Brand extension is a strategic marketing practice that businesses or brands with a good brand name for a specific product category use for launching a different and new product category with the same brand name. For example, the Nike core brand is known for its shoes, but it has now extended to soccer balls, sunglasses, golf equipment, basketballs, etc.
- What is Brand Extension?
- Brand Extension vs Line Extension
- Working of Brand Extensions
- Types of Successful Brand Extensions
- Why do Brands use Extensions?
- Wrap Up!
What is Brand Extension?
Brand extension is a marketing and business management strategy in which a company uses its one of the established brand name for introducing a new product category in the market. The new product can be related or unrelated to the existing product categories.
This marketing strategy is generally used by companies to effortlessly position their new product into the market. A few common examples of extension can be Wipro that was originally into computers and now has extended into soap, powder, and shampoo.
Another example can be of Arm & Hammer, as Church & Dwight which is the maker of Arm Hammer leveraged a key component of its brand promise – purity, cleanliness, and freshness to extend the brand from its original household cleanser category (i.e. baking soda) to deodorant, toothpaste, and detergent.
Brand Extension vs Line Extension
While the brand extension is associated with the expansion of the brand itself into new product or service territories or markets, line extension is associated with the expansion of an existing product line a brand.
When a soft drink manufacturer launches bottled water products under the same brand name, it is an example of brand extension. But when the same soft drink manufacturer introduces a “Diet” variety of soft drinks then it would be an example of line extension.
Both these extensions utilize brand awareness to target and convert the existing customer base with new categories of products from an original brand or variations of an existing product.
Working of Brand Extensions
In the strategy of Brand extension, a brand leverages its popularity, loyalty, and reputation to position a new product in the market. There must be a good association between the existing brand product and the new product for a successful brand extension. If they are not associated with each other, then there are chances that this strategy will fail in the market, which can also harm the reputation of the parent brand.
Businesses adopt this strategy because it serves as an effective and inexpensive tool for marketing the new product. If brand extension gets successful, a company can diversify its offerings and achieve a high market share as compared to its competitors.
Types of Successful Brand Extensions
1. Companion Brand
In this category of brand extension, the newly launched product complements the original one. In other words, they are directly related to each other. For example, the launch of the toothbrush by Colgate under the same brand name.
2. Product Form
Product form extension is a type of brand extension whereby the original product is launched in a new form. For example, Snickers launched its ice cream bars by using the marketing strategy of brand extension. Here the product is the same, but it changes its form to compete in a different product category.
3. Company Expertise
In this type of brand extension, a company extends its brand name and expertise to launch a new market. For instance, if a company is an expert in making good sound speakers, it can extend its brand name and expertise to develop good-sounding television sets.
4. Customer Franchise
Customer Franchise Extension is a type of brand extension in which a company extends its brand name to different product categories that target the same segment. For example, Johnson and Johnson offering various products that target the same segment of customers, i.e., babies.
5. Brand Distinction
Sometimes a company uses its product benefits to enter into a new niche of products. Here, the brand equity is extended for the launch of a new product in the market.
6. Brand Prestige
In this type of brand extension, a brand extends its brand image to the new product, completely different from the original one. For example, BMW launches accessories products under its brand name. BMW is an automobile company that extends its brand to a different product line, i.e., accessories.
Why do Brands use Extensions?
A company extends its brand name to launch a new product because it benefits a company in several ways. Some of them are:
1. Saves the cost of creating a new brand
The cost of creating a new brand is high, and with a brand extension, a company can work with the already established brand to promote the product. Hence, saves the cost of creating a new brand and promotion for the new product.
2. Improves brand image
When a product is launched under a well-established brand, the brand image gets improved, and most people start trusting the brand.
3. Better chances of accepting new products by the market
There are high chances of accepting a new product when launched with the already established brand in the market. It is so because many people have used that product already and trust the brand. This trust and credibility get automatically passed on to the new product.
4. The operating market of the brand can increase
A brand’s operating market increases when a new product is launched under its name. With this market increase, a business is now visible to a broader audience.
5. Better efficiency of marketing and promoting a new product
With the already established brand identity, a new product is benefitted in the marketing and promoting the new product.
Successful brand extensions are associated with the strategies of making brands more deeply entrenched in the daily lives of existing and target users of the brand.
When any specific attribute or quality of a brand resonates perfectly and favorable with its users, companies try to utilize this connection by launching new categories of products with the same brand name. In the process, it is always important to take care, so the brand keeps on fulfilling its brand promise with new products as well.
How effective do you find brand extension strategies for an existing brand?
Pinky is an MBA in Marketing from the University of Mumbai. She loves helping people out in learning Marketing and sharing latest ideas and tactics for growing businesses.