{"id":175789,"date":"2024-03-29T07:58:01","date_gmt":"2024-03-29T07:58:01","guid":{"rendered":"https:\/\/businessyield.com\/?p=175789"},"modified":"2024-04-02T12:46:15","modified_gmt":"2024-04-02T12:46:15","slug":"brand-extension","status":"publish","type":"post","link":"https:\/\/businessyield.com\/marketing\/brand-extension\/","title":{"rendered":"Best Brand Extension Strategies for Expanding Your Brand Reach (Plus Examples)","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"\n
Brand extensions are initiatives that allow brands to leverage awareness and equity to create more revenue streams. And how do they do this? By using the success they have built over the years to propel a new product or branch into a new industry.<\/p>\n\n\n\n
Most of us have come across brand extensions before, whether we know it or not. A prime example is Amazon (pardon the pun). The company started in 1995 as an online bookseller. Since then, the brand has extended into everything from music, grocery delivery, consumer goods, movies, and more.<\/p>\n\n\n\n
But what does brand extension really entail? And how can you harness its power to expand your brand’s reach? Read on to find out.<\/p>\n\n\n\n
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Key takeaways<\/p>\n\n\n\n
Brand extension refers to an established company developing a new product under the same brand name as their other products.<\/p>\n\n\n\n
Brand extension works when the original and new products share a common quality that the consumer can immediately identify.<\/p>\n\n\n\n
However, it fails when the new product is unrelated to the original, is seen as a mismatch, or even creates a negative association.<\/p>\n\n\n\n
Businesses that maintain commonalities between their products and remain consistent in their quality may find success with this approach.<\/p>\n\n\n\n
Selecting the right type of brand extension could help you execute an effective brand extension<\/p>\n<\/blockquote>\n\n\n\n
Understanding brand extension and how it works<\/strong><\/span><\/h2>\n\n\n\n
A brand extension is when a company uses one of its established brand names on a new product or new product category. Sometimes known as brand stretching, it uses the company’s already established brand equity to help it launch its newest product. The company relies on the brand loyalty of its current customers, which it hopes will make them more receptive to new offerings from the same brand. <\/p>\n\n\n\n
If successful, a brand extension can help a company reach new demographics, expand its customer base, increase sales, and boost overall profit margins. However, it works best when the new product category is related to its parent category and is something consumers and customers want. A weak or nonexistent association can result in the opposite effect, brand dilution. This can even harm the parent brand.<\/p>\n\n\n\n
One company that does brand extensions well is Apple. Starting with its popular Mac computers, the company has leveraged its brand to sell products in new categories, as seen with the iPod, the iPad, and the iPhone, as well as tech accessories (Apple Watch and Earpods). Even though all these new products are different, the extension works because Apple didn’t drift too far from its parent product category.<\/p>\n\n\n\n
Types of brand extensions (with examples)<\/strong><\/span><\/h2>\n\n\n\n<\/figure>\n\n\n\n
Depending on the type of customers you have and what you want to achieve as a brand, you need to decide which brand extension strategy is right for your company.<\/p>\n\n\n\n
Here are five different extension strategies that could work for you:<\/p>\n\n\n\n
Line extension<\/strong><\/h3>\n\n\n\n
This refers to creating new products that already fall within a current product line or category. Think of it as upgrading an existing product or introducing new sizes or colors. This is probably the easiest strategy to implement because you\u2019ll already have the product base. <\/p>\n\n\n\n
It works especially well for products with a lower price point as customers often want a product in multiple sizes or colors. <\/p>\n\n\n\n
Line extension can be a successful strategy as it can create a larger shelf presence for already established brands. A risk associated with the strategy lies in market oversaturation. Too many similar products on the same shelves can be overkill to customers, and if not deployed intelligently, line extension can cause such an effect.<\/p>\n\n\n\n
Example of line extension: <\/strong>Coca-Cola expanding from its original flavor to Coke Zero, Diet Coke and more.<\/p>\n\n\n\n
What other products go hand in hand with your product? Things that complement your existing products will increase your average basket spend. You could even compile the products into a bundle to increase revenue. <\/p>\n\n\n\n
An example would be a calendar company. They could offer complementary products, such as diaries, pens, and stickers. While you\u2019ll be creating new products, they\u2019ll still fall within the same niche.<\/p>\n\n\n\n
Product extension is viewed as a low-risk, low-cost way to meet the needs of different customer segments and attract buyers who may have different preferences. Potential drawbacks of product extension lie in the possibility of over-saturating the market or running the risk of a lesser-received new product undermining the quality expected of the brand.<\/p>\n\n\n\n
Example of complementary product extension: <\/strong>Adidas expanding from a sports shoe company to a sports apparel brand. Also, Dove, which expanded from soaps to general hygiene products such as deodorants.<\/p>\n\n\n\n
Brand extension via leveraging a lifestyle occurs when a culture is created for consumers that revolves around a set of values or interests. Customers who are supporters of certain hobbies, sports, or lifestyle choices will flock toward a brand that centralizes around them.<\/p>\n\n\n\n
Who would have thought a tequila line from an energy company would sell out within a few hours? Well, Tesla did it. And it was primarily due to the personality and lifestyle of its CEO, Elon Musk.<\/p>\n\n\n\n
However, Elon and Tesla are not the only ones to use a celebrity’s lifestyle to extend an existing brand. Other instances include Adidas\/Kanye West’s Yeezy lineup and Fenty (a brand under LVMH) with Rihanna.<\/p>\n\n\n\n
Example of brand lifestyle extension: <\/strong>Drink company Red Bull hosting extreme sports events, or actor Ryan Reynold purchasing and promoting Aviation Gin.<\/p>\n\n\n\n
Customer base extension<\/strong><\/h3>\n\n\n\n
This is where your buyer personas and user segmentation come into play. Focus on one specific demographic or quality to create a product to suit their needs.<\/p>\n\n\n\n
This strategy allows a company to expand its product inventory with a greater chance of success due to the trust that’s already been developed with a specific demographic. For example, Nike offers athletic wear and shoes for almost any sport. Customers who know and trust their tennis shoes are also more likely to trust their soccer cleats\u2014a perfect example of leveraging brand loyalty. <\/p>\n\n\n\n
Customer franchise extension still comes with risks. If a new product is less well-received, it may run the risk of tarnishing brand identity and customer loyalty.<\/p>\n\n\n\n
Think about travel agents. Their customers love to travel. Instead of shopping around, travel agents can sell them their plane tickets,<\/em> currency and travel insurance.<\/p>\n\n\n\n
Example of customer base extension: <\/strong>Dyson expanding from high-tech vacuum cleaners to high-powered fans.<\/p>\n\n\n\n
Company authority extension<\/strong><\/h3>\n\n\n\n
Businesses that have become an authority in their sector can launch new products or services in an area in which they don\u2019t currently operate and transfer that reputation to their new product category. This requires a strong established brand image, and the ability to leverage customer trust in the current offering.<\/p>\n\n\n\n
Customers will know about your high-quality products if you have brand recognition in your industry. That means you can offer them a wide range of products they will buy. This works especially well for technology companies. <\/p>\n\n\n\n
Example of company authority extension: <\/strong>Apple moving from a trusted tech business providing home computing solutions to selling mobile phones, headphones and other technology.<\/p>\n\n\n\n
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