Every business seeks new revenue, and extensions of a product line are a good bet for driving it. However, as I mentioned in 'Sequel Products:  When Are They a Good Idea?,' extensions are only a good idea in specific circumstances. So, what can you do if your product does not meet any of the criteria for being extended? When a sequel product is not advisable, a brand reinvention may be the right step.

What is the difference between the two?

• A line extension is when a new product is added to an existing brand portfolio without changing the brand identity. For example, a hockey team can sell a new style or size of fan jersey. This gives fans a reason to buy something new from the team, without changing the team's name, colors, roster or brand identity.
  
  
• A brand reinvention, on the other hand, is when an existing brand is redefined. This entails altering what consumers think the brand delivers for them. To achieve this, a hockey team would likely change names, trade players, movie cities, or change player behavior – to alter their image in the eyes of fans.

You may wonder why a brand would go through the work of reinventing itself, when they could make the potentially simpler move of producing new offerings under existing branding. After all, building a brand requires significant investments of time and money.

The answer is found in the product life cycle. If a brand is on the decline, management may not agree to fund a line extension. After all, a declining product may indicate a value proposition with decreasing relevance or a target audience with decreasing purchasing power.

However, even though your target or offering have lost relevance, your name may not have. In keeping the branding, you reap several benefits:

1. You retain the consumer name recognition you worked so hard to build with the original product. Over time, in a successful reinvention, this name comes to mean something different from what it did initially, without having to start from scratch.
2. You keep the value of the brand name among retailers or distributors. Using the name that they associate with a trusted supplier helps with distribution for your new offering.

What does a successful brand reinvention look like? One example comes from Banana Republic®. This brand was originally a travel-oriented store, supplying books about voyages and excess military clothing store. However, they redefined the brand to be a high-end casual clothing store, allowing them to target a more affluent audience. Though the original store might have conjured the feeling of walking into a safari, the new store experience is more about clean lines and elegance.

If a line extension is not the right move for your brand, consider whether a brand reinvention would be worthwhile. If you have a mature brand with strong name recognition, but a declining product, you could be a good candidate.

If you need consulting on Product Life Cycle Management, contact TrustedPeer Expert Ted Judson.

In most cases, sequel products generate lower revenue than their original versions. Line extensions in new scents or flavors are rarely as successful as the flagship product.  Their sales are not meant to be as robust, as they are line extensions.  This is no less true of movies, where films with ‘two’ or ‘reloaded’ in the title expect to only attract a subset of the original’s audience. With each subsequent sequel, revenues continue to fall.

Of course, there are exceptions to this rule. Video games are an example with which I have extensive experience from my time at EA. The occasional success of sequel products in this arena is in part because the original games helped build the market to its current size. Initially, video gaming was a smaller business, but as console gaming advanced and early fans became advocates, the audience and revenues grew, as did the audience’s age! 

Given the stark view of sequel revenue potential, companies may wonder why to invest beyond the original product. Good question. There are three scenarios in which sequels are a wise investment:

1. If a line extension is a meaningful complement, rather than a substitute: For example, after The Sims® game was released, its popularity fed the desire for additional game play. Thus, The Sims Pet® edition, for example, was a profitable line extension, as it provided new accessories to enhance play among enthusiasts of the original The Sims® game.

2. If a line extension is a product improvement: This often occurs when technology advances after the release of the original product. To prevent being eclipsed by late entrants who can leverage the newer technology, a company can offer their own advanced version. Though the new product may replace the original on consumers’ lists, it also prevents the loss of overall share – and boosts reputation, by demonstrating innovation as a company value. (Don’t undervalue this attribute!). One example was the emergence of microwave ovens and the release of Orville Redenbacher’s Microwave Popcorn®. That could be an example where the new extension actually drove the technology; if you don’t believe me, check your microwave and see if there is a “Popcorn” setting!

3. If a line extension serves a new market: This occurs when factors like timing make the original product less appealing to the original audience. For example, in sports games, simulating play with the team roster from the year before is less fun: fervent players want the team to represent the one they see on the field. Rather than allowing the old game version to disappear, a company can re-package it for a more price-sensitive audience – and retailer. This was the case with EA’s complete line-up of video games: this robust content was repurposed for a new price-sensitive market.

When considering a line extension of an existing product, companies should evaluate whether it fits one of these scenarios. In so doing, they can ensure that the new product does not cannibalize their sales, but rather extends the life cycle of the original product.

If you need consulting on Product Lifecycle Management, contact TrustedPeer Expert Ted Judson.

Most product line extensions do not stray far from the original offering. For example, video games are commonly extended into movies, as shown by films like Mortal Kombat and Lara Croft: Tomb Raider. Similarly, television shows regularly prompt board game extensions, like the Simpsons® Monopoly® edition. Even the wildly popular internet video 'What Does the Fox Say?' is now being turned into a children's book! All of these examples are very natural extensions of the original product, because they fall under the general category of entertainment. This kind of closely-related extension is considered same-dimensional.

Rarer are extensions which are new-dimensional, representing a complete transformation into mediums which were not there at the start. A recent example comes from M&Ms®, the beloved chocolate candy, which will soon star in a movie! This is not the first line extension for this iconic brand: they have extended their original chocolate product to everything from pretzel and dark chocolate versions to Easter and mini-sized versions. They have also ventured further afield, making candy dispensers, mugs and even t-shirts celebrating their product. However, these extensions have all been in the food category or in the broader consumer packaged goods (CPG) arena. Their newest product bridges their offering from a food product to an entertainment vehicle.

This is not an easy feat, and it did not happen overnight. What first paved the way for this revenue-generating extension was the brand's commercials. Initially, the creative team came up with the idea to anthropomorphize the candies in ads to help sell more chocolate by fueling a sense of connection. One way to do this, they found, was to make the product relatable, by pumping up its personality. This early idea resulted in ads in which different colors of M&M® candies had different personas: fun, mischievous and sometimes cheeky. The life of these personalities continued to evolve in subsequent ads with ongoing storylines for each color of candy. Finally, there had been enough exposure to these ads that the characters had come alive to consumers. With this series of small steps, Mars built up consumer demand for a movie featuring their candies.

But how did the brand know that their characters were ready for the big screen? The key would have been observing how consumers perceived the brand. For example, in focus groups, did consumers talk about liking 'that color' – or did they mention liking 'that guy?' Consumers who thought of M&Ms® as 'guys' were seeing them as peers, for whom certain actions would be in- or out-of-character. This is why an M&M® movie is hitting theaters, but a gummy bear movie is not: you would be hard-pressed to name or assign characteristics to any individual bear. 

New-dimensional product extensions like this are very rare – and have great potential. Though it is difficult to predict how successful the transition will be for M&Ms®, it is an opportunity that not many brands have.

The important question is: will watching M&Ms® on the big screen increase or decrease M&M® sales at the theaters themselves? How will viewers see it: happy convergence or disturbing cannibalism?

If you need consulting on Product Life Cycle Management, contact TrustedPeer Expert Ted Judson.