A company like Haagen-Dazs, known for its classy ice cream, might opt to extend into a related product category like frozen yogurt; or Nike could break into a brand new sports category, as it did with skateboarding in 2002. The decision can be crucial to your company's bottom line.
One thing firms concern themselves with is fit. This is the notion that, say, Heineken had best not roll out a new popcorn product, because consumers will expect it to taste like beer (participants actually expressed this concern in an experiment). Another example? "Exxon ice cream," says Kelly Goldsmith, an assistant professor of marketing at Kellogg School of Management at Northwestern University, playfully laughing at the notion that consumers will think, "I don't want gasoline in my milk."
But while an extremely low-fit concept like Exxon ice cream is a no-no, what about a product that is just lower fit? For every high-fit extension, like Mr. Clean making mops, Ms. Goldsmith points out, "there are also lower-fit extensions that...are successful in the marketplace. Harley Davidson, a motorcycle brand, went into apparel and fragrances. Those products were lower fit, yet still successful."
Ms. Goldsmith says she and her research collaborators Tom Meyvis, an associate professor at New York University, and Ravi Dhar, a professor at Yale University, began to wonder, "Maybe there are some factors we haven't explored that could actually increase consumers' likelihood of accepting low-fit extensions."
The trio experimented with visual cues and brand comparisons. Visual cues come into play when the consumer can inspect the product as in a store, next to similar products. When customers are choosing among products they feel are familiar to them, the researchers thought, they might be less concerned about whether a product fits with its brand company and more concerned with whether it fits their needs. Brand comparisons also allow participants to consider a particular brand's product in a more natural context: next to the product's competitors.
In a series of experiments published in the Journal of Marketing Research, Ms. Goldsmith and her colleagues showed participants pictures comparing higher-quality but lower-fit brand extensions, like a fictitious Haagen-Dazs cottage cheese, and lower-quality but better-fitting brand extensions, like store-brand cottage cheese. They found support for their hypotheses that visual cues and brand comparisons would increase participants' preferences for the higher-quality, lower-fit brand extensions.
One study found, for instance, that "[s]imply providing the outline of a deodorant stick increased the choice share of a Nike deodorant from 50% to 80%" over store-brand deodorant. Another study found that when they were asked to rate or compare adjacent brands, participants rated themselves as more likely to purchase the higher-quality product, such as an Applebee's Mexican cookbook, over the higher-fit product, such as a Taco Bell Mexican cookbook, than when they were asked to rate brands separately.
"If you are a brand like Nike or Haagen-Dazs, or one of these very large national brands associated with quality, and you want to make money by extending that very successful brand even further -- to new [but] lower-fitting categories -- what our research shows is that you really need to show people what that product looks like and show it to them in the context of other brands in that category," says Ms. Goldsmith. The implication is that advertisements for Haagen-Dazs cottage cheese on its own might not be enough. Instead, the company would need to get the product into grocery stores and give consumers taste tests to "make it imaginable, make it real."
There is, of course, a flip side: for lower-quality brands that want to introduce a brand extension -- Ms. Goldsmith offers the examples of McDonald's and Taco Bell -- "you might want to keep it in isolation; you don't want to put it in the context of other brands and potentially highlight low-quality associations."