This is the fourth of a series of weekly posts introducing key themes from the new brandbgym book, Grow the Core: How to Focus on Your Core Business for Brand Success. Here, we look at the final of the three main ways to grow the core, which is extending the core.
Core range extension offers new versions of the core product or service, such as Dove bar introducing a Refreshing Green version. This is very different from brand stretch, where you move beyond the core into totally new markets, such as Dove launching deodorants.
Range extension can be a great way of growing the core. It can drive penetration by widening the brand’s appeal to more people on more occasions. But it can also deliver an additional business benefit for the core in the form of ‘premiumisation’: charging a higher price for new benefits. This drives not only volume share but also value share. As long as the new product features are genuinely adding value to the consumer, the premium price should at least recoup the extra cost of the product to maintain percentage profitability. In the best cases, the core range extension actually delivers significantly more profit per unit sold.
A great example of this ‘double whammy’ of penetration and premiumisation is Gillette. The brand has been unrelenting in its drive to develop better and better razor systems. So, we have gone from Sensor (two blades) to Mach 3 (three blades) and now Fusion (five blades). Each of these is priced at a premium, supported by superior benefits. The growth in the UK core shaving business over this time was impressive, with the razor and blade business up from £128 million in 2002 to £180 million in 2006, with value share up from 60.1% to 67.9%;
Pack extension – WD-40
Extending through packaging formats is a great way of growing the core. You sell more of the same core product, rather than adding new products. A great example is WD-40, the multi-purpose lubricant which stops squeaks and unlocks stuck bolts, amongst its many uses. WD-40 used to come with a little straw taped on the side, to help direct the spray. The problem was that people would often lose the straw. This led to the creation of ‘Smart Straw’, a new WD-40 pack with an integrated straw that flips up to use and back down to store. Smart Straw solves a real problem and makes the product easier to use. And as it offers consumers real added value it supports a premium vs. the normal can.
After having done all you can to sell more of your existing product offer, the last step is to consider adding new products. Here, there is a need to focus on those products that genuinely offer potential to drive penetration by widening the brand’s user base. A good example is the Ryvita's ‘seeded’ crispbreads. These have played a role in re-positioning the brand from being a diet product to a tasty, crunchy and healthy product. The core extensions deliver a more interesting and tasty eating experience, whilst also offering extra health benefits. These extra benefits are worth paying more for, supporting a 60% price premium versus standard.
In conclusion, core range extension can be a great way of growing the core, providing your new formats and products add real consumer value that supports a price premium, delivering the double whammy of penetration and profitablity.