the key associations customers link to the brand and competitive brands in the categories (e.g., product or service features, functional, emotional, and self-expressive benefits, and personality).

Specific exercises and lines of questioning for this phase of research are fairly similar in nature to the types used during standard brand positioning research. What are the things you like most about the brand? What benefits does the brand provide you? What are the first three things that come to mind when you think about the brand? How would you describe the brand as though it were a person? What benefits does this brand provide you that others cannot? How does this brand make you feel? These questions, asked for both your brand and those of a few key competitors, help define the associations as well as the higher-order benefits that matter most to your brand and the competition.

The output of this step is the identification of approximately six to eight key “associations” that define the brand and the category. These associations represent the most closely held beliefs customers have with your brand and the overall category and provide the basis for thinking logically about extending the brand with future new product or service offerings.

Exhibit 2 illustrates the key associations customers have with a national, prepared convenience food brand, as well as the overall category. The output clearly delineates how customers define the category where this brand currently resides on each association and therefore provides the basis for how to test the boundaries of future brand extendibility.

Exhibit 2: Key brand and category associations

It is necessary to complete an assessment for each potential new category the brand is considering. For instance, if the prepared convenience food brand was also considering new product or service offerings in the food service industry, the company would have to assess that category and determine its key customer associations and the degree to which the category and brand are a logical fit.

Even if relatively current brand research exists for your brand and competitive brands, it pays to conduct at least some additional research to supplement those insights. It’s imperative that these brand and category associations be determined with an eye toward future brand extendibility.

Step 2: Develop proxies. Once the six to eight key associations have been identified for the brand and category, proxies should be carefully chosen for each one. To accomplish this, turn each association into a continuum of attributes and benefits that range from “close in” to “far out” relative to where customers perceive the brand to be today. For example, the prepared convenience food brand referenced earlier may select the following proxies to complete a “cuisine” continuum: family favorites, Americanized ethnic, spicy/seasoned, ethnic, and exotic.

This continuum begins with a proxy that’s relatively close in (family favorites) and ends with one that is a significant stretch from how customers perceive the brand today (exotic), with several points in between. It’s important to remember that these proxies were strategically chosen to represent distinct points on a continuum. For example, two variations on ethnic food were intentionally selected as proxies to differentiate between familiar ethnic food (e.g., Italian and Mexican) and less common ethnic food (e.g., Indian and Thai).

The reason these continuums and proxies are so important is that they will eventually represent the stimuli used in Step 3 research to determine the “guidelines” customers use to judge the boundaries of extendibility. Since it’s difficult for them to articulate these guidelines on an unaided basis, the proxies serve as a basis for in-depth conversations as to what type of extendibility is in bounds vs. out of bounds for the brand and, more importantly, the reasons why. The proxies chosen may or may not represent good new product opportunities for the brand (i.e., customer unmet needs). What’s more important at this point is that they provide the basis for rich conversations with customers as to how the brand can and cannot be extended in the future (i.e., brand relevance).

Step 3: Conduct research. Once brand and category associations have been determined and representative proxies selected, it is imperative to go back to customers to solicit their input. As is true for Step 1, qualitative research formats are ideal for Step 3 research. A variety of stimuli can be used for the chosen proxies to facilitate brand extendibility research discussions, including white paper concepts, representative images, and actual products or prototypes. During focus groups and in-depth interviews, customers should be systematically presented with the proxies identified in the previous step and asked for their opinion as to how well each product, service, feature, or benefit fits with the brand in question.

Once again, it’s important to remember that we are mostly interested in understanding customer rationales for why something does or does not fit with the brand. These explanations will help the brand manager develop the guidelines and bounds of the brand’s extendibility in Step 4. As such, for any given proxy, it’s imperative to probe deeply into the explanations customers offer relative to fit and understand the thought process they go through to arrive at their conclusions.

One effective technique for this phase of research is to separate focus group participants into teams of two or three people and ask them to divide all proxies within a given continuum into two buckets: fits with brand and does not fit with brand. Once they’ve done this, have each team present their recommendations to the entire group, along with their rationale. The ensuing discussions will shed significant light on how customers think about the bounds of extendibility for your brand.

Another useful technique is to compare and contrast different proxies within a continuum. For example, if the prepared convenience food brand has an occasions continuum that includes breakfast and dinner as two of its proxies, and dinner is considered a strong fit with the brand while breakfast is not, then it would be important to understand the reasons why dinner works with the brand while breakfast does not.

Exhibit 3 illustrates the final output of Step 3 for the prepared convenience food brand. It is a complete set of continuums and proxies, with boundaries drawn based on how well customers perceive different proxies to fit with their impressions of the brand. As the exhibit demonstrates, it’s helpful to make distinctions between proxies that are a strong fit with the brand vs. those that are only a moderate or slight fit. Any proxy outside the latter should be considered inconsistent with the brand’s current identity and therefore off limits for near-term brand extendibility.

Exhibit 3: Brand extendibility continuums

Step 4: Create guidelines. The final step of this approach is to take the insights obtained in the previous step’s customer research and develop guidelines detailing how the brand can and cannot be effectively extended. There are a couple of rules of thumb to get you started down the right path.

First, it’s crucial to conduct thorough analysis of Step 3 research data. Specifically, the customer feedback (i.e., which proxies are in, which are out, and the reasons why) needs to be interpreted and translated into guidelines for extendibility. In some cases, the guidelines will be readily apparent based on customer feedback and your knowledge of the brand and category. In other cases, more sophisticated interpretation will be required. The development of guidelines will certainly require that some hypotheses be made where conclusions are less clear cut.

Once an adequate number of guidelines (i.e., roughly a half dozen) has been established, it’s helpful to prioritize them because they won’t all be of equal importance. One way to think about this is to establish several guidelines that are imperatives (i.e., go/no-go screens). What this means is that unless a potential new product or service opportunity satisfies these guidelines, it should not be considered for marketplace introduction. Other guidelines would be deemed important but not mandatory. In other words, if a potential new product or service opportunity satisfies this guideline, it should be considered favorable.

Exhibit 4 illustrates the guidelines that were developed for the prepared convenience food brand illustrated throughout this article. As the exhibit demonstrates, there are three “imperatives” that any new product opportunity being considered for the brand must satisfy. It must be a “familiar family favorite,” require minimal preparation and cook time, and help Mom demonstrate she cares about her family. The imperatives in this case were deliberately chosen to represent one product feature, one functional benefit, and one emotional benefit, respectively.

Exhibit 4: Brand extendibility guidelines

In addition, a potential new product opportunity must receive a “high fit” rating on at least one of three other important attributes: the protein it contains (high fit = chicken), the extent to which it’s a complete meal (high fit = complete meal), and its temperature state (high fit = frozen). These guidelines provide an effective screening mechanism for potential new product opportunities. It will undoubtedly help management evaluate the extent to which new product opportunities fit with and even enhance the current brand equities.

When to Do It

These guidelines will clearly help you evaluate which potential new product or service opportunities fit with your brand and how strong the fit is. It’s a crucial step that should guide future brand extendibility activity. As mentioned earlier, however, it represents only one of the three necessary components of the credibility footprint detailed in Exhibit 1.

For a complete picture of how best to extend the brand with the highest likelihood of success, these guidelines should be used in conjunction with the two other assessments—organizational capabilities and marketplace opportunity—that most organizations already currently perform. New product or service concepts that reside in the intersection, or “sweet spot,” of the three assessments represent opportunities with significant company and marketplace potential and also the greatest potential for enhancing brand equity.

As with any process, there are a few situations where implementing this 4-step approach would probably be suboptimal or even infeasible. One such situation is where a brand is being considered for numerous (or even an unlimited number of) new categories. When this is the case, it would be difficult to conduct the initial assessments across so many disparate product or service categories. If this is the situation, one solution is to simply select the most probable categories of entry and proceed with the approach in the same manner outlined in this article, realizing it may be necessary to backtrack down the road and assess additional categories. Another option would be to postpone the start of this approach until more direction around potential new categories has been established.

Another inherent limitation to this approach is in its inability to account for new-to-the-world products as proxies. For example, a hypothetical product continuum for the Crest brand a couple of years ago may have included the following: toothpaste, toothbrush, floss, mouthwash, denture cream, and chewing gum. It probably would not have included whitening strips, a product it later successfully launched, because it did not yet exist in the mass market. One solution to help mitigate this limitation is to make sure to include continuums that are focused on benefits as opposed to only products or attributes. For example, in this case, Crest may have created a benefit-oriented continuum that includes cleaning, refreshing, strengthening, disinfecting, and whitening—the latter of which would have enabled new product opportunities to be identified like the whitening strips it eventually launched.

Protecting Your Brand

Given the number of new products and services launched each year and the fiercely competitive nature of most categories and industries, it’s more important than ever to take all steps possible to increase the probability of success when extending your brand. Additionally, it’s vital to remember that, with brand extendibility, more is at stake than merely the success or failure of the new product or service. The positive equities associated with your brand, which your company has worked so hard to establish over the years, will either be favorably or unfavorably affected based on how your new product or service offerings perform (and are perceived by customers) in the market.

The only way to accomplish the dual objectives of increasing a new product’s probability of success and ensuring it adds to, rather than detracts from, your brand’s strong equity is to include the all-important third component of brand relevance in your brand extendibility strategy. While it’s true that adding a brand relevance assessment to your extendibility efforts increases investment in time, effort, and money, this investment is more than paid back through the increased success rate in new product activity and the protection of your brand’s positive and valuable equities.