How far can your brand stretch?
There’s a term that most marketers and economists learn about pricing, called price elasticity. This refers to how much a consumer is willing to pay for a product or service .
Beyond the value of precisely measuring a product's price elasticity, there is benefit from a broader understanding of just how sensitive (or not) a product is to price swings.
That simple understanding of how sensitive one attribute is to the movements of another attribute also lies at the core of the concept of brand elasticity, which gauges how sensitive consumer preference is for a certain brand when it stretches beyond its positioning or expands into new categories.
Imagine a new brand of ice cream brought to you by ENOC. Crazy, right? Of course it is: We all recognize that ENOC cannot stretch into a category so distant from its own and be credible, let alone create preference, in the category.
That extreme example may be a case of what academics would refer to as "perfect elasticity." What it means is that any shift away from the oil and gas category will absolutely be met with a dramatic change (in this case, negative) in consumer preference. In other words, variability is assured.
At the other end of the spectrum is a brand that is "perfectly inelastic," meaning it can pretty much enter any category it desires without much change to customers' preference for it.
Virgin is an example that might be as close as a brand can get to being perfectly inelastic. Virgin can span categories ranging from airlines to bridal services and still generate preference (this has a lot to do with brand positioning, but that, along with a host of other brand architecture considerations, is a topic for another day).
Of course, rarely do real-world issues fall neatly at one end of the spectrum. Extremes are rare; most brand portfolio challenges occur within the middle.
With that in mind, an good way to think about brand elasticity is to consider the most defining attributes of a brand and then think of them as a center point, around which orbit a series of ever-expanding concentric circles, each with its own set of complimentary secondary, tertiary, etc. attributes. When deciding about how best to brand a new offering, think about how proximate that new offering's core attributes are to those at the center point of another brand already in your portfolio.
Take for example Adidas. The brand is all about athletic performance, the byproduct of which is sweat. So why not stretch into personal care, specifically Adidas deodorant? There is a solid case to be made that the Adidas brand is sufficiently inelastic to enter into this new category. If, however, the distance is too far, such as the case with ENOC and ice cream, the brand is probably too elastic—i.e., it responds too dramatically to movements beyond its established category.
Brand architecture is an often complex practice area within brand strategy. Applying the conceptual framework of brand elasticity—and, whenever possible, quantifiably gauging elasticity through testing—is a meaningful approach to assuring brand equity is properly extended without stretching a brand to its breaking point.
If you’re considering a brand refresh, or wanting to launch a new brand, let’s chat.
