When they win over consumers, brand extensions offer big rewards: more revenue, more distribution and better name recognition. But finding success in a new category isn’t a straightforward popularity contest. Consumers may love your brand and know its name, but there needs to be a bigger strategy at play to drive sales in the new category. Reputation alone isn’t enough to launch a successful extension even if your brand is widely popular.

So what does it take to make the sale? Consumers need to accept your brand in the new category, and they need a reason to prefer your brand extension over what’s already on store shelves. To put it more simply, you need two key things: fit and leverage. These critical factors can help you determine everything from which brand extension you should pursue in the first place to what you need to emphasize on that new packaging.

The Question of Fit

You wouldn’t buy a pair of jeans that didn’t fit, so don’t expect consumers to purchase a brand extension that doesn’t feel like a good fit in the new category. When you’re considering extension ideas, here’s the first question you need to ask yourself: Am I moving into a store aisle where consumers will readily accept my brand? In fact, it’s a question you may need to take straight to consumers, because fit is largely a matter of consumer permission.

The Clorox brand illustrates this point perfectly. Today its extensions enjoy sales in the hundred millions, but this
success owes a debt to careful consumer research. Dr. Edward M. Tauber, a member of my agency’s board of advisors, played a key role in helping Clorox find brand extensions with superior fit. It was fairly obvious that Clorox owned an ingredient — bleach — but it wasn’t as obvious that consumers have a love-hate relationship with bleach. People love that it cleans, brightens and disinfects, but hate that it’s difficult to handle, caustic and can damage some surfaces.

Without fully understanding this duality, it’s impossible to determine where the Clorox brand fits and where it doesn’t. At first, management considered a number of products outside the brand’s fit boundaries. Automatic dishwasher detergent, carpet cleaner and even oven cleaner all received two thumbs down from consumers. People worried about bleach taking the finish off china, removing color from carpet or giving off fumes in the oven. Consumers simply didn’t give permission for Clorox to extend in these categories.

The brand needed to tread carefully to find success. So it created a nuanced definition for its extensions based on consumer input: “Brand extensions that offered the tough cleaning benefits of bleach, on surfaces which consumers felt wouldn’t be harmed by it.” This focused approach led the brand to product categories and cleaning surfaces where consumers easily gave the brand permission to extend. One of the early brand extensions was a household/cleaner sanitizer. It held broad appeal and helped consumers adjust to Clorox moving out of the laundry. Today the brand’s extensions include everything from toilet bowl cleaner to washing machine cleaner.

Identifying Your Leverage

Fit is only half the equation. Once you’ve figured out where consumers will welcome your brand, you still need to know what leverage you have in these new categories. A brand has leverage when it “owns” one or more distinct qualities that make consumers perceive a brand extension as superior to existing competitive products. In other words, leverage gives consumers a compelling reason to choose your new product over what they’re buying right now. Try posing the question to yourself like this: What competitive advantage does my brand have?

It may take a little thought to uncover your brand’s true leverage. Arm & Hammer is synonymous with baking soda, but its leverage actually stems from a functional benefit: removing odor. To take full advantage of this benefit, the brand sells products in a wide range of categories where odor fighting matters to consumers. You can head to the store right now and buy Arm & Hammer laundry detergent, dryer sheets, cat litter, toothpaste and deodorant.

And when you get there, you’d probably see this leverage strategy play out on the packaging. A deodorant lid proclaims “powered by baking soda” to remind consumers about the ingredient’s odor-eliminating powers. The tagline for Arm & Hammer cat litter reads “clumping litter with odor eliminating baking soda,” and to bring the point home, the words “odor eliminating” appear in bright yellow color while the rest of the tagline is white. Even the familiar Arm & Hammer logo, prominent on all the packages, reminds consumers about baking soda and its odor-fighting abilities.

Identifying and leveraging this functional benefit allowed Arm & Hammer to grow far beyond the core product. The brand found extension success by strategically focusing in on categories where odor control provides superior leverage. It’s a model anyone would be smart to follow. Once you’ve identified your brand’s leverage, start looking for categories where that leverage offers the most value to consumers. These are the store aisles where you’ll be able to provide consumers with a truly compelling reason to buy.

How Fit and Leverage Work Together

Both these strategic components are critical for brand extension success, but they’re not exactly equals. In fact, I’d go so far as to say that fit is nothing without leverage. It might help to think of fit as a pre-qualifier for your brand to enter a new category. You don’t stand a chance without it, but you’ll fail if you don’t have leverage, too. Leverage brings the muscle — the reason to buy your product over existing offerings — that’s necessary for long-term success. It takes both fit and leverage to make the sale.

But here’s where it gets a little more complicated. There’s an inverse relationship between fit and leverage: The more a brand has of one, the less it tends to have of the other. A brand with a narrow fit, for example, is typically restricted to a handful of really focused product categories. Most people easily associate the Philadelphia brand with cream cheese. This limits the brand’s extendibility (or fit), but it also means the brand brings strong leverage to any extension where cream cheese is critical (say, cheesecake).

Then there’s the opposite scenario. When consumers give a brand permission to enter just about any category (broad fit), it tends to have very little leverage. Let’s consider the Betty Crocker brand as an example. If we conducted a study, consumers might give it permission to enter countless categories — from additional food products to cookware and appliances. But if there’s no leverage, these brand extensions would still be poor business decisions. Goodwill toward the Betty Crocker brand isn’t enough to drive sales and revenue in these new categories. Something more strategic needs to be at work.

Ultimately, fit and leverage allow you to measure consumer purchase intent before making an investment in a brand extension. This gives you a huge advantage over all the companies who simply put the same logo on a different product every year. Because a solid brand extension strategy beats out a good reputation every time.