How much mileage can you get out of your brand? If you are feeling like your brand has traveled as far as it can go, then it might be time to explore a brand extension. In some cases, a brand extension might be the exact type of fuel you need to go above and beyond your existing market.
Some companies like to play it close to home. They make one thing really well and bet all their chips on that one hand. Some brand name examples that come to mind are Crocs and its unmistakable footwear and Roku and its game-changing collection of smart TV devices. Sure, these brands have a variety of products with their name and logo attached, but the apples don’t fall far from the tree.
And then there are companies that have embraced the concept of brand extension to tap into new markets, new audiences, and new opportunities. They’ve expanded their product offering beyond the initial products that built their brand in the first place.
What exactly is a brand extension? And more importantly, is this a branding strategy that may help your brand grow leaps and bounds? Let’s look at some specifics.
Table of Contents
What Is Brand Extension?
Types of Brand Extension (with Examples)
Benefits of Brand Extension
How to Build a Successful Brand Extension Strategy
What Is Brand Extension?
Let’s start with a brand extension definition:
A brand extension is a marketing strategy that uses an established brand to create new products or enter a new brand category.
Brand extensions are used to build brand equity. The more a brand offers (and can do well), the more valuable the brand may become.
The products resulting from a brand extension may or may not be closely related to the flagship product for which the brand is already known.
For example, before Apple was the tech giant we know today, it was largely known for its Macintosh computers. The company later expanded into portable music players (the iPod), smartphones, tablets, and smartwatches, among other things.
However, brands like GE dabble in many different areas. Their presence is felt in healthcare, energy, aviation, and industrial data, to name a few. But each of their business units ties back to the brand’s core, which is to further the development of society.
Source: https://www.ge.com/
So, retail brand extension is not just about finding comparable products or categories. It’s also about aligning the company’s vision, mission, and values as they relate to the core business.
When brands achieve this alignment, they reduce the risk of negative associations. What's more, their product line extension is more likely to be successful. The consumer is more likely to accept it and trust it.
Types of Brand Extension (with Examples)
There are different types of brand extensions, each one serving a special purpose. Let’s look at some brand extension examples of each one:
Companion Product
Source: https://www.flickr.com/photos/smohundro/2312334025/
One of the most common types of brand extensions is when a company creates a new product under the same brand. A companion product is essentially a product line extension.
For example, parent brand Tom’s of Maine started with a simplistic line of toothpaste, then later expanded with mouthwash, deodorant, and other personal care items. All items still uphold the company’s traditional brand values of using all-natural ingredients and focusing on environmental stewardship. Call this brand extension a success.
Product Format
Source: https://www.flickr.com/photos/like_the_grand_canyon/5356725897
Similar to a companion product strategy, brands may choose to launch a popular product in a different format. This allows that same product to compete in a different product category.
Mr. Clean’s Magic Eraser product proved so popular that the brand decided to turn it into a mop for better scrubbing action. For a cleaning products company, this extension product was a great category fit.
Snickers is another great example with its classic candy bar-turned-frozen treat. Its strong brand identity in the sweets sector and a standout original product make the leap to ice cream realistic and successful.
Brand Prestige
Source: https://store.ferrari.com/en-us/?from=SH
Sometimes, brands want to break into product categories that are completely unrelated to their original offering. Companies that have built a wealth of brand equity can use their brand's prestige to their advantage when pursuing an extension.
For example, luxury automaker Ferrari found success in venturing into the high-end fashion market with its collections of eyewear, shoes, watches, luggage, and everyday wear.
Brand Distinction
Source: https://www.flickr.com/photos/jeepersmedia/15977414749
Brands often lean on their brand equity when launching a new product or service that somewhat relates to what they’re already known for.
For example, restaurants will often sell versions of some of their top-selling products in the grocery store. This lets the consumer enjoy an at-home experience of some of their favorite foods. Plus, the brand can compete alongside traditional supermarket mainstays. Cheesecake Factory (cheesecakes), Checkers (French fries), and McDonald's (McCafé coffees) are a few illustrations of this branding strategy at work.
Brand Expertise
Source: https://www.samsung.com/us/
A core brand that has become a best-in-class expert at what it does can leverage its expertise to introduce new products. For example, Samsung has built a powerful reputation in technology and is a go-to when it comes to televisions, appliances, smartphones, and home goods.
Brand Market
Source: https://www.flickr.com/photos/85567416@N03/32484794632
A market extension is when a company decides to explore a new product category or sector. This allows the company to increase its market reach while continuing to build brand equity.
3M is a great example of this. First known for its line of Scotch tape, the brand is also synonymous with packing products, Post It notes, and Command Hooks, a homeowner’s best friend in decorating.
Geographic Expansion
Source: https://pixabay.com/photos/dunkin-donuts-dunking-boston-4121328/
Brand name extensions can take place across completely new markets. This usually requires brands to tweak their existing product to different geographic preferences.
Dunkin’ Donuts handled its geographic brand extension by keeping a consistent donut recipe but letting local flavor preferences guide the toppings. For example, stores in Japan serve Mochi-flavored donuts, while an option in Lebanon features mango and chocolate.
Customer Franchise
Source: https://commons.wikimedia.org/wiki/File:Burt%27s_Bees_Miracle_Salve,_Sep_2012.JPG
Brands that have built up a loyal fan base may leverage the customer franchise strategy to increase their loyalty and provide them with new options. Burt’s Bees, for example, dominates the market on natural makeup and wellness products, from soaps to shampoos to toothpaste and more.
Benefits of Brand Extension
When you choose the right marketing strategy for your brand extension, things like brand equity, a stronger reputation, and higher profits become natural byproducts. Some of the quintessential branding extension benefits include:
A Greater Operating Market
Catering to a greater number of customer needs and wants gives you more opportunities to expand your audience. Increasing your customer base drives more revenue and will ultimately make your brand more valuable.
Greater Brand Visibility
Extending your brand gives you more ways to interact with your customers and more customers with whom to interact. This means more conversations and more marketing touchpoints to help drive top-of-mind awareness of your brand.
Stronger Brand Image
Launching a new product or service gives people another reason to interact with your brand. More engagement and more opportunities to impress your audience can help you support your brand image as a whole. Investing in strategic brand management can help you make this goal a bigger reality.
No Need to Create a New Brand
When you can tie in your new product or service idea with your current brand, you can avoid the time and cost of developing that same product under a new brand. A brand extension allows you to use the same brand messaging, marketing channels, and advertising budget to promote your new idea.
Increases Consumer Trust
As you extend your brand into new markets, sectors, and niches, you may find it easier to gain initial traction every time. That’s because you have a ready-made audience that is familiar with your products and services, and most importantly, your reputation. It’s easier and cheaper to win over existing customers than to acquire new customers. They may easily buy into whatever new item you launch simply because they’re familiar with your other products.
How to Build a Successful Brand Extension Strategy
Despite the benefits and potential of a brand extension, not all efforts to expand a brand are home runs. The wrong approach can lead to brand failure. In some cases, a brand extension strategy can dilute your brand, damage your company’s existing image, and even lead to brand confusion about what your company does.
Take Colgate, for example. The company makes perfectly fine toothpaste, but in the 1980s, it also created one of the biggest brand extension failures in history when it launched a beef lasagna. Its image as a minty fresh personal care products brand didn’t translate in the convenience food market.
It's the same story with Cosmopolitan yogurt (yes, a magazine tried to enter the yogurt market), Pillsbury’s frozen microwave popcorn, and chocolatier Cadbury’s instant mashed potatoes. These things just didn’t make sense for the brands and never took off with their intended audiences.
The best and most successful brand extension ideas start with consumer insights. Getting inside your ideal customer’s head can help you develop a brand extension strategy that will resonate with your target audience.
A consumer evaluation can answer everything from what people want to buy, when and how buyers are searching for products, to how much they’re willing to spend, among other things.
Working with a partner like Meltwater, experienced in collecting and leveraging consumer insights can be invaluable to a brand extension strategy. Contact our team today to learn more about how Meltwater can grow your brand in the right direction.
