This is the fourth of a series of weekly posts introducing key themes from the new brandbgym book, Grow the Core: How to Focus on Your Core Business for Brand Success. Here, we look at the final of the three main ways to grow the core, which is extending the core.
Our official launch day is next Monday, 4th Feb. But you can already get it here if you like: on Amazon.co.uk. Or, if you are a Kindle fan, the book can be dowloaded here.
Core range extension offers new versions of the core product
or service, such as Dove bar introducing a Refreshing Green
version. This is very different from brand stretch, where you
move beyond the core into totally new markets, such as Dove
launching deodorants.
The double whammy: penetration x profitablity
Range extension can be a great way of growing the core.
It can drive penetration by widening the brand’s appeal to more people on more occasions. But it can
also deliver an additional business benefit for the core in the
form of ‘premiumisation’: charging a higher price for new benefits. This drives not only volume share
but also value share. As long as the new product features are
genuinely adding value to the consumer, the premium price
should at least recoup the extra cost of the product to maintain percentage profitability. In the best cases, the core range
extension actually delivers significantly more profit per unit sold.
A great example of this ‘double whammy’ of penetration
and premiumisation is Gillette. The brand has been unrelenting in its drive to develop better and better razor systems.
So, we have gone from Sensor (two blades) to Mach 3 (three
blades) and now Fusion (five blades). Each of these is priced at a premium, supported
by superior benefits. The growth in the UK core shaving business over this time was impressive, with the razor and blade business up from £128 million in 2002 to
£180 million in 2006, with value share up from 60.1% to
67.9%;
Pack extension – WD-40
Extending through packaging formats is a great way of
growing the core. You sell more of the same core product, rather than
adding new products. A great example is WD-40,
the multi-purpose lubricant which stops squeaks and unlocks
stuck bolts, amongst its many uses. WD-40 used to come with a
little straw taped on the side, to help direct the spray.
The problem was that people would often lose the straw. This
led to the creation of ‘Smart Straw’, a new WD-40 pack with
an integrated straw that flips up to use and back down to
store. Smart Straw solves a real problem
and makes the product easier to use. And as it
offers consumers real added value it supports a premium vs. the normal can.
Product extension – Ryvita
After having done all you can to sell more of your existing product offer, the last step is to consider
adding new products. Here, there is a need to focus on those
products that genuinely offer potential to drive penetration
by widening the brand’s user base. A good example is the Ryvita's ‘seeded’ crispbreads. These have played
a role in re-positioning the brand from being a diet product to a tasty, crunchy and healthy
product. The core extensions
deliver a more interesting and tasty eating experience, whilst
also offering extra health benefits. These extra benefits are
worth paying more for, supporting a 60% price premium versus standard.
In conclusion, core range extension can be a great way of growing the core, providing your new formats and products add real consumer value that supports a price premium, delivering the double whammy of penetration and profitablity.
