The Ingredients of Brand Extension

More than a few businesses operating in the food & beverage industry have shifted their strategic focus from the product-ingredient to the finished product, thus bringing the product directly to the plate, so to speak. Just think of the difference between a box of spaghetti and a plate of spaghetti with sauce, between a grain of rice and a saffron risotto, between a bottle of wine and a glass filled and served on a restaurant table. Broadening the business perspective to include the finished product and the final experience extends the boundaries of the market, broadens the horizons of corporate knowledge, and paves the way for original experiments.

We can read from this perspective many innovations that are taking place in the industry: the opening of dining venues, to be interpreted as places of consumer education and customer experience in which the brand meets its consumers and engages with them firsthand; the development of multichannel customer management strategies where each channel plays its own specific role, by stimulating the individual to experience the brand in various forms and pass from one channel to another; identifying effective brand extension strategies; the internationalization strategy of the brand and its brand architecture. They are of great strategic importance because, on the one hand, they can be the engines of a major evolution of the brand, but on the other hand, they can cause a lot of headaches if consumers do not buy into the project.

It is true that the consumer is ever more informed, but if you scratch below the surface, and ask consumers to assess the soundness of their information, it turns out that they are not so confident about their knowledge of a product. When posing precise questions to individuals about a product, it turns out that the number of newbies is far superior to that of experts: all people know rice or pasta or wine and most of them eat pasta or eat rice, but when you are beginning to ask questions about origin, type, nutritional properties, how to prepare and cook the product, the number of experts drops dizzyingly.

This is a great opportunity for brands with a long history behind them - educating the consumer. The distribution of people between novices and experts has a significant impact on multichannel and brand extension strategies. Sales outlets, whether they are shops or restaurants, physical retail points or online platforms, are places of education and learning ahead of being sites of shopping and selling. The individual goes there to inquire, compare, select, buy, and also to have fun. Not all distribution formats have the same potential to educate their customers, so the channels will have to be used complementarily and perhaps sequentially, so that the individual moves from education to purchasing, and develops loyalty to the brand's experimentation in all its forms and extensions. And here we get to another theme: what brand for new projects? The same brand, a new version of the brand architecture, or a brand-new brand?

Both experienced and inexperienced consumers of a product are however reluctant to embrace brand extension operations which either they do not understand or feel they don't have a connection with the parent brand. The success of brand extension is based on three factors: the ability of the brand to transfer its accumulated knowledge over time to a new product category, the perceived difficulty of such know-how transfer, and the complementarity between the traditional vocation and the new product area. The likelihood of success is higher when the brand has accumulated robust knowledge and knows how to transfer it, when the transfer is challenging, and when product categories are complementary. Success breathes new life into a brand and hurls it towards the future, in an inexhaustible process of valorization, abstraction, experimentation.