I have been launching new products over 15 years across different fast-moving consumer goods industries and the most practical framework to guide any brand person is the framework below.
I have added the Brand Stretch as a measure of whether a brand can be extended to another category. In my previous work, I was handling a dominant market leader in the energy drinks segment – there was over 70% market share, and the new product idea of launching a cola version of the Cobra Energy drink to get shares from the Cola beverage segment was very tempting.
Despite favourable product and consumer acceptability tests, the Cobra Energy Drink Cola variant failed in the market even though it has a strong brand equity and brand awareness in the Philippine Market. So why is that?
Simple. Cobra Brand was so strong and dominant in the category that it was no longer flexible to be extended to another category. Cola Drinkers was primarily after refreshment and taste while Cobra Energy drink users are already happy with the current flavor of Cobra. Energised Cola was something new in the carbonated soft drinks market but it was not relevant to the core drinkers of cola.
Another case example can be found in my current industry, under the bleach category is Zonrox, a local brand in the Philippines with a strong brand heritage. It is currently the dominant market leader in the bleach category with over 80% market share; years ago, the company extended the Zonrox brand in the detergent category. With the same pitfall of a strong dominant brand in the category, it failed entry in the detergent category and was rationalised. That being said, I believe that the power of the brand was the reason for product failure, and launching a new detergent brand would have increased the probability of success in the market.
As a tip for marketers, if you are launching a new product with a new benefit or technology, better launch a new brand and create a good compelling brand story. You may use your strong Brand as an anchor to establish the credibility of your new product.