The Good, the Bad and the Smelly

The past two days I have been up early to appear on Fox Business' "Money for Breakfast" to count down my top 5 line extension winners and losers of 2007 or "The Good, the Bad and the Smelly" as I refer to them. I'll start today with the losers and follow-up later this week with the winners.

What is a line extension?

A line extension is taking a brand name in one category and using the same brand name in another category. Scott used to be just a toilet paper. The number-one brand in fact. Today Scott is into everything:

• Scott toilet tissue
• Scott napkins: Scotkins
• Scott paper towels: ScotTowels
• Scott facial tissue: Scotties

Line extension killed the brand. No longer is Scott the number-one brand of toilet tissue. Today Charmin is the number-one brand. While well-known, Scott is a meaningless brand in the mind because its name is on everything.

Put Scott on a shopping list and what do you buy? I put Coke on the list; I buy Coca-Cola. I put Charmin on the list; I buy toilet tissue. I put Scott on the list and what do I buy and where do I use it?

Are different flavors a line extension?

Line extensions are sometime confused with flavors and varieties. Vanilla Coke is a flavor and Diet Coke is a line extension. There are lots of varieties of Tostitos chips. But Tostitos salsa is a line-extension.

Why do companies line-extended in the first place?

It’s the cheapest way to introduce a new product. You don’t have to spend millions of dollars on advertising establishing your brand’s credibility because everybody already knows your brand name. That’s why 90% of new supermarket brands are line extensions.

Unfortunately most new brands fail. It is especially confusing when you have the same brand name in two different categories. And long term, line extension it can damage the core brand by undermining its meaning in the mind.

But if they didn’t line extend how would companies ever grow?

Instead of always thinking how to line extend, companies should think more about launching second brands. Many line extensions represent a missed opportunity. Toyota could have sold many expensive Toyotas, but they would have missed an opportunity to launch the Lexus brand which today dominates the expensive car category. Lexus is much more valuable than the sales that might have been generated by an expensive Toyota model.

The 5 Worst Line Extensions of 2007

1. Play-Doh Cologne.

Hasbro says the fragrance is "meant for highly-creative people, who seek a whimsical scent reminiscent of their childhood."

Play-Doh does have a unique and different smell, but I doubt too many adults want to smell like Play-Doh. Kids play with the stuff despite the bad smell, not because of it.

What is next Eau de Huggies?

2. Hooters energy drink.

Hooters is known for boobs and chicken. The brand has no credibility in energy.

Just because everybody is doing it is not a good excuse to launch a line extension. Today there are hundreds of energy drinks. In order to succeed, you need be first in the mind and have a good name. Hooters has neither.

3. Jeff Gordon fine wine.

Don’t the wine makers attend any NASCAR races? I have been to several since moving down to Atlanta. And while I have seen a lot of beer consumed, I have never seen a glass of fine wine consumed. Wine and NASCAR go together like water and motor oil.

4. Disney wedding gowns.

As a wedding destination Disney has had some success. Disney World is a great place to visit, and many weddings are part family reunion these days so in some ways a Disney wedding makes sense. I have been to a wedding at Disney, but having Mickey Mouse and Goofy characters dancing with the guests is not my cup of tea.

I just went to a Cinderella party for a three year old. And while little girls loved to dress up as Cinderella, I don’t think 25-year-old really girls do. Not too many brides want to look like a cartoon character on their wedding day. Looking like Princess Diana is one thing, a Disney Princess is quite another. A G-rated wedding night is not a fairy tail ending.

5. Trump Steaks, Trump Vodka, Trump Rugs, Trump Water, Trump Cologne, etc. etc.

Trump is the most line-extended brand in America today. The Trump extensions are novelty items. They might sell a few in the short term, but long term Trump Vodka/Rugs/Water will never be a big deal.

Of course, all Trump extensions are licensed. So Trump doesn’t stand to lose any money on these deals, he just gets a cut if they sell. Which, in the case of most of these won’t amount to much.

Comments

[Devon Thomas Treadwell]

Great analysis, Laura, as usual. I always enjoy reading your thoughts on branding.

We have posted our picks of best and worst brand names of 2007. I'd be curious to know if you agree.

Cheers.

[Sunil S Chiplunkar]

Very thought provoking blogpost. Line extensions certainly do not work in the long run. The Lexus example was good.

I think when one looks at business processes and results on a quarter to quarter basis, line extensions seem to have a place in the scheme of things. The wise thing to do is to kind of balance out immediate financial goals with the long term objectives of ensuring financial health of the organization.

[Dan Schawbel]

http://personalbrandingblog.wordpress.com/2007/10/02/donald-trumps-personal-brand-extension-into-steaks/

I mentioned the Donald one on my blog a while ago. It makes for a good laugh and I'm glad you included it in your report.

[Martin Calle]

Another one of my truisms. "It's hard for a company or brand to be one thing to some people." Like Starbucks, they grow to attempt to become more things to more people. Strength of equity fades in relation to development of the flattening maure earnings phase. I seem to be one holding out hope a renaissance in positioning innovation will enable such to return to the rapid growth phase.

[Scott Miller]

The issue of flavors is a gray area. I personally think that there are many opportunities for new brands that focus on a single flavor. Coke and Pepsi used to be such brands, until they remodeled themselves after Shasta, and became brands of many flavors (and therefore a lot weaker, IMO). Someone asks, "I'll take a Coke." The waiter replies, "What flavor?" Not good.

If I were forced to start a new ice cream brand, I'd focus solely of chocolate flavored ice cream. I'd position it as the best chocolate ice cream in the world, as that's all we make. I'd make sure than we didn't use artificial flavors, used real sugar versus corn syrup, and so on.

Someone might suggest that I'm losing out with vanilla lovers. Well, I'd start another brand that ONLY made vanilla ice cream! I'd probably limit it to these two flavors, as combined I'm sure they cover 80% of the market.