Competition in the consumer staples industry has always been intense, and giants like the Colgate-Palmolive Company (CL), Unilever plc (UL) and Frito-Lay North America, Inc. have experimented with many innovative strategies to sustain revenue growth and gain market share.
Brand extension, a marketing strategy used by companies to introduce a new product category under an existing brand name, is one such strategy. But it sometimes backfires… spectacularly.
Colgate Kitchen Entrees
Colgate launched Kitchen Entrees, a line of frozen food products, in the US in 1982, hoping to capture the growing market for ready-to-eat meals. It also hoped that customers, after enjoying its frozen food offerings, would go out and buy its toothpaste as well.
While the idea seemed workable on the drawing board, Kitchen Entrees flopped with customers, who got very confused about Colgate’s brand image. The brand had traditionally been associated with hygiene and oral care, and customers simply did not buy the idea that they should eat food offered by the same brand whose products they normally used to clean their mouths with.
Unilever tried to increase its market share in oral care products in the early 2000s by introducing a toothpaste under the Pond’s brand. The brand had previously been successful at moving from skin creams to soap products, and the jump to toothpastes seemed like a logical next step.
Customers, however, thought otherwise. The queer thing was, there was nothing wrong with the product itself: a study found that participants could not tell the difference between Colgate and Pond’s toothpastes in a blind test.
The problem with Pond’s toothpaste was the brand. Soap and skin creams are usually associated with the sense of smell, while toothpaste is associated with taste. Moreover, Pond’s products generally have topical uses, whereas toothpaste is used to brush the inside of one’s mouth. For these reasons, the company could not transfer Pond’s brand attributes to its toothpastes successfully.
Frito-Lay manufactures Fritos, Doritos, Cheetos and Lay’s – some of the most-recognized salty snacks in the US. Salty snacks are supposed to make consumers thirsty, so the company thought it would be a nifty marketing ploy if it could sell lemonade as well using the Frito-Lay brand name.
The lemonade was not popular with customers, however, as they associated the Frito-Lay brand with salt snacks and thirst. A thirst-quencher of the same brand as the products that made them thirsty did not make much sense. It confused the brand identity of the company somewhat, and Frito-Lay soon fell flat.
Although product innovation and brand extension is an important marketing strategy that saves companies a lot of time and money, it fails spectacularly if companies fail to understand how their brands are perceived by consumers. Brand extensions often go awry if the company cannot align the product with its brand, or if they cannot identify their target market appropriately.
Colgate, for example, could have conducted some more market research and perhaps introduced its frozen food products under a new brand; Unilever could easily have used one of its oral care brand names for its toothpastes.
But sometimes, the strategy works. Take Caterpillar Inc. (CAT), for example: it has successfully introduced an apparel line as an extension of its machinery brand. CAT shoes sell because the company was able to transfer its brand attributes of durability and industrial strength to them. Their customers buy their shoes thinking that the company’s products are long-lasting.