What exactly is a brand extension? This is a branding strategy that can help your brand grow by getting in front of a whole different subset of consumers. Let’s look at the definition of brand extension and some great examples of brand extension done right.
Contents
What Is Brand Extension?
Infographic: Types of Brand Extension
Benefits of Brand Extension
When Brand Extension Goes Wrong
How to Build a Successful Brand Extension Strategy
What Is Brand Extension?
Let’s start with a brand extension definition:
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 and indispensable 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 mostly known for desktop and laptop computers. The company later expanded into portable music players (the iPod), smartphones, tablets, and smartwatches, among other things.
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: GE
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.
Infographic: Types of Brand Extension
When it comes to types of brand extension, some companies like to play it close to home while others use it for expansion into markets that might at first glance seem like odd choices. But these are the kinds of risks that usually pay off when you have strong brand loyalty, brand equity, and a solid marketing strategy.
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.
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
Greater brand visibility
Stronger brand image
Avoid the cost of creating a whole new brand
Increases consumer trust
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.
Avoid the cost of creating a whole 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.
When Brand Extension Goes Wrong
Despite the benefits and potential of a brand extension, not all efforts to expand a brand are home runs. In some cases, the wrong approach can dilute your brand, damage your company’s existing image, or lead to 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, Pillsbury’s frozen microwave popcorn, and Cadbury’s instant mashed potatoes. These things just didn’t make sense for the brands and never took off with their intended audiences.
How to Build a Successful Brand Extension Strategy
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 to collect and leverage 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!
