Just as humans have evolved to thrive and survive, so must brands. With constant changes in consumer culture, taste and technology, brands that fail to adapt to their new environment face extinction.

Brand evolution through innovation has become the new imperative and the key to staying relevant (and avoiding extinction). Extending a brand’s product range has become a necessary part of this strategy. Requiring less capital and fewer resources than launching a new-to-world brand, companies look to their existing product portfolio to identify opportunities where a brand that’s already working hard for them can stretch beyond its core offering. When carefully considered and executed well, a line extension has the potential to:

• BROADEN FREQUENCY by satisfying more need states or fitting with more occasions—on the go, dessert, snacking, drinks (think Chobani);
• BROADEN THE CONSUMER BASE by expanding access— different pricing tiers, ingredients, or even pack types and sizes (think Jim Beam);
• EXPAND OR REINFORCE THE BRAND MEANING—a brand becomes about more than just one thing (think Special K’s evolution from diet to healthy lifestyle);
• DEEPEN THE BRAND’S RELATIONSHIP WITH EXISTING CONSUMERS (think Annie’s).

Line extensions can also be a purely defensive play. A brand may extend to compete with a new competitive offering entering the market or to maintain or grow shelf space—a key to success in the crowded retail environment.

In short, a well-executed brand portfolio strategy can be a competitive advantage.

Big Rewards Come With Big Risks

Line extensions done right can help maintain or grow a brand, but they must be carefully considered to avoid brand dilution and cannibalization. If a new line fails, it has the potential to negatively impact the parent brand’s reputation and profit.

A clearly defined brand architecture makes it easy for both consumers and retailers to understand exactly why the new extension makes sense and how it fits within the larger brand portfolio. Brand owners and agency partners need to identify and define the role of (and the relationship between) each offering. How much coherence or freedom is assigned to a new product? Is it simply a different flavor or pack type? Or does the new product address a new insight and require expansion into a different category with a different competitive set or consumer target?

A critical key to success will be determining when to introduce new visual equities and when to lean on those of the parent brand. What is the right balance? The more differentiated the new line extension is from the parent, the more freedom and difference there should be in its strategy, nomenclature and design. A clearly defined brand architecture provides all stakeholders with a foundational blueprint for how to carefully and strategically grow the brand portfolio in a way that performs better in the market and in a way that consumers will understand.

Most line extensions exploit the existing parent brand, building a masterbrand strategy where extension names are descriptive in nature and lean heavily on the parent’s equities and awareness to promote trial and brand block on shelf. Lucerne Dairy Farms, the flagship OWN brand from Albertson’s-Safeway, is one example of a successful masterbrand that has effectively leveraged its dairy reputation and heritage to expand beyond milk. Prior to its redesign, its offerings across each dairy category had a different look and feel. Each had their own personality and design language that’s held together by a small and dated brandmark.

For example, consumers who shopped for milk did not realize the same brand they reached for had hundreds of offerings in nearly 20 other categories across the store.

Alberston’s-Safeway came to the conclusion that it would see a growth of 1.5 percent (roughly $33 million per year) if half of its existing customers purchased only one additional Lucerne product per trip. So, creating a strong Lucerne presence from aisle to aisle throughout the store was imperative.

The brand needed to be immediately recognizable across 20 different categories while also being flexible enough to compete strongly in each—the ultimate line extension challenge.

It is vital to first consider the visual norms of the new category when extending a brand. What are the clues consumers look for to inform their purchase (e.g., red for whole fat, blue for skim)? How is functional information treated (e.g., lowfat or whipped)? What about flavor? The strategic use of the toolbox helps us fit into a particular category (this looks like milk) but should also be used to help us stand out from the competition and connect to the parent brand (I can clearly find my brand and the flavor I’m looking for). Once you know the rules of the road, consider the visual sign posts of the parent brand that should be brought forward to make the relationship to the parent clear. The key to success is finding the right balance between what is leveraged from the parent, where evolution is needed, and what new equities need developed to fit in with the new category or competitive environment.

For Lucerne, the redesign immediately announces its presence with a bespoke brandmark, masterbrand color, and a dynamic holding shape that brand blocks at shelf. These brand-building equities are balanced with key category-specific cues to make finding the right product and form easy. This strong system works across a category with more than 40 cheese flavors and multiple product and package forms.

When a brand needs to stretch into a different category, recruit new consumers or address a different insight, the parent brand may need to launch a sub-brand or adapt a more flexible brand architecture. This was indeed the case when extending the Lucerne redesign to non-dairy categories such as eggs and almond milk.

Consumer insight suggested that non-dairy users were turned off by seeing a cow on non-dairy products. The established system is flexible enough and had enough other distinctive visual equities that the non-dairy option could feature a different icon and still be recognizable while leveraging the power of the Lucerne masterbrand.

The iconic Northern California oak tree was drawn in the same illustration style and allowed the brand to seemlessly extend to dairy-adjacent categories. The parent brand name and logo were maintained, as was the signature blue and the arc shape. But the word “dairy” was removed from the name. This is a powerful example of how a brand can subtly evolve to be relevant to a different audience but still leverage its brand equity and reputation to create opportunity for brand growth.

Brand extension can be a double-edged sword. Even a popular extension can dilute or damage its parent brand. As you consider how to line extend and design packaging for those new offerings, managers and agencies alike must carefully evaluate not only how the brand impacts the line extension strategy, but also how the line extension might impact the brand. Done right, the strategic use of extensions can deepen and expand the meaning of the parent brand and ensure its health, relevancy and financial success through its next evolution.