TOP UK BRANDS AND CLIENTS: How far can brand extensions be pushed?

Brand extensions have proved very successful and profitable for some companies, yet disastrous and costly for others. Robert Dwek discovers the secret of the more is more philosophy

Brand extensions have proved very successful and profitable for some

companies, yet disastrous and costly for others. Robert Dwek discovers

the secret of the more is more philosophy

Brand extensions have been flavour of the month for some years now. They

rose to prominence in the late 80s on the back of increasing

competition, dramatic technological advances and the overnight

superstardom of ‘The Brand’ - since brands were now considered pure

gold, went the thinking, why not sprinkle a little gold dust over a

whole new array of products by endorsing them with a name that had

already proved its worth?

Then came recession. But far from dampening the brand extension spirit,

it added fuel to the fire. With new product development costs spiralling

and uncertainty dogging every marketing move, the appeal of a proven

brand name became even greater. Now that we’re supposedly well out of

the economic doldrums, whither brand extension?

Well, to judge by a stream of almost- daily news stories - Tesco

launching a pet health insurance scheme, for instance - it is in very

fine fettle indeed. But there is a new twist. Brands now being extended

are not always the kind we would expect to see radically rearranged.

Take the Post Office, for example. Boring? Staid? Not any more. In the

past few years, its Post Office Counters division has gone on a brand

extension extravaganza, offering a host of sexy new services. Most

recently, it has announced its intention to move into financial services

in a big way, as well as the travel agency business - both, of course,

offered from the comfort of the familiar Post Office premises.

Another famous corporate name busy extending itself right, left and

centre is Virgin. It now includes PEPs, soft drinks, hard drinks and

will soon stretch to pensions and health insurance.

Will Whitehorn, corporate affairs director for the Virgin group,

believes there is nothing odd about a company entering completely new

markets at a rate of knots, as Virgin is doing. Far from it. ‘It’s only

in this country that Virgin’s recent strategy might seem strange. If you

look at the biggest Japanese companies, you realise that we are going

down a well-trodden path.’

Mitsubishi, for example, manufactures products ranging from cars to

stereos, and from medical equipment to textiles, as well as being in the

shipbuilding and banking industries. Sony makes Michael Jackson records

as well as pocket calculators. The same eclecticism applies to other Far

East titans like Samsung, Hyundai and Yamaha.

‘The brand transcends any one product,’ Whitehorn asserts. ‘The UK is

the home of the brand, but this country has lacked a corporate culture.’

By which he means that the UK’s definition of a brand has remained far

too narrow, too closely associated with a product rather than a set of

corporate values.

But change is now in the air because the corporate branding philosophy

is gaining global dominance. So companies like Virgin - to borrow an

investment analyst’s phrase, ‘top down’ companies - are in the

ascendant, and ‘bottom up’ companies - those that associate brands with

individual products - are very much out in the cold.

How far can the Virgin brand extension revolution go? ‘An awful lot

further than we’ve gone,’ Whitehorn replies. ‘What we’ve been doing in

the past few years is what’s been going on in the rest of the world for

the past 30 years. We’ve embarked on a long-term plan to build Virgin

into the first British global brand of the 21st century.’

He claims the UK hasn’t produced a truly worldwide brand in the past 30

years, dismissing Laura Ashley and the Body Shop as narrowly focused

retailers. The top-down approach to brand extension has other followers,

who may yet give Richard Branson a run for his money on the global


Marks and Spencer is a classic example of how a company’s attributes can

be leveraged. The M&S product range has expanded dramatically over the

years, but its move into financial services is perhaps the best

demonstration of the value of the M&S brand.

Consider also the AA, which may not have strayed so obviously from its

original product path, but has extended its brand into a raft of related

services, such as insurance and publishing.

Dorothy Mackenzie, a partner of the design and marketing consultancy,

Dragon International, sees the growing top-down trend as a direct result

of a more service-oriented society.

‘The most unlikely companies, such as the former state-owned utilities,

now see themselves as service providers,’ she notes. ‘This new

perspective is opening up the way they think about their business and

their brands. They’re realising that they can get into new product areas

which aren’t necessarily adjacent to their existing products, simply by

trading off a well-honed set of corporate values and a strong corporate


But when brand extension goes wrong, it’s often because the company has

not got a clear enough idea of what the brand image means. Levi’s, for

instance, is recognised as a very powerful brand. But when it launched a

range of men’s suits in the mid 80s, it didn’t stop to think that this

new product line wasn’t in keeping with it’s original proposition, which

was young, defiant, anti-establishment, individualist. Not surprisingly,

this brand extension flopped.

Another road to ruin is to approach brand extension as a way of making a

quick buck. The once high-fashion name, Pierre Cardin, did this when it

began plastering its moniker over all manner of chain-store clothing

products. As a result, its aura and mystique vanished almost overnight

and critics argue that the brand has never recovered.

Levi’s and Pierre Cardin are two examples of unenlightened brand

extension. The companies were deluded into thinking that they weren’t

straying too far from home, when in fact they couldn’t have been more

wrong. They forgot that brand extension means refocusing on your core

brand and redefining, each time, exactly what it stands for.

UK banks, once blind to the power of branding, have finally woken up to

its impact on their sleepy backwater of the marketing world.

Could Midland have called First Direct ‘Midland Direct’? Would consumers

have bought this brand extension? Marketing consultants disagree. Nicola

Fawssett of New Solutions says Midland was right to go for a completely

new name. ‘Sometimes it is better to accept that a new product needs a

new brand. Midland was too closely associated with the old school of


But Kristina Hunt of the research and product development company, What

If, refers to something called the ‘post-rationalisation factor’, which

loosely translates as the consumers’ ability to forgive a company for

producing an apparently anomalous brand extension, provided the new

product or service is original enough or important enough. ‘Midland had

no heritage of being a hi-tech, young people’s brand. But because First

Direct’s service is so fantastic, no-one actually cares who owns it -

and most people realise it’s owned by Midland.’

The message that comes across from people like Hunt and Fawssett is that

brand extensions have become a way of life and that, whatever the

difficulties, this aspect of marketing can no longer be ignored.

Marketing people are constantly being told to think ‘outside the box’

nowadays, a philosophy which necessitates a much more fluid perspective

of brands. In these fast-changing times, look at the fastest-moving

industry of them all, computing, to see how malleable modern brands must

be. Microsoft is busy extending its brand in a top-down fashion so that

it can make the quantum leap from software programmer to king of

tomorrow’s information superhighway.

Brand extension has been the saviour of many dead-on-their-feet brands.

Brylcreem was seen as yesterday’s news until it realised it could use

the retro-chic fashion of the late 80s to rejuvenate its core

attributes. Having done this, it has been extending with great success.

The key, though, is that it became a strong brand again before it tried

to extend. To do so from a position of weakness would have spelled


Lucozade also came back from the dead, leaping aboard the health

bandwagon of the 80s before extending into a glittering array of new

drinks. Think too of Tango, which five or six years ago would most

likely have bombed had it tried to extend into the variety of flavours

now available. But it redefined its core values, it won back its brand

soul, attracted a new audience and built a dialogue with it. You get the

feeling that Tango could now extend into, say, paints, and make a

success of it - particularly the Outrageous Orange shade.

Talking of which, there’s another top-down brand that has massive brand

extension potential. The mobile telecoms newcomer, Orange, has already

built up an enviable level of customer loyalty, based on its powerful

personality. ‘Orange is in a very strong position,’ Fawssett says.

‘There is an aura about the brand that conveys an almost tangible

feeling of self-confidence, and that rubs off on consumers.’

Brand extension, then, is not something to be viewed any more as a niche

activity. It’s not something you do once every ten years, then sit back

and relax. Everyone is brand extending today - yes, even media owners,

who have recognised that they are no different from other companies.

Consumers today have less time to make decisions and are more brand

literate. Those brands that send the clearest signals will increasingly

act as a short-hand set of values for consumers. For this reason, the

brand extension story is only just beginning and looks set to remain

flavour of the month for many more years to come.

Top five success stories

Tango Apple, Blackcurrant and Lemon

Mars Ice-cream

M&S financial services

Virgin Cola

Weight Watchers

Top five flops

PG, instant white tea; No consumer demand for instant tea, let alone

instant tea with a whitener

Timotei facial care; None of the Timotei hair-care values translated to

facial care

Levi’s suits; Didn’t fit with the rebellious, individualist image

portrayed by the jeans advertising

Delight; This Van den Bergh chilled foods brand extended too quickly and

without defining clearly enough its core attributes

Penguin ice-cream bar; Was priced and packaged as a luxury purchase,

which was out of sync with the core product’s attributes as a fun

product aimed at children