Table of Contents
- What is a Brand Extension?
- Types of Brand Extension
- Brand Extension Strategies
- Brand Extension Examples
- Lesson Summary
It can be really exciting for consumers when they see a brand they love splashed on a new item at the store. Whether it's their favorite brand of chocolate in a new cereal or a line of athletic wear from their favorite brand of clothing, well-known brand names often branch out into different products. When a brand expands from its original product or purpose, it's known as brand extension. So what exactly is a brand name extension?
The brand extension definition is when a company takes an existing brand and applies it to a new product line or combines it with another product or brand. There are countless examples of companies using a known brand to expand into new areas. The most important advantage to brand extension is the ease of new products coming into the market. When a new company starts a product line, or an existing company starts a new line with a new brand, it can be very slow to get consumers to catch on. But when a new line has an existing brand attached to it, it has a built-in consumer base that is already aware of the brand name.
A brand is a name and identifiable image that a company uses to promote its product. A brand name can refer to the name of the company, like Apple, or it can refer to a product line put out by a company like Unilever's brand of Dove soap. There are distinct advantages to employing a brand extension. Consumers are creatures of habit and of consistent expectations. They want to know what they are getting and not be disappointed in the money they spend. It's the chief reason why chain restaurants are so popular. When a new product comes out, the consumer is always hesitant to spend their money on something that they aren't already comfortable with. But if the new product carries a brand name that they know and are comfortable with, it will make it much more likely that they will try the product.
Good brand extension leverages its brand equity to get a leg up in the entering segment. Brand equity is the value of the brand based on customer loyalty and its advantage over a non-brand product. An example of brand loyalty is easily seen in breakfast cereals, where consumers will pay more money for Rice Krispies over a box of generic puffed rice cereal.
Brand extension can be done in several different ways, and the type of extension dictates the ease of the transition and extension as well as predicts its potential success.
One of the easiest and more successful ways to extend a brand is by offering an existing and successfully branded product in a new form. This can be done by changing the form of an existing product or making a supplemental product that supports the original. Some of the best examples of this come in the food and restaurant industries. The popular brand name restaurant P.F. Chang's Chinese started to offer dishes it served as frozen meals and sold them at grocery stores. The food was the same; it just came in a new form. If a smartphone brand decides to make and release a wireless charging case for its phones, that would be an example of a supplemental product extension.
A new product line is when a company uses an existing brand in a particular segment to create a new product line. If an electronics company makes computers under a brand name and then decides to start a line of televisions, that would be a new product line. In this case, the brand is applied to a new product that exists in the same market segment. When Apple decided to make the iPod in the late 1990s, they made a new product line because the brand was associated with computers. The iPod was considered a digital music device.
Product extension is slightly different than a new form. An extension is when an existing product gets more options that still exist as the same product type. Using Apple again, the iPhone is a perfect example of product extension. The original iPhone came in one size and arrangement. Over time, the product line extended to include different models, screen sizes, storage options, and camera configurations. They all have different model names and numbers but were all branded as iPhones.
This occurs when companies attempt to enter a new market using an existing brand name. This is the riskiest strategy because one of the reasons that brands gain a following is because they are good at what they do in the market they were created in. If a brand name started in the clothing industry, it might have a huge following, but that might not translate to another industry or market. The reason that companies think this way os because the try to insure that the new product has a distinctive feature or component that separates itself apart from the other products There have been rumors for years that Apple is in the process of designing an electric vehicle. This would be an example of a brand extending into a new industry. Apple will undoubtedly try to add a distinctive Apple component to the vehicle that brands like Tesla and Rivian don't have. The auto industry is very different from the technology industry, and it remains to be seen whether consumers will trust Apple with cars the same way they do with electronics.
One of the best brand extension strategies involves the communication of the extension to existing consumers and loyal customers. Nothing helps a brand extend beyond its initial product than good communication.
There are many other strategies that are critical to assessing the type of product that is going to be extended and determining which of the previous types of extension would work the best. Some of the most successful brands have done this well, and some of the biggest failures have done it poorly. The following are some examples of questions to consider when deciding the extension route for a product.
Brand extensions happen all the time. Sometimes it creates a buzz, and other times it seems benign. The following tables provide some examples of brand extensions.
|Brand||Original Product||Original Market||New Product||New Market||Extension Type||Analysis|
|Dyson||Vacuum Cleaners||Home Care||Hair Dryer||Personal Care||New Market||Dyson moved into personal care using its current expertise in the movement of air.|
|Harley Davidson||Motorcycles||Motorcycle||Clothing||Fashion||New Market||Harley Davidson used its popular logo to sell clothing with the logo.|
|Lego||Building, and construction sets||Toys||Lego movies||Entertainment||New Market||Lego cashed in on its appeal to kids by making movies.|
|Snickers||Candy bar||Food||Ice cream bar||Food||New product extension||Snickers made an extension to a bar that was made with ice cream.|
|Tesla||Model S Sedan||Automotive||Model 3||Automotive||New Line||Tesla built on the success of the high-end Model S by going vertically down to offer a lower-cost sedan.|
|Ford||F-150 Truck||Automotive||F-150 Lightning||Automotive||Product Line Extension||Ford is building an all-electric pickup truck in the same F-150 line and potentially attracting a new customer base.|
There are many reasons why brand extensions fail, and most times, it's due to a lack of research and understanding of the current market and customer base. Some of the biggest fails come when a brand tries to extend into a different socio-economical customer base or area of expertise. The following are some examples of product extension fails.
Some brand extensions are highly successful and have created must-have products for consumers. One of the central themes is that the brand stuck to its area of expertise so that consumers could connect the products together.
Brand extension is when a company uses their existing brand product to extend into new products, lines, and industries. It's generally a successful way to leverage the name recognition and brand equity to sell a new product without having to build up a customer base from scratch. There are several different types of brand extensions, including new products, new products lines, product line extensions, and new markets or industries.
There are several significant strategies to use and questions to consider when a company is looking to extend a brand. They can leverage their expertise, consider geography implications, combine a product with other brands, make product companions, differentiate between their lines, and consider the implications of vertical movement and customer bases. Some very successful brand extensions have been like Taco Bell salsa, Duracell flashlights, and Honda lawnmowers. There have also been some failures like Harley-Davidson Perfume, Gerber Singles, and Bic Underwear.
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When a company uses its leverage to launch a new product in a different category. The product can be a new product, an expansion of an existing line, or a companion product to the original.
There are many successful examples of brand extensions. Duracell batteries were successful in making a flashlight, Honda made a successful lawnmower, and Taco Bell successfully sold its salsa in stores.
Disney is a company that used its brand to extend into many different categories. Disney began as a person and extended from entertainment into theme parks, toys, food, and many other industries.
Coca-Cola started out as a soft drink, but they have expanded into many other areas. A consumer can buy Coca-Cola clothing, jewelry, luggage, and Christmas ornaments.
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