Sales volume prediction is the traditional way of assessing innovation. We believe that combining it with a brand-centred approach is the best way to minimise the risks of extension launches. We see brand strength as a combination of a brand’s functional performance and its emotional affinity with consumers. Superbrands, the strongest brands, draw their equity very heavily from affinity the image they project and the connections they make with people.
That looks like good news for extensions. They come onto the market with an affinity close to established products and higher than new brands. But there’s a big problem – performance is lacking. Almost two-thirds of new brands have stronger performance than affinity. For extensions that drops to below half; much lower than existing brands.
Companies seem to launch extensions because they think the parent’s strength can overcome any weakness in the product. Extensions are born with silver spoons in their mouths, but the market is hard to fool.
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