Brand extension is a strategy where a company creates a new product category under its well-known brand name. It helps launch new products easily, obtain higher profit, reduce costs necessary to launch a new business, and meet customers’ needs and wants.
In this video, you’ll learn what brand extension is and how to leverage it.
Why is brand extension important?
An increasingly competitive market makes it impossible for a company to stay ahead if it doesn't present something new to its target audience. To increase market share, become more innovative, and create a new product category, entrepreneurs consider a brand extension. It’s a critical step that helps boost business and engage new leads.
Companies research to figure out the new wants and needs of their prospective customers so that they can create a product that will satisfy the requirements. To implement this technique successfully, brands study and analyze the new trends. Afterward, they strive to create a necessary product that will be sold easier under the name of an established company.
The process brings several benefits to businesses. Corporations obtain an increased brand image, save funds on the development of a new brand, use costs on promotion efficiently, and gain more revenue.
With the help of the brand extension, companies present products that are accepted by customers. Nowadays the strategy is popular because businesses can assess their opportunities in new product categories, find out how relevant and appealing their brands are, and define resource requirements.
Now that you know the reasons why many firms use a brand extension, let’s review the advantages of this technique.
Advantages of Brand Extension
It’s worth noting that brand extension helps upscale your business in various ways. Since the number of competitors in the market is constantly increasing, the brand should prepare various strategies to stay ahead.
To gain revenue, companies create new products, provide a better customer experience, present some innovations or new services. When you decide to extend your company and create a product or service, it can be related or unrelated to the business you are in. Brands often leverage brand extension because it
- helps launch new products in new categories easier;
- enables brands to meet customers’ needs and wants;
- allows companies to receive higher revenue;
- reduces costs necessary to spend when launching a new company and developing it;
- encourages customers to try a new product from a loved and trusted brand;
- reduces the risks of customers because they can purchase different products from established reliable brands;
- helps spend costs on ads and promotion efficiently;
- improves the overall brand image;
- provides consumers with a bigger variety of products;
- enables brands to attract more leads;
- helps revive a company.
As you’ve noticed there is a list of reasons why a brand should consider a brand extension. Now let’s review its types.
Types of Brand Extension
- Product form
- Companion product
- Company expertise
- Brand distinction
- Brand prestige
- Transfer of components
- Leveraging a lifestyle
There are different ways in which companies use this strategy, so it’s time to walk you through the types of brand extension.
- Product form. It is when a company decides to change the form of an existing product. This allows a product to compete in a different category. Let’s take Snickers, for example. The brand launched ice cream bars.
- Companion product. Companion products are those that complement the main products. They belong to the same niche and relate to the original products. For instance, Colgate, famous for its toothpaste, decided to release toothbrushes under its brand name as well.
- Company expertise. This is when a company expands its production and designs a new product under an established name. Let’s take Fender, for example, a brand known for its high-quality guitars. It extended its expertise to making earbuds.
- Brand distinction. Often, companies are considered unique because of the exceptional benefits or experience they provide. These advantages are usually associated with a certain brand name. So, marketers use the company's name to compete in the new markets and extend brand equity. For instance, Parachute, a brand name for a variety of hair products based on coconut. These products are manufactured by Marico, a consumer goods company famous in India. The brand also produces other hair products.
- Brand prestige. This is when a company creates a product unrelated to the main company’s expertise. BMW is a great example. The brand widely recognized as a corporation that produces luxury vehicles and motorcycles started to operate in the apparel industry and produce watches.
- Transfer of components. Sometimes brands try to use the successful elements of their old products in a new one. They strive to leverage this element and gain the same success. These components are flavor, ingredient, scent, and color. For example, Fanta, a brand that produces fruit-flavored carbonated soft drinks. It has around 100 flavors worldwide.
- Leveraging a lifestyle. Some companies present a particular type of lifestyle that can be conveyed through a way of living, culture, values, or interests. They possess certain traits customers can relate to. Companies can have different types of brand personalities like “sincerity”, “competence”, “sophistication”, and more. Let’s take Jeep, for example. The company presents an outdoorsy lifestyle and uses this particular image for other products such as knives, tents, bicycles, etc.
It’s time to proceed to the differences between brand and line extension.
Brand Extension vs Line Extension
By saying brand extension we mean an established brand that creates a new product category that is assumed to meet the needs of consumers. In this scenario, a company relies heavily on its loyal customers who will be glad to see more products from a trusted brand. With a successful implementation of brand extension, a firm can reach new demographics, acquire new customers, boost sales, and increase revenue.
A line extension is when a firm extends an existing product line. A manufacturer brings a new product to the product category that a company already manufactures. For example, when a brand adds "Vanilla" or "Lemon" flavor to its cola line. It creates a variety of products that are available for consumers on the shelves of supermarkets.
Usually, line extension is associated with the new scent, flavor, formula, color, and style of a product in a current product line. The strategy is less risky than a brand extension as consumers are familiar with the product and will be eager to try it with a new flavor, for example.
Now let's move to the next section to grab some inspiration from our twelve examples.
12 Examples of Brand Extension
If you consider extending your product category, check out our list of brand extensions that will inspire your own.
A company famous for its toothpaste made a new useful product — a toothbrush that is complementary to the main product. It turned out to be a great combination. This move allowed Colgate to enter the toothbrush market.
Apple, a technology company known for its computers and phones also used brand extension. You can find Smart Watches and MP3 Players designed by Apple.
It might surprise you but Coca-Cola sells not only carbonated soft drinks. The brand also produces Dasani water and Glaceau Smartwater.
A well-established company famous for its coffee beverages and a special approach to each of its clients has also entered the energy drinks market. The brand has made a foray into another booming market with the launch of a new line of low-calorie energy drinks based on fruit juice and green coffee extract.
LifeBuoy, known as a brand of soap marketed by Unilever. Over time, the brand managed to enter other markets such as the supply of sanitary towels and sanitizers that are always on hand. So, now you can see LifeBuoy sanitizers on the shelves of stores that are ready to ensure your daily hygiene.
Everyone knows this luxury sports car manufacturer. However, the brand didn’t limit itself to creating luxurious expensive cars only. The company decided to develop an unrelated product line. Ferrari theme parks in different countries provide visitors with an authentic Ferrari experience, adrenaline, and fun.
The Sunkist brand is usually associated with oranges, health, and energy. The company decided to make the most of it. Sunkist’s production of vitamin C tablets spawned the business of vitamins and supplements.
The company started with the manufacturing of vacuum cleaners and household appliances but further extended its products to desk lamps. Now the brand is popular among young people because of the hairdryers, bladeless fans, and stylers it produces.
Callaway is known for its golf clubs yet now not only for them. This company also manufactures and sells equipment for golf and accessories like bags, gloves, and caps.
Another great example of brand extension is SendPulse, an email marketing service. The company has also introduced two new products: CRM and landing page builder. So now you can automate your communication with customers and create a landing page or an online store.
The company recognized as a manufacturer of guitars and amplifiers now also produces earbuds. Their products bring dynamic and high-quality sound to their owners.
We all know and use Google as a web search engine. Nevertheless, it’s not the only product from Google. The brand extended to hosted email services. Google Workspace empowers brands to access great digital products (Google Drive, Cloud Search, Google Meets, and more) anytime and anywhere and provides security of your information.
Source: The Fanatic
Simply put, when you have an established brand admired by customers and you want to release a new product category, just go ahead. It can bring many benefits to your business such as increased profit, the opportunity to meet the needs of clients, and improved brand image. If you have a great idea for your new product that will be accepted by your audience, give it a try.
The article “The Importance of Brand Extension (2020 Update)” defines the term, covers the advantages of brand extension and its types.
The article “10 of the Most (& Least) Successful Brand Extensions to Inspire Your Own” provides ten examples of good and bad brand extensions.
The article “Line Extension vs. Brand Extension” explains the difference between line extension and brand extension.
Last Updated: 26.03.2021