Trend: Over-Extended?

BrandChannel weighs the hazards of so much brand extension on the store shelf.

some quickie excerpts:

•It's estimated that as of 2004, six percent of all new products launched each year in the US are in fact brand or line extensions.

•a 2003 article in Wall Street Journal cited the ousting of Kraft's co-chief executive Betsy Holden as the result of an "over-reliance on brand extending and lack of new products." The company had not profited from a new-brand success since the launch of DiGiorno Rising Crust frozen pizza in the mid-1990s. In the same article, industry professionals observed that Kraft had perhaps become too good at building brands, completely forgetting to create new ones.

•Extensions via licensing (versus in-house development and management) is a trend that continues to increase in the new millennium accounting for US$ 172 billion of retail sales worldwide, according to the Licensing Industry Merchandisers' Association (LIMA).

•While licensing deals can be lucrative for both the licensee and licensor, they also have the ability to negatively impact a brand when there is a lack of creative and/or marketing management participation on the part of the licensing brand. "If there isn't one person who's really controlling the quality of the product or the quality of the marketing and advertising, you can really hurt your brand and oversaturate the marketplace. It can be real problematic", says Alan Siegel, CEO and chairman of Siegel and Gale, a branding agency.


via BrandChannel