What is Brand Extension?

What Is Brand Extension?

Brand extension is when a company uses an already-established brand name to launch a new product. The new product can be in the same product category as the original product, or it can be in a completely different category. Brand extension can be a very effective way to launch a new product because it leverages the equity of the original brand. The key to successful brand extension is to make sure that the new product is consistent with the core values of the original brand.

There are several different types of brand extensions. The most common is line extension, which is when a company launches a new product that is in the same category as the original product. For example, if there was a successful brand of coffee called “Java,” a line extension would be launching a new flavor of coffee called “Java Mocha.”

Another type of brand extension is category extension, which is when a company launches a new product that is in a different category than the original product. For example, if there was a successful brand of coffee called “Java,” a category extension would be launching a line of Java-branded coffee mugs.

Definition

Brand extension is defined as a marketing strategy in which a company creates new products and services under a parent brand name. A company creates brand extensions to expand its product categories and target new customers while leveraging the brand image of the core brand to create brand loyalty.

As a marketing strategy, brand extension has both advantages and disadvantages. The main advantages of brand extension are that it can be a relatively low-cost way to enter new markets and that it can leverage the equity of a parent brand name to create brand loyalty among new customers. The main disadvantages of brand extension are that it can dilute the brand image of the parent brand and that it can create confusion among customers if the new products and services are not seen as a good fit with the parent brand.

Why use Brand Extensions

Some of the common reasons behind brands using brand extension strategies are-

• Help companies enter new markets without starting from scratch: Utilizing an already well-known brand to enter new markets is called brand extension. This strategy can give your new product a fighting chance because it builds on the original brand’s equity.
• Generate more revenue from existing customers: Brand extension can also be used to generate more revenue from existing customers. If a customer likes and trusts a certain brand, they’re likely to try other products from that same brand. Brand extension can also increase customer loyalty.
• Builds Brand Equity: Brand extension is a great way to build brand equity. When done correctly, it can solidify a brand’s position in the market and make it more recognizable.
• Maintains Brand Relevance: Brand extension can also help a brand maintain its relevancy. In today’s ever-changing world, it’s important for brands to constantly evolve and stay up-to-date. Brand extension can help brands do this by introducing new products that are relevant to their customers.
• Reduces the risk of launching a new product: Brand extension can also reduce the risk of launching a new product. This is because the brand already has an established customer base and name recognition.

There are some risks associated with brand extension, such as diluting the original brand or damaging the brand’s reputation. If done right, a brand extension can help you introduce a new product successfully.

Types of Brand Extensions

1. Product form: This is the most common type of brand extension. It involves taking an existing product and simply changing its form. For example, a company that makes a popular line of shampoo could launch a conditioner that is in the same product category.

2. Companion product: A companion product complements the original product. For example, a company that makes a popular line of sneakers could launch a line of socks that are specifically designed to be worn with the sneakers.

3. Company expertise: When a company launches a new product that is based on its existing expertise, this is called company expertise. For example, a company that makes a popular line of computer software could launch a line of computer hardware.

4. Brand distinction: When a company launches a new product that is in the same category as the original product but is of higher quality, this is called brand distinction. For example, a company that is known for its quality products could launch a new line of luxury products.

5. Brand prestige: When a brand has a lot of prestige, it can be used to launch new products in different categories. For example, a luxury car company could use its brand to launch a line of luxury watches.

6. Transfer of components: When a company launches a new product that uses the same components as the original product, this is called a transfer of components. For example, a company that makes a popular line of cell phones could launch a line of tablets that use the same operating system and software.

7. Leveraging a lifestyle: When a company launches a new product that is based on the lifestyle of its target market, this is called leveraging a lifestyle. For example, a company that makes a popular line of sportswear could launch a line of fitness equipment.

How Brand Extension Strategy Works

The working of Brand extension is pretty simple. Brand extension is all about taking an existing brand and using it to launch a new product. The new product can be in the same product category as the original product, or it can be in a different product category altogether.

Let’s understand this with an example of Colgate. Colgate is a well-known brand that makes toothpaste. The company decided to launch a line of mouthwash, which is in a different product category. However, because Colgate is such a well-known and trusted brand, customers were willing to try the new product.

In the same way, its strategy of launching a toothbrush under the Colgate brand name also worked out very well. Brand extension can be a great way for companies to launch new products without starting from scratch.

Advantages of Successful Brand Extensions

There are many advantages of Brand extension. Some of them are as follows:

1. Brand extension can help brands stay relevant: In today’s ever-changing and competitive marketplace, brands need to stay relevant. Brand extension can help brands do this by introducing new products that are in line with current trends.

2. Easy tapping into new markets: Brand extension can also help brands tap into new markets. For example, a company that makes a popular line of shampoo could launch a conditioner that is in the same product category. This would allow the company to tap into the hair care market.

3. Brand extension can help brands save money: Launching a new brand from scratch can be very expensive. Brand extension can help brands save money by using an existing brand name and identity.

4. Optimized brand visibility & creating brand awareness: Brand extension can also help optimize brand visibility. When a company launches a new product under an existing brand, the new product benefits from the visibility and awareness of the original brand.

5. Increase in the trust customers have in your business: Brand extension can also help build customer trust. When customers see a new product from a brand they trust, they are more likely to try it.

Disadvantages of Brand Extension

However, unsuccessful brand extensions also have some disadvantages. Some of them are as follows:

1. Brand extension may dilute a brand’s identity: If a company launches too many products under the same brand name, it can start to dilute the brand’s identity. This can lead to customer confusion and ultimately, decreased sales.

2. Brand extension may damage a brand’s reputation: If a company launches a new product that is not up to the same quality standards as the original product, it can damage the brand’s reputation.

3. Brand extension can be risky: Brand extension can be a risky proposition because it’s difficult to predict how customers will react to a new product. If customers don’t like the new product, it can reflect poorly on the original brand.

4. Brand extension may not be necessary: In some cases, launching a new brand from scratch may be a better option than doing a brand extension. This is especially true if the new product is in a completely different product category than the original product.

Brand Extension vs. Line Extension

Brand extension is often confused with line extension. However, there are some key differences between the two. A line extension is when a company launches a new product that is in the same product category as the original product. For example, if a company that makes shampoo decides to launch a new type of shampoo, that would be considered a line extension.

A brand extension, on the other hand, is when a company launches a new product that is in a different product category than the original product. A company that manufactures shampoo launching a line of conditioners would be an example of brand extension.

So, while both brand extension and line extension involve launching a new product, the key difference is the relationship of the new product to the existing product.

Here is a video by Marketing91 on Brand Extensions.

Examples of Brand Extension

There are many brand extension examples and some of them are as follows

1. Apple’s iPhone

When Apple launched the iPhone, it was a brand extension of the iPod. The iPhone was in a different product category (smartphones) than the iPod (mp3 players), but it still benefited from the strong brand identity that Apple had built with the iPod.

2. McDonald’s McCafe

McDonald’s is a fast food restaurant known for its hamburgers and fries. However, in recent years, the company has been expanding its menu to include coffee and other beverages through its McCafe brand.

3. Coca-Cola’s Dasani water

Coca-Cola is a soft drink company known for its flagship product, Coca-Cola. However, the company also manufactures a line of bottled water called Dasani.

4. Ford’s luxury Lincoln brand

Ford is a car company known for its budget-friendly vehicles. However, the company also has a luxury car brand called Lincoln.

5. Starbucks

Starbucks is a coffee company that started out selling just coffee. However, the company has since expanded its menu to include food, tea, and other beverages.

6. Nike’s Jordan Brand

Nike is a sports apparel company known for its athletic shoes. However, the company also has a line of products called the Jordan Brand, which is named after basketball legend Michael Jordan.

7. Nestle’s Nespresso

Nestle is a food company known for its chocolate, cereal, and coffee products. However, the company also has a line of single-serve coffee machines called Nespresso.

8. Samsung’s SmartThings

Samsung is a consumer electronics company known for its TVs, phones, and appliances. However, the company also has a line of home automation products called SmartThings.

9. Google

Google started as a search engine. However, the company has since expanded its product offerings to include email, maps, and other online services.

10. Amazon

Amazon started as an online bookstore. However, the company has since expanded its product offerings to include just about everything, from clothes to groceries.

Conclusion!

Brand extension is a strategic marketing move that can help businesses grow their brand recognition and customer base. When done correctly, extending a brand can give a company a competitive edge in its industry.

However, it can also be a risk as it can dilute the original brand identity and confuse customers. The brand extension should only be undertaken after careful planning and research to ensure that it is the right move for the company.

Brand extension can be a great way to grow a business, but it’s important to do it thoughtfully and carefully to avoid any negative consequences.

What are your thoughts on brand extension? Share them with us in the comments below!

 

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