Jeff Bezos, the world’s richest particular person with a net worth of $187 billion, will travel to space in July as aspect of the initially crewed flight by his space business Blue Origin. Bezos will be flying on New Shepard, the rocket ship made by Blue Origin, which the billionaire founded in the year 2000.
It’s been an extraordinary journey so far for Bezos. In 1994, he designed the on the web bookstore Amazon followed by cloud computing platform Amazon Web Services in 2006. In May, Amazon acquired Hollywood studio MGM, which is home to the iconic James Bond franchise. That’s not all. Amazon today holds a important stake in electric car or truck business Rivian and owns grocery chain Whole Foods Market. In January, Amazon.com also announced the acquisition of podcast startup Wondery, aiming to beef up non-musical content on its Amazon Music app. Then, of course, there is Bezos’s space venture.
Tesla owner Elon Musk is not far behind either when it comes to diversification. Unlike numerous, in reality, Musk had an thrilling 2020—Tesla stocks surged, he had a infant boy and even launched Tesla Tequila. The lightning bolt-shaped bottle, launched in November 2020 in the US, was sold out inside hours of lift-off at an eye-watering price tag of $250 per piece. Interestingly, it all began as a joke. On April Fool’s Day in 2018, Musk had shared a photo on Twitter of himself, holding a sign saying “Bankwupt!”. In subsequent tweets, he stated he was “passed out against a Tesla Model 3” surrounded by “Teslaquilla” bottles. It wasn’t lengthy just before netizens began asking him to sell ‘Teslaquilla’, which he lastly launched last year as Tesla Tequila. As per the brand web page, it is “an exclusive, small-batch premium 100% de agave tequila añejo”. Añejo tequilas are usually aged for one-3 years in oak—Musk’s was aged for 15 months.
Bezos’s investment approach and Musk’s branching out from rockets and automobiles to tequila are not the initially examples of brand diversification. Many entrepreneurs just before them have gone the brand innovation and extension route. It’s uncomplicated to see why, as it not only aids establish a brand’s position in new categories, but also advantages the parent brand by making a higher sense of loyalty, reaffirming the brand guarantee and customer perception. It also sustains the parent brand’s relevance in its current category, say specialists.
Growth approach
Brand extensions work nicely as it is less complicated for firms to focus on just the new item rather than face the prospect of making awareness each for the brand and item, as per business specialists. “It is an effective brand and business growth strategy. But what’s most important is to set up a positive outlook with the consumer regarding the performance of brand/product extensions,” says Mumbai-based Krishna Iyer, executive vice-president of marketing firm MullenLowe Lintas Group. “A strong retail focus based on anticipated consumer demand helps mitigate the risk of failure. Product extensions have seen a fair share of failures, too, and so it requires careful thinking to identify the right categories, as well as the approach to enter those categories. Imagine a brand of condoms called Virgin. It’s a positioning disaster!”
Iyer cites a handful of examples of brand extensions that worked nicely in the previous. Even although the airline is today grounded, Kingfisher is a excellent instance, he says, as its beer flew off the shelves. Technology giant Google, also, has extended its brand name to most of its items and services. FMCG majors Unilever and Nestle adhere to a hybrid model of many brands with unique item extensions. ITC, initially a cigarette business, has extended into categories like hospitality, FMCG and stationery, all unrelated and unimaginable for a brand that began its journey with tobacco. Clearly, extensions require not necessarily be born out of a item. Fratelli, a wine manufacturer, lately diversified into cheese, launching a variety of flavours.
Mumbai-based Anjali Malthankar, national approach director, Tonic Worldwide, a digital-initially inventive agency, says, “Traditionally, brand extensions were considered to be more successful than new brand launches as these entailed less risk and were also more cost-effective, but times have changed. People have a platform to voice their opinions and we are seeing brands struggle to keep even their equity intact in the trolling world. This reduces the brand’s will to experiment and face scrutiny for new innovations. However, we are noticing brand extensions for local and regional brands, which are low-risk and mostly triggered by needs such as hygiene and cleaning during pandemic.”
Success stories
One of the most revolutionary examples of brand diversification is the Michelin Star, one of the greatest honours a restaurant can obtain. It’s a star rating that is awarded as a sign that a restaurant has succeeded at the highest level. The Michelin Guide, viewed as the Bible of dining guides, can make or break fine dining establishments about the world. But it is the identical Michelin that manufactures tyres.
As per the brand web page, Michelin tyre business was established in 1889 by brothers André and Édouard Michelin in France. It was a time when driving was perceived as a novelty, with much less than 3,000 automobiles in all of France. However, the brothers had been swift to recognise driving and mobility as a lasting trend. To encourage more road travel—and increase tyre sales—they decided to produce a extensive guide book for motorists, which would catalogue hotels, restaurants, mechanics and gas stations. In 1900, the pretty initially edition of Michelin Guide was published and 35,000 copies had been provided out for no cost. Today, more than 30 million copies have been sold across the globe. It presently prices more than 40,000 establishments in more than 25 nations across 4 continents. “From an image standpoint, it certainly has helped as a halo for a tyre brand. Because tyres, of course, aren’t the sexiest product,” Tony Fouladpour, Michelin North America’s director of corporate public relations, reportedly stated.
Other results stories of innovation incorporate Dyson. It revolutionised the category of vacuum cleaners for more than 3 decades, but in 2019, forayed into desk lamps and other grooming items. Ferrari, whose automobiles frequently dominate world racing competitions, effectively ventured into the theme park business enterprise with Ferrari World Abu Dhabi in 2010.
However, some brand extensions can dilute the brand. Take, for instance, Callaway, an American international sports gear brand. It began by generating premium golf clubs and later launched footwear, apparel, golf accessories, umbrellas, watches, towels, and so forth. All items are created for golfers, but have totally unique engineering and building techniques that can dilute the brand. However, the pluses of brand extension are more than the minuses, opine specialists. “For brand and product extensions, the pros far outweigh the cons. In the case of the former, a brand is visible to a wider audience, increasing its equity and loyalty. For the latter, the brand’s new products have a higher chance of acceptance, better trials and increased sales. Extensions are a CFO’s delight, helping companies reduce the cost of new brand development, and optimising distribution, marketing and advertising expenses,” says Iyer.
Then there is Jaquar Group, which began by manufacturing faucets in 1960. Over the years, it incorporated wellness options as well—whirlpools, shower panels, steam cabins and spas—and lighting also. “We utilised our expertise, legacy, manufacturing and distribution prowess to foray into the lighting business way back in 2001,” says Sandeep Shukla, head, advertising and communications, international operations, Jaquar Group, adding, “We felt that the gradual move towards LED was the right one. It was a strategic business decision to progress from bath and sanitaryware to lighting solutions, a decision which reaped rich dividends for us as it was a well-researched and insight-based move.”
Pursuing innovation
Brand extensions about the world are designed as a outcome of inspiration and innovation, and today, no sector is left untouched. Take, for instance, gin makers, who have in the previous place their brand name on a box of chocolates and even a pair of socks.
Indian organizations and sectors are also pursuing innovation and gaining recognition. In 2020, Delhi-based Anand Virmani, founder and CEO, Nao Spirits & Beverages, announced the initially brand extension in the type of a restricted-edition gin named Juniper Bomb, an extension of yet another variant named Greater Than. “The restrictions on advertising alcohol have led brands over the last two decades to create brand extensions with the primary motive of using these as surrogates through which to promote the mother brand. Think Bacardi Music CDs or McDowell’s Soda Water. While the result is the same in both cases, the difference is that surrogates are basically empty shells and no one really cares to sell or, for that matter, buys these products,” says Virmani. “An ideal brand extension is one that benefits not just the parent brand, but can also be a self-standing product in its own right. Both should complement each other, with the whole being greater than the sum of its parts,” says Virmani, adding, “Greater Than was the first craft gin in a market that didn’t as yet have a culture for drinking gin. Our aim at that point was to create a solid base for a gin culture. Now, having seen it take hold, we want to build a new level and get gin drinkers to experiment with different flavour profiles.”
If, having said that, there is no understanding of the core values or brands are just attempting to extend into other categories, it will outcome in failure, say specialists. In 2002, soap and detergent important Nirma aimed at option development avenues to lessen its dependence on the stagnating and hugely competitive soap and detergent marketplace by test advertising toothpaste and shampoo. It failed. Pond’s, also, suffered a related fate in its initial years. “After a few hits and misses with toothpaste and deodorants in the early years, Pond’s took off when it focused on skincare and beauty. It used its equity in beauty and skincare, and added gravitas with its premium portfolio by extending the target group,” says Malthankar, who has been aspect of the brand’s ‘mass-to-class’ journey apart from working with other FMCG brands like Clean & Clear, ITC Skincare, Go Air, Jo & Doycare soaps and Ferrero Rocher, amongst other individuals.
“A brand extension benefitting the parent brand is completely dependent on the success of the extension,” says Malthankar, who is working on a brand that has entered a unique category—from car to apparel. “When a brand has a strong purpose and point of view, it makes for a better extension than a brand that is based on the success of a particular product category. Good examples of strong purpose are Reliance, which is known for value, and Tata for trust,” she says, citing examples of some current Tonic Worldwide projects such as Glucon-D ImmunoVolt (immunity bites for kids), Nutralite Choco Spread (a healthful choco spread) and lingerie brand Enamor’s athleisure put on.
As per Shukla, extending a brand outdoors its core item category can be advantageous as it aids evaluate a brand’s all round relevance and appeal. “In our experience of shifting gears, it worked to our advantage as the customers of our new product extension (lighting) had values and aspirations that synchronised and matched with our core business… and the core promise of the new product embodied that of the brand. Since Jaquar was already a well-established brand name, it increased consumer interest and willingness to try our new product. Hence, our move was accepted by the market. Extending a brand outside its core product category can be beneficial as it helps evaluate a brand’s overall relevance and appeal. If the brand enjoys great trust and equity, an extension that addresses a need gap in the market can augment the brand’s appeal and business. Having said that, the flip side can’t be ignored too. Brand extensions in unrelated markets may lead to loss of reliability and, if the move goes wrong, the new product may generate implications that can hamper the image of the core/original brand,” he says.
Going ahead what we require, Shukla says, are home-grown cutting-edge suggestions. “We have a long way to go. India will truly take the spotlight as a global hub when real innovation takes place on the back of cutting-edge ideas that are home-grown and capable of competing with nations like the US, Germany and Japan,” he says.
An excellent brand extension is one that advantages not just the parent brand, but can also be a self-standing item in its personal correct. Both should really complement every other, with the entire getting higher than the sum of its components — Anand Virmani, founder & CEO, Nao Spirits & Beverages
When a brand has a powerful objective and point of view, it tends to make for a much better extension than a brand that is based on the results of a unique item category — Anjali Malthankar, national approach director, Tonic Worldwide, a digital-initially inventive agency