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Stretching brands to the limit

BRANDS

Bhanu Pande  |  Mumbai 

Three years back, Lux, HLL's brand of beauty soap was extended to shampoos. Similarly, Reckitt-Benckiser tried to further stretch Dettol's equity to talcum powder and is now test- a floor cleaning agent under the same brand. Dabur's Vatika hair oil brand was extended to shampoos a couple of years back.
Anchor made an even larger leap of faith by extending its successful electrical switches brand to toothpaste! Go further deep into the past, and we have seen Liril, HLL's premium brand of soap, extending itself to talcum powder. Pond's, despite an unsuccessful brush with brand extension from talcum powder and cold cream to toothpaste, tried its luck with soap.
Never mind the fulminations of gurus Al Ries and Jack Trout, companies globally are prepared to sin against the light and extend brands from familiar to unfamiliar territory. It is believed nearly one out of every three new products launched in the developed markets - primarily the US - are brand extensions of some kind or the other. No such studies have been reported for the Indian market, but look everywhere and the anecdotal evidence suggests that companies have run out of names for new products. In the last decade, Indian marketers have outdone themselves on brand extensions.
Not without reason, though. Increasing competition and the consequent clutter of MNC and domestic brands means that companies have to fight to expand their presence on shop shelves. And the easiest way to do that is by letting your current brands occupy more space through extensions into other product categories. Just ask yourself: if you are selling Godrej soaps, will your common kirana store be more willing to stock a new after-shave called Triple X or Godrej Something?
High media and promotional costs are the other reason. It is estimated that the average cost of new brand launch nationally ranges anywhere between Rs 5-7 crore for an average FMCG product, up from Rs 3-4 crore in the early 1990s. Companies thus have two options: bust a back or lower costs by launching familiar brands in new avatars.
This strategy has the pundits shaking their heads in disbelief. "It's greed rather than need," says Walter Vieira, president, Advisory Services, one of India's oldest marketing consultancies with a 25-year track record.
"The attraction of trying to make your existing costs stretch to cover new products is understandable. But it cannot always work. It may work if the products are related and the original brand has a positive connotation for the new product. If it has a negative connotation, the negativeness too will rub off. If it's neutral, it may have no relevance. Otis is a good brand (for elevators), but it would have no relevance for a face cream."
Figures are difficult to come by, but industry guesstimates put the success rate for brand extensions at less than one in four. Lux shampoos failed, so did Dettol talcum powder. Vatika shampoos and Pond's talc have been reasonable successes. But the jury is still out on what the fate of Anchor toothpaste is going to be. These are just a few examples.
Brand extension is perhaps one of most misunderstood concepts in marketing. It is often confused with what Ries and Trout have called line extensions. In yesteryears, most of the extensions that have happened have been of the line extensions sort - using the same brandname to launch new forms, flavours, colours or variants of the existing products. Thus we have Hero Honda SS & Hero Honda Sleek, Nycil Sandal & Nycil Lavender, Colgate Gel, Colgate Tartar & Colgate Total, Surf & Surf Ultra. These are not brand extensions in the true sense, but line extensions. However, in the recent past, the Indian marketplace is getting to see more extensions than ever before.
Going by the number of marketing houses adopting the brand extension concept (Tata salt, Amul pizzas and Wills Sport), it seems that the idea has come to stay as an attractive growth strategy in the Indian marketing arena - especially when companies are strapped for cash. That brings us to the key question: when do brand extensions work, and when do they not? One thing is clear: brands cannot be extended until they have attained maturity. Till the time they come to occupy a particular slot of strength in the consumer's mindspace, they cannot be extended beyond their current products.
Godrej as a brand was built over the years, and is renowned for its quality products; the brand has been extended to an array of dissimilar products. Similarly, the Tata name is sported by widely dissimilar product categories. It stands for something trustworthy and ethical.
Once a brand is established, the marketing people propelling new products under the same banner have at least one thing going for them: the benefits or image associations of the original brand automatically get transferred to the new product. This can make both the communication task and the positioning exercise easy. When Newport extends from denims to shirts, the shirts will also (initially, at least) be perceived to be resonably-priced and of good quality. If Park Avenue extends to any other product, it will automatically be associated with premium appeal.
Strong brands can extend confidently and instantly to achieve a quality perception. The extensions can in fact become stronger than the mother brand. For instance, Wipro soaps and Wipro computers. These are higher involvement categories than what the mother brand started out with - vegetable oils.
There are two aspects to successful brand extension, according to analysts and marketing consultants. One is the brand name, the basic attributes of the brand, and its end use. The other issue is: how relevant the brand is to the category it is being extended to. One of the most talked about failures of brand extension in the last decade has been Pond's toothpaste.
A strong brand in the personal care area had been extended to personal hygiene in the late 1980s. The brand colours (pink) were maintained on the pack, and the launch was high profile. The product went out of the market in record time. Consumers could not reconcile themselves to the idea that a brand which they had been applying to their faces would now enter their mouths. Similarly, Lakme shaving cream didn't work because the brand had very strong "woman connotations".
PLANNING BRAND EXTENSIONS
Editor's Choice tea is another great example of why brand extension may not work. Editor's Choice was a column run by journalist Pritish Nandy in The Illustrated Weekly of India. First, of course, there was no strong brand to start with. Secondly, the category to which the brand was extended had nothing to do with its core line of business. More recently, Lux shampoos failed because the mother brand had the strong positioning of a beauty soap which was in clear dissonance with the property which was being transferred - hair care.
Brands that extend into existing or new categories without acquiring the requisite meaning and depth may not only fail but also damage the equity of the original brandname. In some cases, the existing brand associations may also be weakened by an extension. In such cases, it is better for the extension to fail, rather than succeed and damage the existing brand.
Poorly planned brand extensions, therefore, may prove very costly in terms of time, money and image. Hence decisions on extensions need to be taken after considering several strategic issues.
Reckitt-Benckiser's experience with its age-old antiseptic brand, Dettol, makes an interesting case study even as it throws up a number of lessons on what can actually go wrong in indiscriminate and rapid brand extensions.
DETTOL: A CASE STUDY
In its 65-year-old history, Dettol, the brand now owned by Reckitt-Benckiser, has seen some seven or eight product extensions from mouthwash to prickly heat powder. One more, a floor cleaner called Dettol Gold, is being test marketed in Kolkata and Chennai. An anti-dandruff shampoo is also reportedly on the launch-pad. Now consider this. From Rs 30-odd crore in 1991, Dettol is a Rs 230-crore brand today. This was also the period when most of the product extensions took place. But if you thought this impressive growth was the result of all those hectic product extensions, think again.
Almost three-fourths of today's turnover come from Dettol soap, which was introduced in the eighties. The core antiseptic liquid accounts for less than a quarter of Dettol's sales. The rest - shaving cream, medicated plaster, mouthwash, prickly heat powder, antiseptic cream and so on - make up a minuscule percentage.
Clearly, with the notable exception of soaps, Dettol's efforts to stretch its brand equity to other allegedly contiguous products have been a failure. Though the specific reasons for failure varied in each case, the overall result highlights a unique problem for marketers. There are limits to transferring the core values of a powerful brand to other product categories.
Dettol's brand values as an antiseptic were so strong that few of the new products were able to assimilate the core properties of its powerful mother brand credibly. This process was tougher because with each extension, Reckitt found itself having to deal with new markets and new competitors.
To be sure, the decision to opt for product extensions can hardly be faulted. Launched in 1936, Dettol antiseptic liquid was as generic to its category as Xerox became to copiers. Little needed to be done to promote Dettol's brand equity; it was built through sheer usage over the years.
Things were comfortable till as late as 1980 when the first signs of stagnation began to surface. Numerous research studies concluded that though Dettol had a high penetration level and almost all households kept a bottle of it handy, they rarely used it. So to stoke sales, Reckitt (then Reckitt & Colman of India) decided to expand Dettol's usage beyond cuts and bruises.
This resulted in a communication campaign that showed that Dettol could be used as an all-purpose antiseptic while shaving, rinsing babies' nappies, as a general disinfectant and so on. Soon, all these uses pointed to a number of possible extensions, a fact that subsequent consumer research validated.
Dettol soap was first off the racks. Strangely, though it may be a winner today, it was not an outright success initially. This was because Reckitt & Colman launched Dettol soap on a premium platform which was way off the brand's core properties of hygiene and cleanliness. When the product bombed, Reckitt quickly relaunched it the following year as a "100 per cent germ fighter" - a positioning that has worked so well that Dettol soap commands a share of 11 per cent in the premium soap market today.
In the mid-1990s, increasing competition within the soap category sent the company looking for a fresh initiative. The major competition now came from Hindustan Lever's Lifebuoy, which the company was trying to upgrade by introducing it in liquid form in a plastic dispenser.
That effort resulted in a fiasco mainly because the dispensers proved defective and there was a dissonance with Lifebuoy's value-for-money proposition. Still, given the urban market's penchant for convenience products, the soap-in-a-dispenser gave well-entrenched Dettol soap an opportunity to introduce a similar product. According to industry sources, the liquid soap today accounts for over seven per cent of Dettol soap's sales.
Dettol liquid soap worked because its contemporary and convenient format once again actually strengthened the brand's core values and helped it emerge from the confines of the first-aid box into the bathroom. The frequency of usage, too, has substantially jumped over the years.
Encouraged by the successful extension into liquid soap, Reckitt pushed its luck further. Dettol added two variants over the last one year - Dettol Extra with moisturiser and a glycerine variant, Dettol Junior (which was launched last month). It is too early to judge the performance of Junior, but company sources say Extra has not been able to induce trials.
No one has ascribed a reason to this, but given the soap's history, it can be assumed that the moisturiser put Dettol in the beauty soap sphere, where it didn't quite fit. Retailers say Extra has been clubbed with other Reckitt products as a freebie to induce trials. While this is normal practice with most FMCG marketers, it appears as if Dettol is having to do this more often. Extra's fate has, in fact, cast doubts on the fate of Junior.
The problem is in trying to make a brand all things to all people. When Dettol offers a single-minded proposition of protection, it makes little sense to push it into the vanity case. The proposition then changes from protection to cosmetic - and the chances of success are reduced."
In the case of soap, where the extension worked well, the product maintained the core value of protection against germs without cosmetic appeal. But beyond this core area, Dettol is on weak ground. That is why when Reckitt tried to add cosmetic appeal for its soap by adding moisturiser in Dettol Extra, it didn't work.
CHOOSING THE MARKET
The fate of medicated plasters and shaving creams has, however, been a bit ignominous. In terms of usage, the forays into both markets in the early nineties made sense. The problem, though, was that the market for both was not large enough to justify the relatively heavy investments that product extensions required.
The launch of medicated plasters, in fact, was more of a tit-for-tat combat strategy against Johnson & Johnson (J&J) rather than an extension that flowed from market needs. This was around the time J&J had bought marketing rights to Savlon, Dettol's only rival in domestic antiseptic liquids. With its traditional turf under threat, Dettol decided to return the compliment by attacking J&J's hegemony in medicated plasters. Dettol medicated plaster was introduced to coincide with the relaunch of Savlon.
The extension made sense because Dettol had established credentials as a germ protector for cuts and bruises. The problem was that, at just Rs 20 crore, the market was too small. Not only that, this market had a feisty No. 2 in Bieirsdorf's HandyPlast, which was already giving J&J a run for its money in several markets.
With medicated plaster, Reckitt had hoped to divert some of the resources that J&J would put behind Savlon. True, J&J took defensive action by introducing many variants to Band Aid. Also, its promotion of Savlon was too weak to take this stagnant market by storm.
Thus, once the Savlon threat was seen off, Dettol medicated plaster vanished from the ads and so did the aggression that Reckitt needed to put behind the product to sell it in this tough market. This weakened its presence in the retail segment, where the real volumes are. A former senior Reckitt executive says Dettol Plaster has a strong franchise only in clinics and institutions today.
Similarly, the shaving creams market was small (about Rs 50 crore at the time), but Dettol had strong compulsions to get into that category. A study commissioned by Reckitt in 1996 revealed that about 40 per cent of regular shavers used some kind of antiseptic lotion after shaving, and 30 per cent used Dettol liquid.
The same study also showed that those who used Dettol didn't feel the need to use any after-shave lotion. Moreover, the average frequency of purchase of Dettol liquid was once every 10 months. That sent Reckitt looking for a product extension that could satisfy the same need and be picked up more often. Ergo, why not try shaving creams and gels?
This was logical, but Dettol made the mistake of venturing into a market in which it didn't have any expertise. Shaving creams and gels are part-utility and part-cosmetic products, and Dettol's two-in-one proposition didn't address the latter need at all (after all, no one would have wanted to smell of Dettol after a shave). It was the same mistake that Dettol later made with Dettol Extra.
Not surprisingly, the gel was withdrawn within a year of its launch. The shaving cream is still available, but it's no star. The market for shaving creams has hardly grown and it's just Rs 70 crore now. Reckitt saw no reason to splurge on advertising for this product.
In the mid-1990s, Reckitt tried to balance its product portfolio by bringing in offerings that required regular usage like floor cleaner Lizol, insecticide Mortein, a relaunched ultramarine blue brand Robin, et al.
Mortein was a great success and accounts for almost one-third of Reckitt-Benckiser's turnover. But stiff competition in other categories didn't really allow Reckitt's other products to quickly grab volumes (Lizol, for instance contributes less than Rs 18 crore even after four years). So, in 1997, to drive growth, Reckitt had to turn back to its top-of-the-mind Dettol.
THE LOGIC OF EXTENSIONS
In 1998, with capacity utilisation at its Mysore plant poor, Reckitt started thinking of a large number of extensions to achieve a higher capacity utilisation for Dettol antiseptic. The company had done everything on the pack sizes front to push sales. This included bulk packs for institutions and smaller bottles for retail buyers. There were even plans to introduce sachets, but this was shelved because the product formulation did not lend itself to this form of packaging.
But the earlier lessons had clearly not been assimilated. In 2000, Reckitt made the same mistake when it entered the talc market with Dettol prickly heat talc. The size of the talcum powder market is roughly Rs 750 crore, but the prickly heat segment accounts for less than 15 per cent of that. The talc has since been phased out. To be fair, Dettol's failures at brand extension are no exception in India's corporate history. The difference, however, is the consistency with which its extensions have floundered.
When brands have values that are as strong as Dettol or Pond's (which became more circumspect when it came to extensions), companies tend to get into the straitjacket of being forced to function within the parameters defined by the brand.
The dangers of constant failures are obvious. Shunu Sen, managing director, Quadra Advisory, a strategic marketing consultancy, recently went on record to say that companies can weaken the core brand proposition through foolish extension strategies.
Certainly, the extensions have done little to strengthen the mother brand. This was reportedly a point that the new marketing director, Ernesto Blanch, pointed out when he joined the Indian company this January.
Strangely, while Dettol was extended into different new categories, the company did little to strengthen the mother brand, Dettol antiseptic liquid. Though this probably hasn't weakened Dettol's brand image, it hasn't solved the problem of low usage, as the extension into floor cleaners suggests.
The logic of these extensions is hard to see. Would a housewife, who is being asked to use Dettol Junior as a protective soap for her child agree to use the same brand to clean her floors?
"Companies find all kinds of justifications to extend brands," muses Walter Vieira. Faced with the daunting costs of new brand launches, companies, it seems, are willing to bet on hope rather than reason.
(This article was published in the April 2002 issue of Indian Management)

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First Published: Mon, June 07 2004. 00:00 IST
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