Pitfall of Brand extensions

The main advantage of a brand extension is that you take the equity/goodwill from an existing brand and use it in another context. If successful, this can save a lot of money because you do not have to invest huge monies in developing a new brand. All you have to do is to make people aware that the brand has entered a new product/service or market category.
Another advantage is that, if you are successful, you increase the respect/stature of your brand overall, and may well rejuvenate it.
The downside to a brand extension is that you can:
Fail in the new product/service or market because the brand is not compelling in that area
Lose the tight focus of your existing brand, and therefore its intimacy (differentiation and relevance)
Damage your existing brand by introducing new conflicting/confusing attributes

Learning’s from some brand extensions:
Over the past 2 decades there have been several brands in India have adopted brand extensions. Some have succeeded and some have failed. It is very critical that the equity and the values of the mother brand is percolated to the new brand with out any baggage. However there are some brands, which has failed miserably because of major miss- match in the new brand extension. The cosmetic brand Ponds launched a toothpaste long time back. It was really surprising as to how a consumer who knows the brand Ponds as a cosmetic brand use this inside the mouth. Total dichotomy and the brand did not take off and the company had totally withdraw from this category

Similarly Dettol Soap did the same mistake but realised it soon and corrected their strategy. Dettol liquid which was an antiseptic liquid had a great equity in the market and literally the market leader with absolutely no competition. Taking advantage of this company got into the toilet soap market and positioned the brand as the love and care soap. The brand did not take off as there was a disconnect in the brand proposition. The core values of the mother brand Dettol liquid was missing in the soap. But the company quickly revisited the brand and re launched Dettol soap as an antiseptic soap with the line THE 100% BATH SOAP. The results were seen and today dettol soap has a significant market share in the toilet soap category. The success has been well supplemented by the company by launching new variants of the soap to give the consumer more choice and variety in their offerings.

Another recent example of brand extension, which surprises me, is the launch of Anchor toothpaste from a brand, which is strongly know for electrical switches. On the face of it there is a major disconnect but I am told that the brand is doing well in certain pockets of Gujarat and Rajahsthan where the product and the brand is well received. The company also used a very clever strategy of positioning the brand as vegetarian toothpaste. Will they be able to sustain as a long term strategy one has wait and watch.

Some lessons one can apply:
What does your brand stand for in the mind of existing/potential customers?
What could you, with significant investment, make it stand for?
In what markets could your brand profile match needs, and in which segments?
Are those segments attractive enough to you?
Do you, or could you, have leading edge competence in those markets?
Evaluate the dangers of eroding the equity of the mother brand
Try and launch it as test market case