One of the oldest moneymaking tricks in the marketing book is the trusty brand extension—grabbing a successful name and slapping it on a new product in a different category. It’s not hard to see why brands do this. The deals are fairly simple (see sidebar, opposite) and the added revenue is pretty much gravy. When the extension works—as it did with Starbucks Latte ice cream and Mr. Clean Car Wash—it’s a thing of balance-sheet beauty. Trouble is, brand extensions often don’t work. When a brand stretches its name too far from its home turf, the results can be scary, e.g., Colgate frozen entrées, Cheetos lip balm and (we’re quite serious) Precious Moments coffins.
The latest fad in the brand-extension game: home collections. Suddenly, brands ranging from Esquire magazine to cooking show queen Paula Deen want to sell you stuff for your living room. Why now? According to Robert Sprung, president of TippingSprung Licensing, a still-moldering economy has left many brands questing for a fresh revenue stream. “A lot of these guys are desperate,” Sprung said. “They’re thinking: ‘Here’s my brand—what can I do with it?’” And since so many Americans are still staying home instead of dropping money at the mall, the current spate of home collections seems aimed at hitting them, well, right where they live.
So, thinking about replacing that old recliner? Sheraton would love to sell you one.