Answer – Four Branding Alternatives

This is the suggested answer to the Four Branding Alternatives exercise on Colorado Ricardo Mountain Bikes.

Tauber's Four Branding Alternatives: line extension, flanker brand, franchise extension and new brand

New Frame Size and Colour: Line Extension

An existing brand name (Colorado Ricardo) applied to an existing product category (off-road bikes) is a line extension – the lowest-risk move, since it asks existing customers to consider only a minor variation of a bike they already trust.

The E-Mountain Bike: Franchise Extension

An existing brand name applied to a new product category (electric-assisted bikes) is a franchise extension. It borrows the trust Colorado Ricardo has already earned for ruggedness and durability, and carries that reputation into a category the brand has never competed in before.

The Cheaper Range Under a New Name: Flanker Brand

A new brand name applied to an existing product category (off-road bikes) is a flanker brand. Selling a budget off-road bike under a separate name lets Colorado Ricardo compete on price in a lower tier of the market without risking the premium reputation the main brand depends on.

Key point: the closer a move sits to the existing brand and category, the more it borrows the brand’s existing trust – and the more that trust is at risk if the new product disappoints (Tauber, 1981). The fourth quadrant, new brand, would apply if Ricardo entered a completely unrelated category, such as outdoor apparel, under a name with no link to Colorado Ricardo at all.

Whichever option Ricardo chooses, it connects directly back to the strategic direction set out in the Ansoff’s Matrix exercise – a franchise extension into e-bikes, for example, is one concrete way to execute a Product Development strategy.