Loaded brand extension doomed to fail...
Marketers have long recognised that strong brand names, which deliver higher sales and profits (i.e. those that have brand equity), have the potential to work their magic on other products. Brand extensions, therefore, are all the rage, particularly during a recession, when falling back onto a trusted consumer name seems appealing.
The Lucozade brand has undergone a very successful brand extension, from energy drink to a whole range of nutritional supplements. These extensions have generally all proved lucrative. The reasons behind this were highlighted in a study conducted recently, that revealed that there is often an inverse relationship between fit and leverage.
This means that brands that consumers will allow to sit on a wide range of products have little leverage. This means they are not intrinsically linked to one product in the consumers mind. Consumers think, for example, that the Weight Watchers brand would be fine on many food product categories. But if that brand brings little strength, other than recognition and a general good feeling, it may have little leverage. In contrast, the Philadelphia brand stands for cream cheese. This limits its extendibility but it means that any brand extension where cream cheese is an important ingredient will find the Philadelphia brand to be a strong competitor.
So now to Loaded magazine and their attempt to crack the energy drink market. Gone before have been Loaded men’s underwear, Loaded credit cards and Loaded nightclubs. None of them worked.
Back in the 90s Loaded magazine was doing massive numbers and yet all previous brand extensions struggled. Their chief executive though clearly thinks this is a shrewd move: “Consumers of energy drinks are confused…research shows that consumers want extra functionality which is what Loaded Stamina Shot delivers.” The extra functionality he mentions here is that the drink is meant to improve performance in EVERY area of a man’s life, through its stimulant qualities.
Going back to the research Loaded has very high leverage in its niche male market. This high leverage will lead to its downfall as it struggles to apply its recognizable name successfully to a product launch as diverse as an energy drink.
Posted on August 2, 2010
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