online marketing psychology

December 30, 2010

Brand extensions own

Brand extensions own a big percentage of the market. In Brazil about 77% of the products available on the market are brand extensions. I was surprised by this.

Even more surprising was that 95% of the products on the US market are brand extensions. Huge numbers which show that people keep buying famliar names.

This way there are a couple of big brands that take account for the majority of all the products. In Brazil these are: Natura (cosmetics), Sadia (processed meat), Bic, Gillette, Faber Castell and Danoninho (dairy products).

The companies behind these brands follow the same approach. Start off with a good definition of what the mother brand stands for (hopefully!) Then every possible extension is analyzed, how that brand fits into the mind of the consumer and how it affects the mother brands.

For example all of the products with the Bic brand name want to offer a simple, reliable, accessible and well distributed solutions.

Long term success?

But to find a real explanation for this big number of brand extensions, it would be interesting to see how many of these extensions actually stay on the market after a couple of years.

Because of the lowered cost to launch new products, many of them come and go. On the short term the risk isn't that big. But going away too far from the mother brand will damage the reputation.

Probably brands will keep trying to find a balance between extending and their mother brand.
When Parmalat, a Brazilian dairy producer, launched a new line of tomato sauces it didn't stick. So they know that is a bridge too far.
Source: Exame(Portuguese)

77% and 95% also sound like a lot to you? Share your thoughts!

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