The turmoil at Kingfisher Airlines brings us to a more fundamental question: How far can you stretch a brand before you actually start hurting it?.
Ask any marketing expert and he will say building a big, recognisable brand is simply painstaking; so once a company hits the elusive jackpot, it is only natural to stretch it to other products/categories to reap, as they say, a second dividend from their initial investment. But how do you cope with a situation when a much hyped extension doesn’t live up to expectations? Especially so if it is a high-profile brand like Kingfisher?
The turmoil in Kingfisher Airlines has left many wondering if the good times are over for the brand. With the airlines business in the doldrums, will the bread and butter alcohol brand be affected in any way?
There are different views on how the failure in the airlines business will affect the mother brand. Some experts are of the opinion that the troubles facing the airline will have no rub-off effect on the UB Group. “I think the company’s valuation is not affected by what is happening to the airline,” says an expert who wishes to stay anonymous. It is unlikely that the beer business will be affected in any way as the product is in a completely different area of business. “Beer also has a strong heritage and people can differentiate between the two businesses,” notes Madhukar Sabnavis, country head (discovery and planning), Ogilvy & Mather.
Thus, while it may have a negative impact on the discerning investor, a lay consumer may well be aloof. Also, luckily for Kingfisher, being an ‘addictive’ category, beer sales appear somewhat insulated from the wide swinging cycles of some other categories. “Thus if something happened to the beer business, the airline would be impacted, but not vice versa,” quips Harish Bijoor, CEO, Harish Bijoor Consults.
In fact, experts believe that the problems facing Kingfisher have brought to the limelight the pressures on the airline sector as a whole. “Where have all the low-cost flights disappeared? There are the so-called no-frills carriers but flight tickets are not becoming any cheaper,” says an expert. Adds Draftfcb+Ulka, executive director and CEO, MG Parameswaran, “The airline has done the beer business some good, and allowed the brand to gain visibility in a market where alcohol advertising is not permitted. It might have a marginal impact on the mother brand, but this is insignificant in the larger scheme of things.”
Some others are not as optimistic. If the problems last longer than expected, it will, willy-nilly affect the equity of the mother brand as well, they say. Indeed, the Kingfisher debate brings us to a more fundamental question: how to manage brand extensions, especially when a slowing economy is leading marketing managers to focus on cost-savings to increase competitiveness? How far can you stretch a brand before you actually start hurting it?
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The reasons for extending a brand are obvious. Many companies want to piggyback on the existing equity of a brand to gain credibility. The effects of economies of scale in lowering communication costs make this option particularly attractive. The belief is that several products will help promote each other under the same brand name, and thus result in incremental profits. For many brand managers, extending a brand is often a way to scout for additional revenues and a quick way to add to the bottom line. Diversified groups such as the Tata Group (from salt to automobiles) and Godrej (from locks to appliances) have shown how to leverage the corporate brand to enter new and even unrelated categories.
Globally, there are many examples of successful of brand extensions. Imagine a supermarket chain like Tesco becoming a financial services provider, or the Caterpillar brand extending itself from bulldozers to footwear. Compared to the West, Indian brands cottoned on to the concept of brand extension much later. “To a large extent, extensions in India have been dominated by line extensions, that is, extending the brand into new flavours, forms, colour or package sizes. This is a relatively low risk way to increase the potential for sales by increasing the variety of options,” says an expert.
That said, some like Bijoor believe that brand extensions in general are not the best way to introduce new products. “More often than not, the equity of the core product gets affected,” he says. “Marketers are often short sighted and tend to look only at the financial leverage of an extension. My belief is that in the long term any extension takes away from the core brand proposition.”
So what should a company do to increase the odds of success? “It is important for a brand to understand its core values, which aren’t necessarily tied down by physical features and benefits,” says Arvind Mohan, founder of culture and branding firm Religious. “Companies often restrict their values and philosophy to a particular category and find it difficult to extend beyond that.”
One reason why companies like L’Oreal have adopted a sub-brand strategy which makes it easier to extend the brands without creating confusion. L’Oreal for instance has sub-brands for all its Garnier brands: Lite for fairness, Fructis for shampoo and Color Naturals for hair colour. However, even while launching brand extensions, the company is careful. “For example, we will not introduce make-up under Garnier as it is a mass brand whereas make-up as a category is more exclusive,” says Satyaki Ghosh, director (consumer products), L’Oreal India. Pricing of course is a consideration as a mass brand may not find consumer acceptance in a premium extension.
It is vital that the core brand proposition becomes a competitive advantage in the new category. Keeping the core values intact, Hindustan Unilever’s Dove has been able to extend into several new categories from shampoos to deodorants — that is, if one were to discount the misfired 1965 Dove dishwashing liquid meant to compete with Palmolive. As Mohan of Religious explains, the core of the brand is ‘moisturising and classic beauty’ and its inherent DNA can be stretched across an entire gamut of personal care products.
Likewise, when detergent brand Nirma extended to soap, it stuck to its core proposition — value for money. Thus Nirma bath and Nirma beauty soap were priced a notch lower than its biggest competitors, a reason for their big success. A similar view is echoed by Dabur’s marketing head (skin care) Sanjay Singhal. When Dabur decided to extend the Gulabari rose water brand, cold cream and lotion appeared like a natural fit to the core proposition of ‘goodness of rose’. “It is important that the brand promise supports the benefit in the category it is extending to,” reasons Singhal.
Indeed, consumers get rattled when they encounter some sort of dissonance. Take Lifebuoy’s first attempt at launching a talcum power under the same brand. The product was positioned on the family health platform in clear dissonance with the core proposition of the talcum powder category — beauty. The variant was quietly pulled off the shop shelves and last year, the company relaunched it as a prickly heat powder, which resonates better with the core values that Lifebuoy represents.
Remember do not believe the brand pull will work by itself as you extend into the new category. “And this is where the problem lies,” explains Parameswaran. “Companies need to invest money into an extension as well, and not assume that consumers will pick up the product by itself.” Again look at Dove for proof — extension into shampoos has worked well as the company has invested relentlessly into the extension. It is wise for companies not to assume that the target audience for an extension will be the same as the core product. This is particularly true in fast-moving consumer goods. For example, if CloseUp decides to extend beyond toothpaste to soap, it has to keep in mind that the same consumer who bought CloseUp toothpaste might not necessarily buy the soap.
“Often the success or failure of a brand extension is driven by a category issue,” notes Sabnavis. For example, the most recent extension of Horlicks into oats might appear like a logical fit. But marketers must remember not to have huge expectations as the category itself is relatively small. It takes time to nurture a category and it will be wrong to write off an extension going by early numbers. Failure of a brand extension can often be a business issue, rather than a brand issue, points out Sabnavis. “For instance, the failure of Kingfisher is nothing to do with the brand per se but with the business model and many other factors,” says Sabnavis. Devanathan of Dentsu agrees. “That Kingfisher Airlines is in trouble does not mean the brand Kingfisher is in trouble or that the extension itself was doomed. This just says it failed to adapt to certain economic circumstances.”
So there you have it. There is no one-best-way to go about brand extension like there are no time-tested secrets for capturing the consumer’s heart. Given that reasons for failure are often both simple and very apparent — especially with hindsight-brand managers can reduce the possibility of failure leveraging prior experience, forethought and with effective planning.