Successful Brand Extensions have “Fit” and “Leverage.”
Fit: What categories consumers will accept from a brand. A brand’s stretch-ability or boundaries.
Leverage: Distinctive properties a brand “owns” that provide a competitive advantage to the brand extension in its new category
Brand extensions that are illogical for consumers are unlikely to succeed. In contrast, those that are such a natural fit have a great advantage in the marketplace. I have had consumers say “Of course, why didn’t I think of that.” Clorox Clean-Up was such a natural fit because bleach cleans and disinfects hard surfaces. Snickers Ice Cream Bars were instantly accepted and desired by consumers. The brand name sold the product. People required no explanation in order to want the product. The benefits of the brand extension were inherent in the name. This is true brand extension where the brand provides a competitive advantage. In contrast, some brand extensions are simply an attempt to slap on a well-known brand onto products in a somewhat unrelated category. Thus, leverage is the properties a brand name owns that can be transferred to a product in another category giving it a strong competitive advantage.
Unfortunately, some academic articles about brand extension focus on “fit” as the most important dimension in choosing a brand extension. In reality, leverage is the most important property. When a brand “owns” a benefit, attribute, or other element that is important in another category, extending it offers tremendous potential to succeed. Some brand extensions may make little sense to consumers until the connection is explained. This can work, but those that need no explanation are best. So start with what a brand name “owns” and explore what other categories would benefit from a product with that property.