State of the economic system and brand extensions.

During the 1990’s, economy was growing strongly and global brands wanted to ride the coattails of that evolution. Companies saw great opportunities and wanted to make the most out of the positive economic climate. Therefore, brand extensions were a gift from heaven. Almost every single strong brand saw itself obliged to use their reputation/name to enter new departments of the market. This resulted in a situation in which extensions represented an astonishing 81% of all new products launched during the 1990’s. Furthermore, it’s worth mentioning that brand extensions aren’t always offensive moves. Sometimes, companies feel the need to take opportunities, just to outsmart the competition.

But times are changing and the economic downturn certainly doesn’t stimulate extensions. As a matter of fact, companies need to reduce costs in every possible way. Nowadays, it’s not uncommon that companies quit some of their extensions, despite of earlier made multi-million investments. In 2002 for example, Unilever decided to cease all extensions of Domestos, its household bleach product.

Source: http://goliath.ecnext.com/coms2/gi_0199-2688400/Fool-s-gold-for-marketers.html

Van Vooren Lennert


I fully agree on Alexandre’s opinion. I see a lot of brand extension failures as the result of incomplete information about the target audience. To me, investing in additional research to achieve a more realistic image of the aimed segment seems a necessity to succeed.