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Brand Extension: How to Make the Decision

Tropicana Case Example Shows Brand Extension Research is Valuable for any Brand

After PepsiCo acquired Tropicana, research indicated that there were clear good and bad choices for brand extensions.

Brand Building Drives Value

Brand building is essential, whether your organization is a household name (as many CPG brands), a startup or a small or mid-sized business.    Brands drive higher market value for both B2B and B2C firms. 

With that in mind, few, if any, marketing professionals and brand managers will disagree with the importance of building the brand and of creating a brand extension into new business categories.

Brand Extension: How to Make the Decision

Not all Brand Extensions Build the Core Brand

Despite general agreement on the importance of brand building, it’s common to find that companies have applied their brands to new business categories that literally detract from the brand’s equity. Leadership usually even agrees that this is a not a good idea. 

What to Include in a Brand Extension

We recommend starting with a clear understanding of the current brand equity, including awareness (aided and unaided) and the brand pyramid elements of:

  • brand attributes
  • rational benefits
  • emotional benefits
  • personality
  • positioning

Also important are the brand pillars, which are the key differentiating points and product standards. Finally, category extension guidelines with relevant business categories need to be defined, as well as places not to extend.

Developing the brand pyramid, pillars and expansion zones with organizational buy-in and alignment requires investment to gather employee and customer inputs and hypotheses. We recommend insisting on a fact-based understanding of the current brand that is done by an unbiased, third party.   

Moving Beyond the Obvious with Quantitative Research

Carefully designed quantitative research is an essential input, with a robust, balanced sample and a considered, competitive set. Before embarking on the research, it’s essential to identify the relevant brand extension categories so these can be tested in several ways (e.g., deductive, inductive, visualization of prototypes).  Otherwise, the research results will suggest only obvious, close in expansion categories.

Brand Extension: How to Make the Decision

Tropicana Brand Extension Case Example

PepsiCo bought Tropicana in 1998 for $3.3 billion. At that time, Tropicana made and distributed Pure Premium (100% orange juice), Season’s Best and Dole line of juice products. Tropicana Pure Premium was the primary asset being purchased, as Tropicana Pure Premium is the leading refrigerated orange juice brand, with sales of over $962 million dollars in 2020.

Extension of the Tropicana Brand

After reviewing existing data and conducting a large-scale research project, we worked with the PepsiCo Tropicana team to develop the brand pyramid and pillars along with the category extension guidelines.  These extension guidelines clearly showed that carbonated soft drinks (CSDs), energy drinks, ice cream and roll-up type snacks detracted from the brand, while many other categories were additive, including fruit & vegetable juice, fruit smoothies, 100% frozen fruit bars, fresh fruit, etc.  Since it has been more than 10 years since this work was completed, undoubtedly it has been updated, while some of the fundamentals likely remain.

Brand Extension: How to Make the Decision

Getting Started on Your Company’s Brand Strategy

So, do you have a brand strategy to extend your brand into new business categories?    If not, we’d suggest that it’s time to get started.   To learn more, you can find case examples and resources on brand strategy at the Insight to Action brand strategy resource page.  Or take the next step, and contact us to schedule a brand strategy workshop.