Brandgym_research paper 9

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September 2015

BRANDGYM RESEARCH PAPER 9

By David Taylor Managing Partner

www.thebrandgym.com

About the researchIn this, our 9th global survey, we looked at the opportunities and challenges of stretching brands into new categories, including the importance of having a strong core brand and business.

The research was carried out via a survey of 80 senior marketing professionals across Europe, Africa, Asia, the USA and Latin America, covering a range of different sectors. We have brought to life the findings with examples, both good and bad, from our work on brandgym projects and through interesting case studies suggested by the marketing directors surveyed.

1 | SEPTEMBER 2015 | BRANDGYM RESEARCH PAPER 9

Stretch the Core

IntroductionStretching brands into new categories is clearly a business priority for the marketing leaders we surveyed. It accounted 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.

In this paper we look at the following areas:

• Grow from the core: what is the role of the core brand in stretching into new categories?

• Stretch success factors: what are the most

important factors for successful stretching?

• Core stretch capabilities: which organisational capabilities are most important for brand stretch, and how effective are the systems currently in place?

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The brandgym partners

www.thebrandgym.com


The importance of having a strong core brand and business from which to stretch is confi rmed 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 fi rst and most obvious role of a strong core is providing relevant equity that can be leveraged in the new category to help drive trial. As one marketing director commented, "Strong core equity is like a great calling card and gets you in the door. Lacking a strong calling card the effort and resources needed to get penetration are much higher."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 andknow-how that can be leveraged to create advantage in the new category. In the case of Apple,the iPhone benefi ted hugely from Apple's core "ecosystem", including iTunes for content, Apple ID for ease of payment and distribution via the Apple Stores.

Part 1: Growfrom the core

Effect of weak core on chancesof brand stretch success

Much less likely

Less likely

No effect

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24%

5%

71%

Action point: ensure you are building a strong core brand and business before trying to stretch into new categories, in terms of brand equity but also business competences that can be leveraged

CoreEquity

Leverage

CoreKnow-howLeverage

CoreBrand

Leverage

CoreBusiness

Know-how

Gorgeous design

Distribution inc. Apple Stores

iTunes and Apple ID

Displays

Intuitive use

Brand properties: silver,white, black, Apple logo

www.thebrandgym.com


Part 2: StretchSuccess Factors

Action point: when working on a brand stretch initiative, focus not only creating awinning concept and product/service, but also on building a viable long-term business model

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The importance of a strong core for brand stretching was confi rmed 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%).

These results confi rm our own experience, where 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. In contrast, Dove's stretch into deo was helped by Unilever's capability in this category, including distribution, on-shelf presence and a commitment to long-term investment.

Strong core brand and business

Product that delivers

Differentiated, relevant concept

Sustained marketing investment

Getting distribution

Large and/or growing market

Price/value

Manufacturing capability

Being fi rst to market

20% 30% 40% 50% 60% 70% 80% 90% 100%10%0%

Brand stretch success factors

% Extremely Important

% Very Important

Size of prize

Ability to win

Size of PrizeAbility to Win

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Part 3: Core Stretch Capabilities

Action point: Try to move more quickly from written concepts into prototyping and exploring ideas. This makes it much easier for consumers to understand and gives you valuable learning on how easy, or hard, the concept is to execute. And when evaluating ideas, try acting like private equity investors by asking "Would we invest our own cash in this idea?"

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In terms of organisational capabilities for successful stretching, the double whammy of insight (85%) and idea generation (78%) were, as you might expect, seen as the most important. 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 above for an example of a mocked up pack and ad idea 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?"!


NEED for IMPROVEMENT (% NOT EFFECTIVE)

20%

75%+

VERYHIGH

HIGH

MED

50%

25%

40% 60%

IdeaGeneration

Insight/Foresight

Quant.Evaluation

RealisticFinancial

Evaluation

Getting IdeasTo Market

Fast

QuickPrototyping/

Exploring

Important &working well

Important &needs improvement

Lower importance/need for improvement

IMPO

RTA

NC

E (%

EX

TREM

ELY

IMPO

RTA

NT)

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Conclusions

ConclusionsThe importance of brand stretching has been confirmed by this survey, along with the challenges of doing this successfully, with almost 40% of attempts failing. The survey also has some clear recommendations on how to maximise your chances of successful stretching:

• Stretch from the core: ensure you are building a strong core brand and business before trying to stretch into new categories. It’s critical to build not only your core brand equity but also business competences that can be leveraged

• Ability to win: When working on a brand stretch initiative, focus not only creating a winning concept and product/service, but also on building a viable long-term business model that gives you the ability to win

• Agile marketing: Try to move more quickly from written concepts into prototyping and exploring ideas. This makes ideas easier for consumers to understand and gives you valuable learning on how easy, or hard, the concept is to execute.

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www.thebrandgym.com

Anne Charbonneau (Benelux/France)

M: +31 611 64 34 07

E: [email protected]

Diego Kerner (Latin America)

M: + 54 (9) 11 5 058 5900


Anna Eggleton (UK/Service brands)

M: + 44 (0) 7500 703 368


David Taylor (Managing Partner)

M: + 44 (0) 7789 202 564


David Nichols (Managing Partner)

M: +44 (0) 7787 148 806


Brand Stretch Coaching

www.brandgymblog.comwww.thebrandgym.com | DESIGNED BY Red Fox Studio

• The brandgym is a network of 7 senior brand coaches helping marketing leaders achievetheir brand and business ambitions.

• We are leaders in the area of Brand Stretch, helping teams leverage their core brand equitiesand competences to enter new categories:

• Developing potent insight fuel from different sources to inspire idea creation

• Creating and rapidly prototyping brand stretch ideas

• Helping you "follow the money" to quickly prioritise ideas based on size of prize andability to win.

• We also have a track record of delivering top rated keynote speechesand training courses on the subject of stretching the core

• Additional brandgym services include Brand Vision to Action andGrowing the Core

• We have published 7 books on brand growth including“Brand Stretch: Why 1 in 2 extensions fail and how to beat the odds”

• We have a track record of helping leading companies stretch theircore for brand success, including SAB Miller, Mondelez, Unileverand Johnson & Johnson.

Prasad Narasimhan (Asia)

M: +91 9901585005


Silvina Moronta (Latin America)

M: +54 (9) 3436612393


stretchcorethe

Brandgym_research paper 9

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