How to stretch from the core? brandgym research results
We've just published our 9th annual research paper: Stretch from the Core. We looked at the opportunities and challenges of stretching brands into new categories, including the importance of having a strong core brand and business.
Stretching brands into new categories is clearly a priority for the marketing leaders we surveyed, accounting for an estimated 30% of growth in the coming 3-5 years. However, brand stretch is confirmed as being a challenging route to growth, with a failure rate of almost 40%. Whilst this failure rate is slightly lower than that in our book, Brand Stretch: Why 1 in 2 extensions fail and How to Beat the Odds, there is still clearly room for improvement.
Below are some of the highlights from the research.
1. Stretch from the core
The importance of having a strong core brand and business from which to stretch is confirmed by the marketing directors in our survey. 95% said that brand stretch success was less likely with a weak core brand, with most of these saying success was much less likely.
The first and most obvious role of a strong core is providing relevant equity that can be leveraged in the new category to help drive trial. Apple is of course a brand that has mastered the art of equity leverage and was unsurprisingly the most often quoted example of good brand stretching in our survey.
An additional, and less often quoted, role of a strong core is the business competences and know-how that can be leveraged in the new category. In the case of Apple, the iPhone benefited from Apple's core "ecosystem", including iTunes for content, Apple ID for ease of payment and distribution via the Apple Stores.
2. Stretch success factors
The importance of a strong core for brand stretching was confirmed by this being the most important success factor, with 90% rating it as extremely or very important. This was closely followed by a differentiated, relevant concept combined with a product that delivers. These factors contribute to the "Size of the Prize" for a brand stretch initiative.
More interesting was the importance of factors linked to the company's "Ability to Win", including sustained marketing investment and getting distribution. Indeed, when explaining failed brand stretch attempts, lacking the ability to win was considered to be even more important (60%) than size of prize (40%). This confirms our own experience; companies often under estimate the go-to-market challenges of brand stretching. Examples of unsuccessful brand stretch attempts with decent concepts but a lack of ability to win in the new category include Lynx/Axe shaving and Heinz Farmers' Market Chilled Soups, as I posted on here.
3. Core stretch capabilities
The double whammy of insight (85%) and idea generation (78%) were, as you might expect, seen as the most important capabilities for brand stretching. These were also areas where respondents felt their organisations had good systems in place, with 80%+ saying these were effective.
However, there were other important areas with much more need for improvement. Firstly, quickly prototyping and exploring ideas was rated as highly important, but over half the survey said systems for doing this were ineffective. Rapid prototyping, experimentation and refinement are key features of the "agile marketing" used by digital start-ups, and an approach used on our brand stretch projects (see on the right for an example of a mocked up pack and ad created in 48 hours).
The second important area for improvement is realistic evaluation of the financial opportunity. We find it helpful on projects to get teams to act like the investors in the TV shows The Dragons's Den / Shark Tank. This helps them to be more business savvy and "follow the money". We find a good question when evaluating ideas is to ask "Would you invest your own life savings in this idea?"
In conclusion, to maximise your chances of brand stretch success, ensure you are building a strong core before trying to stretch into new categories, in terms of brand equity but also business competences. A winning concept and product/service is key, but so is a viable long-term business model that gives you the ability to win.