BRAND EXTENSION: 3 RULES TO FOLLOW TO SEIZE NEW MARKET OPPORTUNITIES

The food & beverage sector is dotted with the so-called commodity categories, characterized by a slow and gradual decline in consumption, strong price competition, a significant presence of private labels, and reduced profit margins.
In this scenario, it’s understandable that companies are enticed by the glimpse of new opportunities offered by emerging consumption trends, hoping for growth and good profit margins. This has recently occurred, for instance, with plant-based and vegan products, foods that are ‘rich in’ – particularly protein – and also with ready-to-eat products.

But does it make sense to venture into these new market segments? And if so, how to do it?

Here are the 3 rules that all companies must follow to evaluate expanding their product range into new categories or segments:

1.  Ensure consistency between the values and positioning of the brand and the elements characterizing the new segment: a brand rooted in traditions like craftsmanship will struggle to support a range expansion into the “protein” segment, as it is inherently opposite to these pillars.
2.  Assess the positive relevance of brand associations for the target audience: a brand traditionally linked to the dairy market will not be credible to a target preferring plant-based alternatives for ethical and environmental reasons.
3.  Maintain the perceived quality level of the brand for new products: a brand that holds a significant premium price in its reference category risks undermining its positioning if it opts to include lower quality and priced products in its range.

So, if your brand doesn’t align seamlessly with the extension, what should you do? Stay Tuned!

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