Brand Extension – Smart Move or Foolish Decision

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3 years ago, my family was out shopping for a washing machine at one of the largest electronic goods stores in Singapore. Top-of-mind brands for us include Whirlpool, LG, Panasonic and Maytag (we were initially considering Whirlpool), and as we were browsing, we were really surprised to see many Samsung branded washing machines displayed brightly and prominently at the showroom.

When we asked the sales manager about it, he did not hesitate to recommend the sleek looking Samsung washing machine to us, and confidently remarked that the Korean power house brand is very innovative and we can expect the same quality standards similar to their phones and TVs. Well, we were quickly sold (we own Samsung phones) and the washing machine now sits snugly at our backyard. Then I was thinking that Samsung had made such a smart move in brand extension into home appliances. However, today with the recent news that Samsung is recalling 2.8m washing machines in US after top-load models ‘exploded’, is this brand extension really smart after all or is it a foolish decision to spread your name across multiple product categories?

What Is Brand Extension

Brand extension is the use of the current brand name and apply in new product categories. This new category to which the brand is extended can be related or unrelated to the brand’s existing product categories. One example of related category would be McDonald’s extending to McCafe (both related to F&B). Unrelated category would be Michelin Tyres to Michelin Guide (the sought after Michelin stars).

There are many interesting brand extension examples over the years, let’s look at three in Asia:

Hello Kitty Beer

hellokitty_5-flavours

One of the most recognisable brands in Asia, and some say around the world, Hello Kitty is a well-loved brand that has licensed its brand to so many things from sweets, bags, shoes, bedsheets, airplanes to restaurant (we have one in Singapore’s Changi Airport). So how about beer? Well it’s available in China and Taiwan with 5 fruity flavours at a relatively low alcohol content of between 2.3% to 2.8% for easy drinking. They are aimed at winning over Chinese women. So do you feel like having a toast with Hello Kitty?

Muji House

mujihouse

Launched in 1980, Muji is a Japanese lifestyle brand that sells a wide variety of household goods and clothing with a strong brand philosophy of “simplicity”. In recent years, the brand has ventured into building homes; in 2015 the brand showcased prototype pre-fab micro-apartments, and more recently in 2016 it revealed the latest pre-fab house prototype named Window House. It is located in the seaside city of Kamakura in Japan’s Kanagawa Prefecture which it will test by having a competition winner move in rent-free for two years. Check out its YouTube video here (note it’s in Japanese). Love its tagline “Muji is enough” as it succinctly communicates its minimalist brand idea.

Haier

haierlogonew

A well-known Chinese brand for home appliances and consumer electronics. Not only has this brand conquered its home market, it is also well received in many parts of world including in the US. One of its key success factors is innovation and Haier owns over 6,000 patents and over 500 software copyrights worldwide. To diversify risk and fully leverage on its brand, it has aggressively expanded to other industries such as pharmaceuticals, real estate, financial, travel services animation etc. The brand is a great success story when it comes to brand extension.

Brand extension is a strategic decision. Before you decide to stretch your brand to other categories, ask yourself two key questions:

  • 1. Does it align to your brand strategy?
  • 2. Is there a strong value proposition?

So how far can your brand stretch?

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