The Law of Line Extension


The Law of Line Extension - Law #12 under the 22 Immutable Laws of Marketing

SAVAS Law of Extension

“There’s an irresistible pressure to extend the equity of the brand”. A company tightly focused on a profitable product may quickly find themselves thinly spread over many products and losing a lot of money.

The Line Extension temptation is something that most of the entrepreneurs and business owners will be very familiar with. The moment a business idea clicks, the next thing that gets into the business owner’s mind in most of the cases is ‘What else can we add to our brand’. They will then start spending more time in researching what else they can add to their product or services line than focusing on the main product or service that got them there. It is a common psychological human behaviour no doubt, but also the most common reason why most brands fail to keep up the tempo on the long run.

It is true that a company manufacturing baby diapers can also get into manufacturing sanitary napkins as both use similar technologies and raw materials to a certain extent. But will your customers be able to associate your brand with the sanitary napkins easily? Research suggests otherwise. Your brand might be a very popular baby diapers brand and the reason for that might be as simple as associating the smooth diaper material texture to that of the very mild and sensitive baby skin. The customer will be loving your brand for what it is for babies and will find it difficult to associate the same with adults. It might sound very logical and easy for you to think that the brand will be accepted by the customers when you project the brand’s expertise in moisture absorption technology. As discussed under the previous blog on ‘The Law of Perception‘ it becomes very difficult for the customers to realign your brand with another subject in majority of the cases. So why take a risk, when there is no clear evidence of a higher success rate?

Let’s look at a few examples we have around us and try understand better. The Indian automobile industry has seen a huge revolution in the recent couple of decades. The whole world is envying the Indian market for the potential it is showing. Most of the international players have already set shop and more are following pursuit. In such case there are a few Indian names that we should look at. Let’s look at ‘Tata Motors’, ‘Maruthi Suzuki’ and ‘Mahindra & Mahindra’ as examples and see what we can make out of their market share.

Tata Motors was once the No. 1 automobile manufacturer in India which then got pipped over by Maruthi Suzuki, then Hyundai and then Mahindra & Mahindra and as a result is out of the top 3 positions in the Indian automobile market today. TATA were the No. 1 whilst they were manufacturing commercial vehicles. They were even doing good when they started the passenger cars segment, and then everything started falling apart. TATA actually did the GM thing, they started getting to anything and everything on 4 wheels. TATA was always known for their rugged and sturdy engine and body construction on the commercial vehicles. Customers found it difficult to accept that the best commercial vehicles manufacturer could manufacture passenger cars also, which was supposed to be smooth and comfortable. However, TATA got it right by bringing in some unique designs and variations combined with the first in the segment advantages in the beginning but as they started to bring in more options, everything started to fall apart.

TATA Indica was their last vehicle that was successful and after that many new variants and versions including most anticipated ‘TATA Nano’ were released but none have made any difference in the falling stature of TATA motors. Today TATA motors has a variant in almost all segments from heavy commercial vehicles to the tiny minnos nearest to a three wheeled Autorikshaw (also called as ‘Tuk Tuk’ in European countries) but no segment winners. They have recently acquired international brands such as the ‘Jaguar’ and the ‘Land Rover’ but has not been successful in making a mark as yet.

Maruthi Suzuki has been very successful and growing since the day of inception in India. Frankly, India has been one of the biggest markets and revenue generators for Suzuki as a corporation. It all started when they launched the brand with their flagship product ‘Maruthi 800′ way back in the 1980s. It was a immediate hit as the only alternatives for a passenger car then were ‘Fiat Padmini’ from Premier Automobiles and Hindustan Ambassador from Hindustan Motors. Ambassador was very heavy and bulky whilst the Fiat was comparatively small and sleek but lacked driving comfort. The most important and critical distinguisher was that both of them were not as economical as a Maruthi 800. Since then, Maruthi has always been giving the most economical cars one after the other such as the Alto, Swift and the Ritz. These were small in size and economical to drive and maintain. Suzuki also tried to infuse some bigger cars and a couple of luxury variants as well but failed in all their efforts. Take for example the Kizashi version, it was an utter flop. This version of a luxury passenger car was both expensive to buy and to maintain and therefore found very few takers in the market. Maruthi Suzuki seemed to have learned a lesson from this debacle, but there is news that they are trying to introduce one more luxury car into the market soon. Let’s wait and see how this goes.

Mahindra & Mahindra on the other hand has been doing great compared to the competition. They seem to know that they are popular for their SUV variants and have kept their focus purely on them. They are the largest manufacturers and exporters of SUVs in the country. They did try their luck into the car segment partnering with ‘Renault’ but did not get much success out of it.

Having seen the above three examples, one thing is clear, never risk your brand by adding extensions to your successful product line. If at all you want to get into a new segment, it is always advisable to introduce a new brand that comes under your corporate brand umbrella. By doing so, you are securing that your current brand stays in your customer’s mind and therefore keep it going from strength to strength. Let the new brand take its own path in countering the competition and creating a space of its own as a result. This way we are at least keeping the success story going with one product at least. Digital Media has made it all the more easy for anyone to start a new brand and create brand followers in a simple and effective way these days. Adopting the digital wave and coming up with a sister brand is the right path to take than working on line extensions.


Prrashanth SAVAS author

About the Author

Prrashanth H Nagaraj is the Founder and Managing Director of SAVASInc. He comes with around 16 years of professional experience across multiple industries such as Engineering, Banking, Insurance, IT, ITES and Digital Media. He is graduated in B. Eng. from University of Mysore and has a MBA degree, specialized in International Business from the University of the West of England, UK.