My MasterCard statement came in the mail today, and after the usual glance of wondering when I had time to rack up the charges, I was about to toss it aside until the second page of my statement caught my eye:

I trust my MasterCard with BMO, and if I wasn’t a loyal TD customer, I’d trust BMO to do my banking as well. But my car? Roadside assistance seems like a brand extension that’s gone further off the road than a flat tire could take me.

But to give it a fair chance, I decided to dig into the details. Currently a BCAA member, I decided to compare the two to see if I was missing out. I compiled a side-by-side comparison of the two basic packages:

The two basic packages offer almost identical services. 4 calls per year, BMO offers 10km maximum of towing, while BCAA offers 5km free or to the closest garage. The only difference? Pricing. The objective of BMO’s pricing is heavily sales orientated. They offer a low price of $69 per year (compared to BCAA’s $87.25) in order attract customers and increase sales. This is an excellent example of strategic penetration planning – trying to establish a solid customer base in order to sustain long-term market share.

On the contrary,  BCAA is able to focus on profit orientation. Because of its already established brand reputation, it can focus on prestige pricing and offering products at higher prices as a reflection of their higher value.

It’s a little to early to tell if BMO will be successful. However, was this diversification the right step? Or should their brand extension have led to a different path?

On that note, my friend Kevin has an entertaining entry on brand extension fails to keep your mind rolling.