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Brand Extension: 2021 Ultimate Guide

One person reaching for the others extending and connecting

When consumers are on the go, it's essential for your brand to stay relevant if you want to establish a viable brand extension. Consumers are always looking for new ideas when they're traveling, and that's why brands need to be there at all times to stay present. 

To remain relevant in a continually changing market, brands need to be constantly innovative with their products and services and provide valuable information for customers like never before.

Do you know what your company does best? 

What's the product that most excites and delights customers? 

It might take a lot of time to find the answer. 

undefined

But if you can identify and truly understand your company's core strengths, it will be easier for you to define your new product's position in the market.

Your brand image is important. 

Sound branding creates a positive and lasting impact on your company’s success. 

How can you learn more about how to take your brand to the next level? 

A great place to start is with the basics of brand development. Understanding what makes a successful brand is imperative to building one from scratch or potentially rebranding.

What does brand extension mean?

Brand extension is a marketing strategy that enables an established brand to expand into a new product category, integrating its existing brand and values in an attempt to secure more sales.

Brand Extension Basics.

Brand extension is the strategy of launching a new product into the marketplace under a well-established brand name that is already recognized in a different market category.

This strategy ensures pre-established brand awareness for the new product. 

New products are often misunderstood, but consumers can more readily accept them if they are familiar with their brand and explain why it is necessary. 

Providing the customer with information about why they should buy your new product or service will also help build market awareness and encourage customers to purchase more of what you're offering.

Brand extension is a tricky business, as any brand that has ever tried to expand into a completely unrelated category can attest. 

The research will be crucial for any company regardless of its starting point. Still, brands might be more likely to experience success if they are willing to take the time to develop new products in their separate categories.

What are the types of brand extensions?

There are several ways a company can approach a brand extension. Still, before any strategy is decided, the most critical piece of information to remember is not to forget what your customers' needs are and what they expect from you as a brand. 

A very effective way for brands to increase their brand awareness and sales is through product extensions.

Line extension

undefined

An established product line with an existing brand name launches a new, slightly different item in the same category. 

This has become a common practice. 

Using a familiar brand name, companies can boost awareness and increase sales of a new product line.

Line Extension Benefits

  • Grow company shelf space presence
  • Gain access of ideal customers
  • Give  customers more choices
  • Greater marketing efficiency
  • Greater production efficiency
  • Give budget promotional prices
  • Increased profits

 Line Extension Threats

  • The possibility of failure, which could hurt brand products 
  • Possible intra-fi rm competition

Companion product extension

It's one of the most popular forms of product extension in today's market. By making complementary products an integral part of a brand, a company can capitalize on the perception that they are together and drive sales.

Customer franchise extension

Can you be more specific? 

What constitutes a customer franchise? 

And how does it differ from a customer base? 

Customers no longer fit into rigid categories. Organizations must still be able to service their customers. Still, they must also be able to tailor their service levels and pricing based on how active a particular customer base is.

Company expertise extension

Company expertise extension is a new form of searching for your company’s products or services. With an introduction of company expertise extension in the search engine, people can simply type in the URL of a company and get to its official website to find its details. 

This technique helps companies to be more visible in search engines.

Owned benefit extension

Owned benefit extension is a technique that helps companies show the benefits of their products and services without directly mentioning the benefits.

 For example, a product might say that it is manufactured with “tried-and-true materials” or that it has “consumer-grade components.” 

These phrases are used to communicate the product’s validity without directly telling the user why it works and how.

Vertical Extension

There is a growing trend of companies creating "vertical extensions" within their overall brand. 

These vertical extensions aim to extend the brand in a new, unique, and compelling way. There are three primary reasons for creating vertical extensions: 

1) to keep a brand's identity consistent.

2) to help target a specific customer segment.

3) to create a sense of place or community.

The advantages and disadvantages of brand extension.

How to implement a brand extension strategy? Start by understanding where the competition is and where you want to be. Decide on your competitive advantage, and figure out what you want your brand to bring to the table. 

Then, think about how to enhance that difference through a brand extension strategy.

Advantages of Brand Extension.

  • Capitalize existing brand assets: When market entry barriers are high, the company can capitalize on its existing brand assets by leveraging them. 

This growth method focuses on large-scale branding strategies such as channel expansion and acquisitions to expand into different markets and increase market share.

  • Lower cost access to retail operation: Brand extension allows the retailing organization to acquire a new customer base or expand an existing one. 

The greater the degree of customer overlap, the stronger the brand’s profit. In the men’s wear example, traditionally branded men’s wear clothing companies are now adding women’s wear lines to their collections. 

  • Economies in promotion and advertising: The post-digital era is fueled by mobile, social, and online shopping. Consumers are well-informed about brands available in the market. 

Brand extension is a sensible way to cut costs and provide customers with greater variety at the same time. This strategy enables organizations to sustain a high customer loyalty level by providing them with more variety and choice.

  • Gives an instant position and reputation: The first thing customers notice when they shop online is an existing brand they trust. 

When customers are shopping for a new product, they will have confidence in an existing brand. That trust opens the way for the "new" brand to establish itself quickly.

  • Extends perceived quality to the new offer: Consumers are prepared to buy only when the quality of a product is worth their hard-earned cash. 

They are influenced by the price, brand reputation, and overall market for the product. Most importantly, this figures into whether or not they’ll try — and buy — your new product.

  • Reassures a prospective purchaser that the retail offer is well-supported: Consumers make purchasing decisions on all sorts of factors, not just the price. 

Consumers need to feel confident that the company well supports the retailer, so they feel reassured that they are buying from a recognizable brand. 

A memorable brand often has positive associations that lead to increased purchases; however, it also leads to more sales for a retailer, hence greater profitability.

  • Brand extension increases the probability of success: As competition for the same customers grows, it's nearly impossible to stand out from the crowd. 

So, brands must develop a launch plan before they even think about launching a new product. It's not enough to just have an idea — you need a real plan on how to execute and present your vision through a brand.

  • By knowing the name, a customer can easily understand a new brand’s performance delivery: Brand extensions are a great way to expand your sales in new markets. 

When a customer is familiar with your brand, he or she will purchase from you based on what they already know about your product. 

An extension of your brand is an opportunity to contact potential customers and provide them with the information they need to make a purchase decision, leading to more sales.

Disadvantages of Brand Extension.

  • Brand extension can spur innovation. However, it is vital to ensure that all brand extensions are distinct and offer something different from the original brand.
  • The company will dilute the core brand’s value by getting too involved with other product lines instead of concentrating on their core business.
  • Companies must be careful. Copying competitors’ products may cause backlash from their loyal customers. 

If a company copies another product, the most likely outcome is that the copy is not as good as the original. A company can either stick with its actual product and focus on improving its sales or creating a new product to match a competitor’s.

  • It's tempting to rely on just the name of your brand. But it may not be enough. Make sure to recognize the extension's strengths and give it sufficient financial backing. 

The extension, if properly implemented, can serve the company well in a variety of ways.

  • A brand name's negative reputation may have a spillover effect. The negative publicity for the product adversely affects any other products with the same brand name. 

The best way to fight back is to put in place policies and procedures that discourage this kind of behavior, including social accountability.

6 steps to brand extension success.

Measure Brand Equity

Brand dilution is standard when a brand has expanded too quickly into new product categories. A way to mitigate this risk would be to have a Brand Equity measurement in place to track potential future impacts in case of a decline.

Measure the potential risks

The goal is to have a customer experience that's better than the competition. Running a scenario analysis beforehand can help guide a brand's decision-making process in choosing a customer experience initiative. The ultimate goal of the analysis is to ensure that it will not create a risk of failure that's greater than any marketing initiatives’ efficiency.

Leverage from your businesses core competency

It's essential to identify your current business and marketing operations’ strengths and areas of expertise and leverage them in the new category. By focusing on your core competencies, you'll be able to gain efficiencies and create market differentiation.

Invest in Marketing Research

In the quest for growth, brands tend to forget what is important in their market. Growth can come at the expense of ignoring the market in apparent need. 

Companies must understand real customers and quickly identify opportunities while keeping a pulse on current customers' acceptance of new product lines.

 Marketing research can help companies determine these real customers’ needs and how they may react to your company's new brand extension.

Make the brand extension a logical fit.

Taking the brand in the wrong direction is a common mistake for brands. Having a poor fit isn't as much of an issue, though, since the new line should be compatible with the story already established. 

The link between consumers and the product should be obvious and easily tracked to go back to the parent brand as efficiently as possible.

Create a Brand Extension Strategy

Once you've made sure that the categories are clear for your brand, it's time to set a strategy — your action plan to make sure that your audience has access to you across all the touchpoints they use regularly. 

A brand strategy will be the crucial link in bridging the gap between what you do and how people experience it. 

A great go-to-market strategy will connect your audience with everything you do in a way that speaks directly to their needs and desires.

Examples of Brand Extensions done right and done wrong.

Reese Puff Cereal (Good)

Much like the rivalry between Gangnam Style and Psy, I cannot fathom how someone could not know how much I liked Reese’s Puffs growing up. 

That’s like knowing I’m a dog walker and not knowing that I have a dog. 

There’s just no way.

Put your advertising dollars in advertising and not on your product. Reese’s Puffs has risen to become an undeniable success for General Mills thanks to its advertising campaign highlighting how kids can now enjoy the snack for breakfast.

Aunt Jemima's Pancake & Waffle Syrup (Good)

Aunt Jemima's syrup is a perfect example of a brand extension. 

Before I wrote this piece, I didn't even know they started their company selling pancake mix. For brands, an e-commerce site is just as important as the products or services themselves. 

Today's consumers are on the go and expect to find everything they want online, including products they didn’t previously know existed.

Honda's Lawn Mowers (Good)

Considered by many to be Honda’s most memorable (and underappreciated) initiative. 

Honda’s foray into the lawnmower market in 1978 stands as an example of a company that is rather loose with credit. 

Since changing their business model to emphasize “smaller, lighter, and more fun” cars with the Honda Accord’s success in the mid-1980s, the company has become one of the world’s largest automobile manufacturers.

Cadbury's Instant Mashed Potatoes (Not Good)

Cadbury has been known for making high-end chocolate and candy since its inception. 

However, because of their success in the food industry, many of their products started to look like they came from a cheap manufacturing facility.

Instead of improving their products and building a strong customer base, Cadbury's popular instant mashed potato brand began to decline in popularity as customers started to perceive it as inferior. 

Levi’s Tailored Classics (Not Good)

Of course, companies want to grow by and beyond their original market. When this happens, they also want to enter as many new markets as possible to avoid a plateauing growth rate. 

In the early 1980s, Levi’s, already a significant player in the denim market, wanted to expand its customers for future growth. It soon launched its Tailored Classics collection — just in time for that decade’s women swear trend.

They failed to meet their sales projections. One of these markets was men’s suits. To meet their annual sales goal, they had to launch a new line of casual, rugged, and outdoorsy clothing. 

However, this time around, the casual outdoorsy clothes conflicted with their core identity as factory workers, and it didn’t catch on.

Are you ready to extend?

undefined

If you're ready to take the plunge, think about your customers. 

What problems do they have? 

Does your new marketing strategy make sense and fit within your public brand perception? 

You may be the first to market with a new product, but it's not wise to do so blindly. Make sure you have done your research and can make an informed decision.

One person reaching for the others extending and connecting

When consumers are on the go, it's essential for your brand to stay relevant if you want to establish a viable brand extension. Consumers are always looking for new ideas when they're traveling, and that's why brands need to be there at all times to stay present. 

To remain relevant in a continually changing market, brands need to be constantly innovative with their products and services and provide valuable information for customers like never before.

Do you know what your company does best? 

What's the product that most excites and delights customers? 

It might take a lot of time to find the answer. 

undefined

But if you can identify and truly understand your company's core strengths, it will be easier for you to define your new product's position in the market.

Your brand image is important. 

Sound branding creates a positive and lasting impact on your company’s success. 

How can you learn more about how to take your brand to the next level? 

A great place to start is with the basics of brand development. Understanding what makes a successful brand is imperative to building one from scratch or potentially rebranding.

What does brand extension mean?

Brand extension is a marketing strategy that enables an established brand to expand into a new product category, integrating its existing brand and values in an attempt to secure more sales.

Brand Extension Basics.

Brand extension is the strategy of launching a new product into the marketplace under a well-established brand name that is already recognized in a different market category.

This strategy ensures pre-established brand awareness for the new product. 

New products are often misunderstood, but consumers can more readily accept them if they are familiar with their brand and explain why it is necessary. 

Providing the customer with information about why they should buy your new product or service will also help build market awareness and encourage customers to purchase more of what you're offering.

Brand extension is a tricky business, as any brand that has ever tried to expand into a completely unrelated category can attest. 

The research will be crucial for any company regardless of its starting point. Still, brands might be more likely to experience success if they are willing to take the time to develop new products in their separate categories.

What are the types of brand extensions?

There are several ways a company can approach a brand extension. Still, before any strategy is decided, the most critical piece of information to remember is not to forget what your customers' needs are and what they expect from you as a brand. 

A very effective way for brands to increase their brand awareness and sales is through product extensions.

Line extension

undefined

An established product line with an existing brand name launches a new, slightly different item in the same category. 

This has become a common practice. 

Using a familiar brand name, companies can boost awareness and increase sales of a new product line.

Line Extension Benefits

  • Grow company shelf space presence
  • Gain access of ideal customers
  • Give  customers more choices
  • Greater marketing efficiency
  • Greater production efficiency
  • Give budget promotional prices
  • Increased profits

 Line Extension Threats

  • The possibility of failure, which could hurt brand products 
  • Possible intra-fi rm competition

Companion product extension

It's one of the most popular forms of product extension in today's market. By making complementary products an integral part of a brand, a company can capitalize on the perception that they are together and drive sales.

Customer franchise extension

Can you be more specific? 

What constitutes a customer franchise? 

And how does it differ from a customer base? 

Customers no longer fit into rigid categories. Organizations must still be able to service their customers. Still, they must also be able to tailor their service levels and pricing based on how active a particular customer base is.

Company expertise extension

Company expertise extension is a new form of searching for your company’s products or services. With an introduction of company expertise extension in the search engine, people can simply type in the URL of a company and get to its official website to find its details. 

This technique helps companies to be more visible in search engines.

Owned benefit extension

Owned benefit extension is a technique that helps companies show the benefits of their products and services without directly mentioning the benefits.

 For example, a product might say that it is manufactured with “tried-and-true materials” or that it has “consumer-grade components.” 

These phrases are used to communicate the product’s validity without directly telling the user why it works and how.

Vertical Extension

There is a growing trend of companies creating "vertical extensions" within their overall brand. 

These vertical extensions aim to extend the brand in a new, unique, and compelling way. There are three primary reasons for creating vertical extensions: 

1) to keep a brand's identity consistent.

2) to help target a specific customer segment.

3) to create a sense of place or community.

The advantages and disadvantages of brand extension.

How to implement a brand extension strategy? Start by understanding where the competition is and where you want to be. Decide on your competitive advantage, and figure out what you want your brand to bring to the table. 

Then, think about how to enhance that difference through a brand extension strategy.

Advantages of Brand Extension.

  • Capitalize existing brand assets: When market entry barriers are high, the company can capitalize on its existing brand assets by leveraging them. 

This growth method focuses on large-scale branding strategies such as channel expansion and acquisitions to expand into different markets and increase market share.

  • Lower cost access to retail operation: Brand extension allows the retailing organization to acquire a new customer base or expand an existing one. 

The greater the degree of customer overlap, the stronger the brand’s profit. In the men’s wear example, traditionally branded men’s wear clothing companies are now adding women’s wear lines to their collections. 

  • Economies in promotion and advertising: The post-digital era is fueled by mobile, social, and online shopping. Consumers are well-informed about brands available in the market. 

Brand extension is a sensible way to cut costs and provide customers with greater variety at the same time. This strategy enables organizations to sustain a high customer loyalty level by providing them with more variety and choice.

  • Gives an instant position and reputation: The first thing customers notice when they shop online is an existing brand they trust. 

When customers are shopping for a new product, they will have confidence in an existing brand. That trust opens the way for the "new" brand to establish itself quickly.

  • Extends perceived quality to the new offer: Consumers are prepared to buy only when the quality of a product is worth their hard-earned cash. 

They are influenced by the price, brand reputation, and overall market for the product. Most importantly, this figures into whether or not they’ll try — and buy — your new product.

  • Reassures a prospective purchaser that the retail offer is well-supported: Consumers make purchasing decisions on all sorts of factors, not just the price. 

Consumers need to feel confident that the company well supports the retailer, so they feel reassured that they are buying from a recognizable brand. 

A memorable brand often has positive associations that lead to increased purchases; however, it also leads to more sales for a retailer, hence greater profitability.

  • Brand extension increases the probability of success: As competition for the same customers grows, it's nearly impossible to stand out from the crowd. 

So, brands must develop a launch plan before they even think about launching a new product. It's not enough to just have an idea — you need a real plan on how to execute and present your vision through a brand.

  • By knowing the name, a customer can easily understand a new brand’s performance delivery: Brand extensions are a great way to expand your sales in new markets. 

When a customer is familiar with your brand, he or she will purchase from you based on what they already know about your product. 

An extension of your brand is an opportunity to contact potential customers and provide them with the information they need to make a purchase decision, leading to more sales.

Disadvantages of Brand Extension.

  • Brand extension can spur innovation. However, it is vital to ensure that all brand extensions are distinct and offer something different from the original brand.
  • The company will dilute the core brand’s value by getting too involved with other product lines instead of concentrating on their core business.
  • Companies must be careful. Copying competitors’ products may cause backlash from their loyal customers. 

If a company copies another product, the most likely outcome is that the copy is not as good as the original. A company can either stick with its actual product and focus on improving its sales or creating a new product to match a competitor’s.

  • It's tempting to rely on just the name of your brand. But it may not be enough. Make sure to recognize the extension's strengths and give it sufficient financial backing. 

The extension, if properly implemented, can serve the company well in a variety of ways.

  • A brand name's negative reputation may have a spillover effect. The negative publicity for the product adversely affects any other products with the same brand name. 

The best way to fight back is to put in place policies and procedures that discourage this kind of behavior, including social accountability.

6 steps to brand extension success.

Measure Brand Equity

Brand dilution is standard when a brand has expanded too quickly into new product categories. A way to mitigate this risk would be to have a Brand Equity measurement in place to track potential future impacts in case of a decline.

Measure the potential risks

The goal is to have a customer experience that's better than the competition. Running a scenario analysis beforehand can help guide a brand's decision-making process in choosing a customer experience initiative. The ultimate goal of the analysis is to ensure that it will not create a risk of failure that's greater than any marketing initiatives’ efficiency.

Leverage from your businesses core competency

It's essential to identify your current business and marketing operations’ strengths and areas of expertise and leverage them in the new category. By focusing on your core competencies, you'll be able to gain efficiencies and create market differentiation.

Invest in Marketing Research

In the quest for growth, brands tend to forget what is important in their market. Growth can come at the expense of ignoring the market in apparent need. 

Companies must understand real customers and quickly identify opportunities while keeping a pulse on current customers' acceptance of new product lines.

 Marketing research can help companies determine these real customers’ needs and how they may react to your company's new brand extension.

Make the brand extension a logical fit.

Taking the brand in the wrong direction is a common mistake for brands. Having a poor fit isn't as much of an issue, though, since the new line should be compatible with the story already established. 

The link between consumers and the product should be obvious and easily tracked to go back to the parent brand as efficiently as possible.

Create a Brand Extension Strategy

Once you've made sure that the categories are clear for your brand, it's time to set a strategy — your action plan to make sure that your audience has access to you across all the touchpoints they use regularly. 

A brand strategy will be the crucial link in bridging the gap between what you do and how people experience it. 

A great go-to-market strategy will connect your audience with everything you do in a way that speaks directly to their needs and desires.

Examples of Brand Extensions done right and done wrong.

Reese Puff Cereal (Good)

Much like the rivalry between Gangnam Style and Psy, I cannot fathom how someone could not know how much I liked Reese’s Puffs growing up. 

That’s like knowing I’m a dog walker and not knowing that I have a dog. 

There’s just no way.

Put your advertising dollars in advertising and not on your product. Reese’s Puffs has risen to become an undeniable success for General Mills thanks to its advertising campaign highlighting how kids can now enjoy the snack for breakfast.

Aunt Jemima's Pancake & Waffle Syrup (Good)

Aunt Jemima's syrup is a perfect example of a brand extension. 

Before I wrote this piece, I didn't even know they started their company selling pancake mix. For brands, an e-commerce site is just as important as the products or services themselves. 

Today's consumers are on the go and expect to find everything they want online, including products they didn’t previously know existed.

Honda's Lawn Mowers (Good)

Considered by many to be Honda’s most memorable (and underappreciated) initiative. 

Honda’s foray into the lawnmower market in 1978 stands as an example of a company that is rather loose with credit. 

Since changing their business model to emphasize “smaller, lighter, and more fun” cars with the Honda Accord’s success in the mid-1980s, the company has become one of the world’s largest automobile manufacturers.

Cadbury's Instant Mashed Potatoes (Not Good)

Cadbury has been known for making high-end chocolate and candy since its inception. 

However, because of their success in the food industry, many of their products started to look like they came from a cheap manufacturing facility.

Instead of improving their products and building a strong customer base, Cadbury's popular instant mashed potato brand began to decline in popularity as customers started to perceive it as inferior. 

Levi’s Tailored Classics (Not Good)

Of course, companies want to grow by and beyond their original market. When this happens, they also want to enter as many new markets as possible to avoid a plateauing growth rate. 

In the early 1980s, Levi’s, already a significant player in the denim market, wanted to expand its customers for future growth. It soon launched its Tailored Classics collection — just in time for that decade’s women swear trend.

They failed to meet their sales projections. One of these markets was men’s suits. To meet their annual sales goal, they had to launch a new line of casual, rugged, and outdoorsy clothing. 

However, this time around, the casual outdoorsy clothes conflicted with their core identity as factory workers, and it didn’t catch on.

Are you ready to extend?

undefined

If you're ready to take the plunge, think about your customers. 

What problems do they have? 

Does your new marketing strategy make sense and fit within your public brand perception? 

You may be the first to market with a new product, but it's not wise to do so blindly. Make sure you have done your research and can make an informed decision.


Maurice Byrdsongs
Maurice Byrdsongs

Content Strategist at GINI where he manages all things Adapt and supports larger content initiatives. When he's not at work, you can find Maurice cheering for the Dodgers or rewatching "Avengers: Endgame" (again).

Maurice Byrdsongs
Maurice Byrdsongs

Content Strategist at GINI where he manages all things Adapt and supports larger content initiatives. When he's not at work, you can find Maurice cheering for the Dodgers or rewatching "Avengers: Endgame" (again).


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