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|CHAPTER 8 Products, Services, and Brands: Building Customer Value 281

how much would adding yet another flavor steal from
Doritos’ own sales versus those of competitors? A line
extension works best when it takes sales away from
competing brands, not when it “cannibalizes” the
company’s other items.

Brand Extensions. A brand extension extends a

current brand name to new or modified products in a

new category. For example, Starbucks has extended its

retail coffee shops by adding packaged supermarket

coffees, a chain of teahouses (Teavana Fine Teas + Tea

Bar), and even a single-serve home coffee, espresso,

and latte machine—the Verismo. And P&G has lever-

aged the strength of its Mr. Clean household cleaner

brand to launch several new lines: cleaning pads

(Magic Eraser), bathroom cleaning tools (Magic Reach),

and home auto cleaning kits (Mr. Clean AutoDry). It

even launched Mr. Clean-branded car washes.

A brand extension gives a new product instant

recognition and faster acceptance. It also saves the

Brand extensions: P&G has leveraged the strength of its Mr. Clean brand high advertising costs usually required to build a

to launch new lines, including Mr. Clean-branded car washes. new brand name. At the same time, a brand extension

The Procter & Gamble Company strategy involves some risk. The extension may con-

fuse the image of the main brand—for example, how about Zippo perfume or Dr. Pepper

marinades? Brand extensions such as Cheetos lip balm, Heinz pet food, and Life Savers
gum met early deaths.45 And if a brand extension fails, it may harm consumer attitudes
Brand extension
toward other products carrying the same brand name. Furthermore, a brand name may not

Extending an existing brand name to new be appropriate to a particular new product, even if it is well made and satisfying—would
product categories.
you consider flying on Hooters Air or wearing an Evian water-filled padded bra (both

failed)? Thus, before transferring a brand name to a new product, marketers must research

how well the extension fits the parent brand’s associations, as well as how much the parent

brand will boost the extension’s market success (see Real Marketing 8.2).

Multibrands. Companies often market many different brands in a given product cate-
gory. For example, in the United States, PepsiCo markets at least eight brands of soft drinks
(Pepsi, Sierra Mist, Mountain Dew, Manzanita Sol, Mirinda, IZZE, Tropicana Twister, and
Mug root beer), three brands of sports and energy drinks (Gatorade, AMP Energy, Starbucks
Refreshers), four brands of bottled teas and coffees (Lipton, SoBe, Starbucks, and Tazo),
three brands of bottled waters (Aquafina, H2OH!, and SoBe), and nine brands of fruit drinks
(Tropicana, Dole, IZZE, Lipton, Looza, Ocean Spray, and others). Each brand includes a
long list of sub-brands. For instance, SoBe consists of SoBe Teas & Elixers, SoBe Lifewater,
SoBe Lean, and SoBe Lifewater with Coconut Water. Aquafina includes regular Aquafina,
Aquafina Flavorsplash, and Aquafina Sparkling.

Multibranding offers a way to establish different features that appeal to different cus-
tomer segments, lock up more reseller shelf space, and capture a larger market share. For
example, although PepsiCo’s many brands of beverages compete with one another on
supermarket shelves, the combined brands reap a much greater overall market share than
any single brand ever could. Similarly, by positioning multiple brands in multiple seg-
ments, Pepsi’s eight soft drink brands combine to capture much more market share than
any single brand could capture by itself.

A major drawback of multibranding is that each brand might obtain only a small mar-
ket share, and none may be very profitable. The company may end up spreading its re-
sources over many brands instead of building a few brands to a highly profitable level.
These companies should reduce the number of brands they sell in a given category and
set up tighter screening procedures for new brands. This happened to GM, which in recent
years has cut numerous brands from its portfolio, including Saturn, Oldsmobile, Pontiac,
Hummer, and Saab. Similarly, as part of its recent turnaround, Ford dropped its Mercury
line, sold off Volvo, and pruned the number of Ford nameplates from 97 to fewer than 20.
Says Ford CEO Alan Mulally, “I mean, we had 97 [models, for goodness] sake! How you
gonna make ‘em all cool? You gonna come in at 8 a.m. and say ‘from 8 until noon I’m gonna
make No. 64 cool? And then I’ll make No. 17 cool after lunch?’ It was ridiculous.”46