Fast Magazine published in an article their choice of best and worst brand extensions of last year:

Top best extensions:

• Coppertone sunglasses
• Mr. Clean Performance Car Washes
• Juicy Crittoure (a pampered pet line of doggie duds)
• Zagat physician ratings

Worst extensions:

• Burger King men’s apparel
• Kellogg’s hip-hop streetwear
• Kanye West trip-booking web site
• La-Z-Boy spas

Full article here.

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Product extensions, on the other hand, are versions of the same parent product that serve a segment of the target market and increase the variety of an offering. An example of a product extension is Coke vs. Diet Coke

A successful brand helps a company enter new product categories more easily.

Brand extension benefits:

• Brand extensions let a marketer take a brand with well-known quality perceptions and associations and put it on a brand in a new category. Not only can marketers capitalize on brand awareness, they can also leverage off of the associations consumers know about the parent brand.
• Second, consumers who favorably evaluate a parent brand are more willing to try and adopt the brand extension than an unfamiliar brand in the same category. They trust a known brand name.
• Brand extensions can also help a firm’s stock prices. Some academic research has found that Wall Street attend to brand extension announcements and that whether they like them or not depends on how much they like the parent band.
• Brand extensions can also help consumers understand the core meaning of the brand name.

One of the principal dangers of brand extension is that the parent brand equity may be diluted. If there is a misunderstanding of consumers’ perception of the brand, it could be moved into a sector that consumers view as “inappropriate.” Quite often the parent brand will have been available for some time, enabling it to build a level of equity and trust with consumers. It will have strong credentials. Over time, its marketing has sought to build and secure these credentials within its target market. An irrelevant positioning has the ability to undermine the parent’s credentials.

TippingSprung’s second annual survey of brand extensions, produced in collaboration with marketing newsweekly Brandweek, revealed which extensions are most effective, which have potential to dilute the brand, and what makes some brands more extendible than others. Major trends in brand extensions were also uncovered.

The Top Brand Extensions.

• best overall brand extension – Iams pet insurance
• best liquor brand extension – Starbucks coffee liqueur
• best co-branding/ingredient branding – The Motorola ROKR phone with iTunes
• best extension of a magazine onto new platform – hardcover books from O, the Oprah magazine
• most overdue brand extendion – The Tide to Go stain removal pen
• best furniture brand extension – Antiques Roadshow
• best extension of a not-for-profit – National Geographic

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The Next Step – An evolutionary brand extension.

The Sequel – More than evolutionary, these extensions tend to be a complete re-thinking of existing products and then re-packaged and represented with or without the lineage clarified.

The Spin-Off – Just as the name implies, these are extensions that take some small element of the original and tries to make a full-blown brand out of it.

The Partnership – Co-branded extensions can confuse and confound customers, eventually pissing them off in the process.

The Anti-Brand – Not really an extension, these are brands that leverage the brand awareness of another product to their benefit by claiming to NOT be them.

The Non-Sequitur – These are brand extensions that generate a “huh?” reaction out of consumers.

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Most companies know how to extend their brands by leveraging organizational competencies and determining unmet customer needs. However, surprisingly few have a strategic approach briefing in place to ensure that potential new product areas are consistent with a brand’s identity. Even an outstanding new product concept, satisfying a significant unmet customer need, will not succeed in the market if it is launched under the wrong brand identity.

Here is a four-step road map to make sure that future new products or services complement, or better, enhance the current equities of the brand.

1. Determine brand and category associations.

The first step in determining brand relevance is to begin with a comprehensive assessment of what your brand and those of key competitors in the category currently stand for in the minds of customers.

Even an outstanding new product concept, satisfying a significant unmet customer need, will not succeed in the market if it is launched under a brand identity for which it is a poor fit. The foundation of this assessment is qualitative customer research (e.g., focus groups and in-depth interviews), which provides the richness and depth of response needed to construct an accurate portrait of your brand and the category. The research should focus on uncovering the key associations customers link to the brand and competitive brands in the categories (e.g., product or service features, functional, emotional, and self-expressive benefits, and personality).

2. Develop brand extendibility proxies.

Once the six to eight key associations have been identified for the brand and category, proxies should be carefully chosen for each one. To accomplish this, turn each association into a continuum of attributes and benefits that range from “close in” to “far out” relative to where customers perceive the brand to be today.

This continuum begins with a proxy that’s relatively close in and ends with one that is a significant stretch from how customers perceive the brand today, with several points in between. It’s important to remember that these proxies were strategically chosen to represent distinct points on a continuum. The proxies chosen may or may not represent good new product opportunities for the brand (i.e., customer unmet needs). What’s more important at this point is that they provide the basis for rich conversations with customers as to how the brand can and cannot be extended in the future (i.e., brand relevance).

3. Conduct brand extendibility research.

Once brand and category associations have been determined and representative proxies selected, it is imperative to go back to customers to solicit their input.

A variety of stimuli can be used for the chosen proxies to facilitate brand extendibility research discussions, including white paper concepts, representative images, and actual products or prototypes. During focus group customers are asked for their opinion as to how well each product, service, feature, or benefit fits with the brand in question.

Once again, it’s important to remember that we are mostly interested in understanding customer rationales for why something does or does not fit with the brand.

4. Create brand extendibility guidelines.

The final step of this approach is to take the insights obtained in the previous step’s customer research and develop guidelines detailing how the brand can and cannot be effectively extended. Customer feedback (i.e., which proxies are in, which are out, and the reasons why) needs to be interpreted and translated into guidelines for extendibility.

Once an adequate number of guidelines has been established, it’s helpful to prioritize them because they won’t all be of equal importance. One way to think about this is to establish several guidelines that are imperatives. What this means is that unless a potential new product or service opportunity satisfies these guidelines, it should not be considered for marketplace introduction. Other guidelines would be deemed important but not mandatory. In other words, if a potential new product or service opportunity satisfies this guideline, it should be considered favorable.

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By linking your corporate brand to your culture and values – thereby creating an [tag]internal brand[/tag] – your organization can create a platform from which to communicate to your employees the vision, mission and urgency. Internal branding helps improve credibility and strengthens the bonds of trust between leaders and employees. When people are united in purpose and know where they are headed, positive results can occur.

Brand is a sum of identity, image, and aspiration.

• Identity is what the brand stands for.
• Image is what the brand represents.
• Aspiration is how the brand makes us feel.

The same principles hold true for an internal brand:

• Identity represents the culture and values of your organization.
• Image is akin to the vision and mission of your organization.
• Aspiration stands for what your organization will do.

Internal branding is a linking of the organization’s culture and values to an individual’s values in ways that enable both the individual and organization to achieve their goals. Leaders can, and should, link their leadership communication to the internal branding process as a means of binding their goals to organizational outcomes.

The sum of brand identity, image and aspiration is the promise or guarantee of quality, service and performance.

The Benefits of Brand

The benefits of internal branding are straightforward:

• Internal branding nurtures an organizational identity

It helps reinforce who we are and what we are doing. Take the Red Cross, for example. Its employees working in blood donation know that their message is to augment the nation’s blood supply; the net result of collecting blood is the saving of lives. It is a noble mission and employees feel good about it.

• Internal branding serves as a platform for pushing change

If we know where and who we are now, we have a better idea of what we can become. Harley Davidson has gone through a few organizational transformations from the eighties until now; what has made the transformational process successful is that employees are committed to the product — and its brand — as well as the people within the organization.

• Internal branding is a communications shorthand for getting the message out

Messages tied to brand come with the employee who is pre disposed to receiving them. For example, if you go into a store looking for cereal, the Kellogg brand is familiar to you; you associate the brand with good taste, good quality, and good value. Likewise, a branded message from a senior leader, or a team, is familiar to the employee and connotes a sense of importance, even urgency.

Driving Organizational Clarity

Brand helps clarify alignment. In big hierarchies, orders spill down from the top and remain clear through the first few layers of management. But over time (often in a matter of weeks) if those strategies and objectives are not reinforced, they become unclear and managers are left to improvise. While there is nothing wrong with improvisation, if it’s done willy nilly it causes the organization to veer out of alignment. Internal branding can really help keep customer service and other front line employees in tune with your corporate values as they relate to product performance and service efficiency. And finally the internal brand is an assurance of consistency.

Building the Internal Brand

So how would you go about creating an internal brand? Here are some things to keep in mind:

• Build your brand on your mission

The starting point for any brand is what the organization stands for. Its mission and vision, backed by culture and values, are what the brand means to the employees. Any deviation from mission and culture will strike a false note.

• Make leadership the brand driver

The brand needs your senior management support in order to survive. It’s as simple as walking the talk. Leaders need link their goals to organizational goals — a powerful way to do this is through branding. When leaders are in synch with the organization, they have a better chance of getting results. At the same time, a leader pushing change can use brand to drive the transformation by finding the impetus and support for the initiative inside the culture.

• Nurture the brand through communications

Brand without communication is like an unlabeled can on a shelf by itself — you don’t know what it is and you really don’t care. Any communication tool, from a broadcast email to an all employee meeting, reinforces the brand. Choosing which media and when depends upon the message; the heavier the brand message, the more media you will need. To keep it fresh and vital, email and banners might do the trick. Again, keep the communications consistent with the brand identity, image and aspirations.

• Inject a sense of fun into the brand

Who says life inside an organization has to be dull and boring? Link the brand to activities in the organization that are of a less formal nature; e.g. corporate outings, off site activities, after hours bowling or softball leagues. Your branding can be as simple as displaying your corporate logo on a banner promoting your upcoming ice cream social, or putting your logo on hats made available to corporate retreat attendees. After all, part of brand identity is merchandising. In this way, your brand becomes a unifier and reinforces your organizational culture.

• Grow the brand

Organizations either grow or they die. Same for brands. The brand must be inclusive and by that, it must embrace new initiatives that arise with regularity. Think brand extensions. For example, if manufacturing rolls out a quality initiative, the team would be well served by linking the quality to the company wide brand. In doing so, they add credibility as well as awareness.

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