Brand extension is an effective strategy, but it is not always suitable for every situation. So, what factors determine the success of this strategy? Why do some brand extensions achieve great success while others fail? Here are some conditions where companies should consider using brand extension:

1. Fit Between the Parent Brand and the New Product

The most important factor is consumers' perception of how well the new product aligns with the parent brand. This fit can be assessed from several aspects:

• Product Similarity: Does the new product have a similar function or benefit to the brand’s core product? The higher the similarity, the easier it is for consumers to accept the brand extension. For example, extending a brand from body soap to lotion still falls under body care, making the similarity level high.
• Target Market Similarity: Is the new product intended for the same market segment as the core product? If the target market differs significantly, the brand extension may be difficult to accept or may fail.
• Brand Image Consistency: Is the new product consistent with the brand's image and values? For instance, a luxury brand launching affordable products could damage its exclusivity.

2. Strength of the Parent Brand

Before moving forward, ensure the brand has a strong foundation. A solid brand equity is a crucial prerequisite for a successful brand extension. Without sufficient brand equity, brand extension efforts could backfire. Some indicators of strong brand equity include:

• Brand Awareness: How familiar is your target market with your brand? Is your brand easily recognized and remembered?
• Brand Image: How do consumers perceive your brand? Is your brand associated with quality, innovation, or other positive values?
• Customer Loyalty: How loyal are your customers? Do they repeatedly purchase your products and recommend them to others?

3. Perceived Quality

Consumers tend to assume that a new product launched under a well-known brand will have the same quality as the brand’s core product. Therefore, companies must ensure that the quality of the new product is maintained or even improved to avoid disappointing consumers.

4. Perceived Risk

Consumers always consider potential risks when purchasing new products. These risks can include financial risk (high price), functional risk (product does not work properly), or social risk (negative judgment from others). Brand extension can help reduce perceived risk because consumers are already familiar with the brand.

5. Innovation

Although similarity is important, the new product must also offer something new or innovative to attract consumer interest. This innovation can be in the form of new features, new technology, or new benefits that are not yet available in the market.

6. Effective Marketing Communication

Effective marketing communication is crucial in introducing the brand extension to consumers. Companies need to clearly explain the benefits and added value of the new product, as well as how it relates to the parent brand.

When Should Brand Extension NOT Be Used?

The success of a brand extension does not happen by chance. Evaluating and conducting in-depth research can help companies determine whether or not to use a brand extension strategy. Here are some conditions where brand extension should be avoided:

• The Brand Is Not Well-Known or Has a Poor Image: Focus on building the brand first.
• No Clear Similarity Between the Core Product and the New Product: There is a risk of damaging the brand image.
• The Market for the New Product Is Too Small or Unattractive: Investment may not be profitable.
• The Company Wants to Create a Completely New and Different Brand: It is better to build a new brand from scratch.

Case Studies of Successful and Failed Brand Extensions

Successful: Indomie

Indomie, a highly popular instant noodle brand, has successfully extended its brand to various flavor variants, ranging from traditional Indonesian flavors like soto and chicken curry to international flavors like chicken teriyaki and ramen.

• Why It Succeeded?
• Indomie has strong brand equity in Indonesia. They have managed to maintain the quality and taste that consumers love while continuously innovating with new flavors relevant to market preferences. The similarity of products (instant noodles) and the broad target market also contributed to its success.

Failed: Colgate Kitchen Entrees

Colgate, known for oral care products, attempted to launch a line of frozen meals.

• Why It Failed?
• There was no relevant similarity between toothpaste and frozen food. Consumers found it confusing and struggled to accept food products from a brand associated with oral hygiene. Colgate's brand image as a dental care product clashed with the concept of food.

Analyzing cases of successful and failed brand extensions provides valuable insights for companies looking to implement this strategy. By understanding the factors mentioned above, companies can make better decisions and minimize risks. Ultimately, a successful brand extension requires strong alignment between the core brand, the new product, and market needs.