When is Extension the Wrong Strategy?

Tracey Nelson:

I want to say again – as I’ve said so many times before - that if quick and/or short-term revenue is the objective, extension is the wrong strategy. Brand equity is among the most valuable assets owned by a company and extending the brand is a long-term strategy to build that brand equity and enhance the positioning and footprint of the brand, with long-term bottom line revenue a strong benefit of a well-planned and executed extension strategy. But there are risks.

The extensions will not be perceived by consumers as coming from a licensed company or partner, but from the source of the brand itself. Extensions’ successes – as well as their failures, quality issues, delivery problems, etc. – will be tied to the brand. The extensions will BE the brand and need to be planned with the same strategic considerations as the base business.

Clearly, if the brand is still new, does not have a clear identity, does not have a defined profile of its brand lover or has little awareness, brand extension is probably the wrong strategy at that moment. Research may reveal areas in which to fortify the brand, with the goal of extending it at a later date.

In a previous conversation, I mentioned the licensing agents knocking on the door of any reasonably hot brand. While several excellent agencies exist, brand teams should be aware that many represent both sides of a potential extension, contracting with product companies to obtain licensed brand names as well as brands seeking products. The brand’s priorities need to be the driving force behind any extension strategy, and partners chosen accordingly.

Our Brand Extensions Strategist

Tracey is a recognized leader in the fields of brand management and brand extension. She has over twenty years’ experience in senior strategic brand management and consulting positions for world-class multinational companies, including Polo/Ralph Lauren, FILA Sports and Turner Networks. Her work spans multiple channels, product categories, industries and countries and her cross-industry experience gives her a unique perspective and expertise on the potential of brands to mine new revenue opportunities while enhancing brand equity.

Consistently designing and delivering on growth-oriented strategic and business plans for large enterprises, Tracey has also crafted numerous strategic alliances between brands and companies. She has a track record of building consensus around common goals, across multiple departments, divisions and companies, as well as a P&L management track record and perspective.

Tracey received her MBA, with a concentration in international marketing, from the Thunderbird School of Global Management. She is on the faculty of the University of Texas’s McCombs Graduate School of Management. Tracey speaks on multiple brand topics to industry groups and serves as an expert witness in trademark litigation.

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