Hello Expansion

Don’t you just love it when one of your favourite favourites comes out with a new flavour or new product?  It is like Christmas for me every time.  Perhaps it is because new products ARE my favourite flavour! -LOL

So how do brands successfully expand?

There are various ways you can build and grow your brand.  You can acquire or merge with an organisation and/or their brands or simply build your own by expansion.  Expansion could mean expanding your current offering to new geographical locations or expansion by offering new products and services to existing clients, or even new clients in new markets.  The options are endless.

What is needed in every growth strategy are 5 P’s. Proper Preparations Prevents Poor Performance

Let’s have a quick look at the growth strategies used to grow a brand.

LINE EXTENTION

Brands regularly extend their range by introducing new flavours. They also extend by adding different sizes or packaging variations such as multipacks. This is familiar to us all.

Lindt’s Lindor extends their line every Christmas to include limited editions; such as the That’s Mint flavour in 2018. This year Christmas Limited edition flavour is….(trumpets please) … Pumpkin spice. 

[This has become a past time of mine, by the way, trying to guess the new Lindor Christmas flavour before it arrives.]

Lindor also adds new box sizes regularly and has extended their packaging options to include gift boxes in this range..

The advantages of this is that the customer has more choice and variety across the range.  The limited editions during the festive season also provides Lindor with exceptional shelf space during the peak period driving brand awareness and brand love over the festive period.

New lines increase sales, awareness and space on the shelf. Line extensions can also provide various price variations within the line. These are referred to as vertical line extentions.  

The downside to a line extension, however, is if it fails it has the potential to damage the existing brand.

BRAND EXTENSION

A brand extension is a growth strategy that a brand uses to create a new product in a different category.

This is when the product is completely new, but the brand name is the same.

Brand extensions are likely to be successful with strong, well known brands. However, these extensions have to make sense. If a company does not have leverage in the category it wants to go into, it will likely fail.

The positives are that consumers are already aware of the brand values and position and would be more likely to trust the brand should it enter a new category.  The benefits of this would be increased sales in a new market and increased brand awareness and loyalty. Colgate extended their brand from the toothpaste industry to the toothbrush industry. A natural and complementary move. Similarly Aunt Jemima’s brand extended their from syrup to pancake mixes. These extension make complete sense.

Brand extensions fail when there is a disconnect between the brand and its first category and the extension of the brand into a new category that does not make sense. For example; Dr Pepper launched some sauces in their soda flavours which was a flop and Zippo decided to launch a women’s perfume and the fragrance bottle looked like a zippo lighter.

CONCEPT EXTENTIONS

Dryson Extention

This is diversification of a brand.  This extension strategy uses the existing brand name for a new product in a new market.  In other words, extending the brand Lindt into a fragrance line for example.  The concept extension explores markets outside of the scope of the parent brand.  Often this extension is outsourced under licence agreement. Unlike a brand extension that can be handled by the parent brand, this would take the brand into completely new markets.

Good examples of Concept extentions would include brands such as Dyson from vacuum cleaners to desk lamps or Cosmopolitan from magazines to yoghurt.

CO-BRANDING

Doritos Lacos Tacos

As the name suggests, co-branding is when brands from 2 different organisations combine in an effective and strategic way.  This is a good strategy when a brand chooses to venture into a foreign market.  Co-branding between two reputable brands can also result in a larger brand awareness.

“Taco Bell and Frito Lay advertised the Doritos Locos Taco by wrapping the taco in a classic Doritos bag, reflecting the co-branding partnership and appealing to both brands’ audiences. The Doritos Locos Taco’s extraordinary success is yet another example of why co-branding can boost reach and sales for both brands.

Another example of successful co-branding was Adidas’ co-branding relationship with Kanye and the resulting cult-like Yeezy following led to a stellar year for the company: in 2019, Adidas’ net income climbed 19.5% to $1.9 billion. ” – Hubspot

The downside to co-branding of course is that it could go wriong – Brands must be careful who they go into bed with. Think about Nike and the Lance Armstrong “LiveStrong” initiative.

MUTLI-BRANDING

Another growth strategy is used by Unilever and P&G extensively. This strategy refers to two or more brands entering the same category without any links to the other brands. The benefit is to muscle out competitor brands and attract the brand-switchers, and take the majority of the category pie in sales. However, the negatives include cannibalization between the brands, brand switching and damage to the parent brands.

An example of this strategy is Proctor and Gambles long list of laundry detergent brands. They include; Ariel, Bold, Bonix, Cheer, Daz, Downy, Dreft, Era, Gain, Ola, PMC, Tide and Lenor. With multibranding like this, what are the chances you won’t be going home with a P&G laundry detergent?

Proctor and Gamles Multi Brand laundry detergents

ENDORSEMENT

Endorsement is a stamp of approval. The product name would take centre stage, but the endorsement brand would give it a stamp of approval. Playstation for example is owned by Sony and is called Sony Playstation.

The endorsement is two fold. The endorser expands their portfolio to new markets and the endorsed brand has the positive associations of the endorser brand as back up. Endorsements can aid brands in entering new markets and gain consumer trust.

Celebrity endorsement is also used to gain position in markets and attract consumers. This is often a strategy used by fragrance and beauty organisations to launch new fragrances.

Whatever the strategy, they must be managed correctly. Brands do not operate alone. If a brand cannot extend beyond its current market with its current, new brands must be developed.

HELLO…

Hello Lindt!!!! Mmmmmmm Wow

So now that we have wrapped our heads around the various growth strategy options, let us play with the idea of an expansion with one of my favourites.

There is no surprise here, it is chocolate. Not just any chocolate. Lindt!

Lindt & Sprüngli has had phenomenal growth as a brand showing increase in market share across all markets, they operate in. The group also showed a 5.1% sales increase between 2017 & 2018 and has over 2 000 products in their portfolio.

[View their report here]

But is there room for more? Of course there is…

There are 4 brands that fall under the master Brand Lindt.  Lindor, Lindt Excellence, Lindt Creation and Lindt Hello.

So… eeny meeny mino mo… which way should Lindt go?

I would like to explore a brand extension for their Lindt Hello Brand.

How does a Lindt Hello Cinnamon Bun Ice Cream stick sound to you?

If it makes your heart race and pound in your chest like mine is right now, we may be on to something. 

The ice-cream marketing was valued at 54.8 billion USD in 2016 and grows at an expected 4.1% per annum. [Link]

The market is segmented into impulse, artisanal and take-home sectors.  The impulse marketing is the largest share.  This is the ice cream you buy impulsively [Cups, bars, cones, ice-lollies, sandwiches, bars and sticks]. This is the market that I think the Lindt Hello brand can penetrate.

The major players in this category are Nestle, Unilever, General Mills, Mars and Blue Bell creameries. Lindt Hello could certainly bring some WOW and fun to this category.

Lindt Hello could expand and develop a range of delightfully divine ice cream sticks and tubs positioned across supermarkets and convenience stores globally.  Who wouldn’t want to smack their lips onto a creamy cookies and cream ice cream coated in Lindt chocolate?

The plus side for Lindt Hello would be increased brand awareness and trial with a slice of the global impulse ice cream market.

The Lindt Hello Ice cream range could be further expanded with further line extensions to include more flavour offerings and multi pack options for take home ice cream tubs.

An alternative to the brand extension could be to go with a co-branding strategy with Nestle. That is, if they wanted to get one of the biggest ice cream players on the globe backing their new product this could be the answer.

We could also throw some dreamy celebrity endorsement into the mix to give the ice cream a swirl ladies… what do you think?

Image result for lindt hello logo

SOURCES

http://inevitablesteps.com/marketing/multi-brand-

https://www.marketing91.com/multi-brand-strategy/

https://www.businessinsider.com/the-10-worst-brand-extensions-2013-2?IR=T#eva-longorias-she-steakhouse-for-women-1688-votes-9

https://blog.hubspot.com/marketing/brand-extensions

https://brandmarketingblog.com/articles/good-branding/brand-extension-examples/

https://blog.hubspot.com/marketing/best-cobranding-partnerships

https://mpk732t22015.wordpress.com/2015/08/30/co-branding-be-careful-who-you-get-into-bed-with-group-17/

https://en.wikipedia.org/wiki/List_of_Procter_%26_Gamble_brands#Laundry_detergents

https://www.colgate.com/en-za/oral-health?gclid=EAIaIQobChMI1ILxqYiw5gIVQbDtCh0V4whbEAAYASAAEgLUxPD_BwE

https://www.grandviewresearch.com/industry-analysis/ice-cream-market

https://www.facebook.com/LindtHELLO/

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