Mastering Brand Extension: Strategies for Business Growth
A brand extension occurs when a company utilizes an established brand name to introduce a new product or enter a new product category. This strategy leverages the company’s existing brand loyalty, encouraging current customers to embrace the new offering. Successfully executed brand extensions can lead to reaching new demographics, expanding the customer base, boosting sales, and enhancing overall profit margins.
Key Takeaways
- Brand Extension Definition: It involves launching a new product that relies on the reputation of an established brand.
- Success Factors: The new product should share a recognizable quality or characteristic with the original product.
- Risks: Brand extensions can fail when there’s a disconnect between the new and original products, or when negative associations are created.
How to Execute a Brand Extension Successfully
A brand extension leverages the reputation, popularity, and brand loyalty linked to a well-known product to introduce a new one. To ensure success, there must be a logical and recognizable link between the original product and the new offering. Weak associations can lead to brand dilution, potentially harming the parent brand.
Successful brand extensions enable companies to diversify and increase their market share. The established brand acts as an effective and economical marketing tool for the new product.
Example: Apple’s history of successful brand extensions, starting with the Mac computers and including the iPod, iPad, and iPhone, demonstrates effective brand stretching strategies.
Companies that effectively extend their brand often benefit from the halo effect, capitalizing on consumers’ positive perceptions to introduce new products.
Real World Examples of Brand Extension
Example 1: Boston Market extended its brand by launching a line of frozen dinners, offering similar fare to what was served in their restaurants.
Example 2: Breyers combined its ice cream with Oreo cookie chunks—a collaboration that relied on consumers’ loyalty to both brands.
Example 3: Google, initially a search engine, extended its brand into many other product categories like the Play Store, Chromebooks, Google Apps, and the Google Cloud Platform.
Smart Extensions Based on Positive Attributes
Example: Arm & Hammer’s extension into deodorizing cat litter, leveraging its strong association with odor control.
Example: Black & Decker introduced a line of toy tools for kids, naturally extending its association with quality tools.
Example: Ghirardelli Chocolate Company’s brownie mix reflected its deep understanding of chocolate products.
Example: Coca-Cola’s various flavors and product variations serve as a prominent example of leveraging a strong brand for product diversification.
Potential Pitfalls of Brand Extension
While introducing a product through brand extension is less costly than launching a completely new brand, mismatches can lead to failure. The brand’s reputation may tarnish if the new products don’t resonate with the brand’s existing perception. Brand managers must consider the target audience and ensure that the new product aligns with the primary brand identity.
Unsuccessful Example: In the 1980s, Levi Strauss & Co. struggled with the launch of Levi’s Tailored Classics, a line of men’s suits. Unable to overcome consumer perceptions of Levi’s as a casual wear brand, the initiative failed. However, Levi learned from the experience, later achieving success with the launch of Levi’s Dockers, a line of casual khaki pants and other men’s apparel.
Related Terms: brand equity, brand loyalty, market share, competitive advantage.
References
- Tuck School of Business, Dartmouth College. “Findings: Should I Extend My Brand?”
