Numbers teach us that brand extensions often have the tendency to fail. A team of market researchers from Ernst & Young tried to find a decent explanation for this unfortunate phenomenon.
They managed to identify three key reasons: the new products lack a decent marketing support, they aren’t as distinctive as they should be and the most important reason of all: the products just aren’t good enough.
Companies and marketing directors rely too much on their brands. They assume that the product having a well-known name, makes up for a possible lack of quality. This lack of quality is usually the result of insufficient research and testing because they want to launch their new product on the market as fast as possible.
In these cases, the products show much higher purchase intention than new brands, but due to a possible disappointment caused by a quality difference compared to the mother brand, they will also have a higher risk to have ‘died’ before the end of their first year compared to launches with a new brand.
Bram Van Hijfte
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