Hasta La Creative!

Imagine you are the CEO of a Fortune 500 consumer-products company. Things are going well: your recent product launch was a smash, investors are enamored, and Wall Street is singing your praises. But now your company needs to gear up for the coming product launch, and you need to decide on your next brand extension.

A company like Haagen-Dazs, known for its classy ice cream, might opt to extend into a related product category like frozen yogurt; or Nike could break into a brand new sports category, as it did with skateboarding in 2002. The decision can be crucial to your company’s bottom line.

One thing firms concern themselves with is fit. This is the notion that, say, Heineken had best not roll out a new popcorn product, because consumers will expect it to taste like beer (participants actually expressed this concern in an experiment). Another example? “Exxon ice cream,” says Kelly Goldsmith, an assistant professor of marketing at Kellogg School of Management at Northwestern University, playfully laughing at the notion that consumers will think, “I don’t want gasoline in my milk.”

Continue reading at AdAge.com