Warning: Massive line extension can kill you.

March 14, 2007

Brand Mortality series: Part 2.
Click here to read Part 1.

The second disease that will kill a brand is massive line extension in the face of focused competition.

A great example of a brand that has fallen victim to this disease is Chevrolet. What is a Chevrolet in the mind of a consumer?

A large, small, cheap, expensive car or truck. When you try and have your brand stand for everything, your brand ends up standing for nothing. Chevrolet is a well-known but weak and dying brand.

What is killing Chevrolet is not just line extension, but the strength of its focused competitors. Diet Coke and Bud Light are flagrant line extensions too, but the lack of any focused cola and beer competitors keeps these brands alive and well.

Chevrolet is not so lucky. It has to contend with extremely focused competition. Here are a few of Chevrolet’s competitors and the concepts they own in the mind:

Toyota = reliable
Lexus = luxury
Scion = hip kid car
Volvo = safety
BMW = driving
Mini Cooper = quirky

Miller is an example of how a number-two brand is harmed more by line extension than a leader brand. It is even more important for a number two brand to stay focused than it is for the leader. Staying focused is the only chance a No. 2 has for keeping up with the leader.

Leading brands have more leeway. They can often get away with a certain amount of line extension. They still shouldn’t do it, but line extension doesn’t hurt a dominant brand as much as it does an also-ran.

Microsoft can line extend all it wants. With 95% of the operating-system market, does it really matter? No. However, they still do better when they launch new brands like Xbox.

Miller has paid an enormous price for its countless line extensions over the years. Miller could have been the number one brand of beer in the U.S.

Miller Lite was the first light beer in the mind. But instead of giving its new light beer a powerful new brand name, Miller Brewing chose a terrible generic name, Lite.

To compound the error, the verbal confusion between “Lite” and “light” forced the company to rebrand its new light beer Miller Lite.

Who hands a bartender their order written on a napkin? Verbally, Lite and light are indistinguishable. Tragic.

There’s another problem, too. When you saddle a beer with a diet word like light, you undermine its manliness. Miller made multiple mistakes all at once and it has cost them dearly.

Miller not only messed up its Lite brand, but at the same time it line extended the heck out of its Miller brand. The brewer launched countless varieties of the brand, from Miller Genuine Draft to Miller Regular to Miller Clear to Miller Reserve. Then, of course, there’s also the light versions of most of these brands.

When you compete with The King of Beers and the focused smaller brands like Corona, Samuel Adams and Heineken, you can’t afford to make many mistakes.

Other beer brands have made the same mistakes as Miller in varying degrees. But like cancer, the line extension disease also takes a while to kill you.

Keep tuned. Other beer brands will pay the price Miller has paid and will face an untimely death. Heineken in particular is vulnerable to succumbing to a line extension disaster with its launch of Heineken Light. A short-term winner maybe but long-term it is likely to damage Heineken and undermine Amstel Light. That is the way line extension works. In the short term it feels great, in the long term it kills you.

The best way to keep brands healthy is limiting exposure to line extension as much as possible. A little won’t kill you, but too much and you can easily overdose and die.