Brand Extensions Seek New Revenue Streams

August 30, 2007

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With all the new products that are flooding the marketplace, shelf space is a precious commodity that has allowed retailers to call much of the supply chain shots. Can wisely executing brand extensions help businesses, well, stay in business?

Consumer goods manufacturers have it pretty tough these days. From complying with federal regulations to meeting pricey mandates from retail customers, profit margins are thinning.

Sure, you've got leaders like Procter & Gamble that have multibillion-dollar war chests at their disposal to fund research and development (R&D) and information technology (IT) initiatives. If they can't outsmart the system, they can simply buy their way in. What about everyone else in the consumer goods space? How will they be able to compete in a world full of compliance issues and rising transportation and logistics costs? Or better yet, what if you've already "optimized" your supply chain? Then what?

The short-and-sweet answer may lie in R&D — but more of the brand extension variety. Brand extensions are a safer and more economical way to offer an exciting new product. Extensions of popular brands cause less disruption to the overall business and less strain on manufacturing capabilities.

In this regard, food and beverage manufacturers have it pretty easy. Changing the flavor of a beverage or adding a new marshmallow to a box of cereal isn't nearly as daunting as creating and launching a completely new product that the company isn't known for.

Take Guinness, for instance. In an effort to lure more consumers to their products, the company will soon "break with its 250-year tradition of serving exclusively black and white pints by launching a smoother, sweeter red colored version of their famous Irish beer," according to UK's Media Guardian. Here's what else Guinness has on tap as it relates to this brand extension:

Parent Diageo is investing almost

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