Whether you notice them or not, brand extensions are all over. This concept has been used by big businesses to jump into new categories and industries. However, it can also be used by smaller businesses to diversify their lineup and boost their profits.
So here’s what you need to know about brand extensions, including innovative examples that customers would love to see:
What Is a Brand Extension?
A brand extension occurs when a brand introduces a product outside of its usual category — assuming that the brand name is recognizable enough to drive sales within this new category. A brand extension is a great way for brands to expand their product lines and compete in new areas. That being said, you can only compete if it’s a successful extension that actually makes sense. In fact, many brand extensions have failed because they went way outside of what the brand usually does.
Furthermore, brand extensions usually require a well-established brand that has widespread brand awareness and a positive brand image. These things do not develop overnight! As a result, it’s a good idea to stick to your bread and butter products as a new brand until you’re established enough to begin exploring the potential of a brand extension.
Different Types of Brand Extensions
While the basic idea of a brand extension may seem simple and straightforward at first glance, there are actually many different types of brand extensions to pursue. Here are some of the different types of brand extensions that you may want to consider exploring for your own business:
Line Extension
A line extension is when a brand begins to offer new products within its existing category. Essentially, they’re expanding their current line of products to meet the needs of consumers better.
For example, the skincare company CeraVe produces a number of different face washes within its skincare line, including a hydrating cleanser, a foaming cleanser, and a salicylic acid cleanser for dry, oily, and acne-prone skin, respectively.
Companion Product Extension
A companion product extension is when a brand offers a complementary product that perfectly pairs with its existing products. This is a pairing that makes sense and makes things easier for the consumer as well.
For example, a shampoo company would also want to make conditioners as well since these items are frequently bought together and used in concert.
Customer Franchise Extension
A customer franchise extension is when a brand extends into a category completely unrelated to its original category but is able to do so thanks to a loyal customer following. This loyal following will buy this new product and effectively disrupt the category as a result.
For example, Amazon was able to expand into the grocery game through Amazon Fresh when they had previously only offered retail goods. Now, Amazon is bigger than ever as the world’s largest online retailer.
Company Expertise Extension
A company expertise extension is when a brand extends into semi-related categories based on its expertise within the larger industry. Consumers highly regard this brand as a trustworthy expert within the industry.
For example, Apple originally offered computer products but was able to expand into music devices, music services, headphones, watches, and more based on its expertise within the technology industry.
Owned Benefit Extension
An owned benefit extension is when a brand’s general product use is then extended in the form of different products within different categories.
For instance, Febreze started off by offering spray air fresheners but now offers fresh-smelling candles, laundry products, car fresheners, plug-in fresheners, and wax melts.
Pros and Cons of Pursuing a Brand Extension
As with any business venture, there are both pros and cons of pursuing a brand extension.
Some of the pros include:
Diversification
Diversification is key to an enduring business. Extending your brand into new areas provides you with alternate sources of income should the market for your existing products start to change. It’s impossible to predict the future, but you can plan for it by diversifying your product offerings.
Strengthen Brand Image
A successful brand extension can also strengthen your brand image and show your customers that you’re versatile and innovative.
Meet customer needs
Customers’ needs are always changing, and you can effectively meet them through a brand extension! This allows your brand to meet their needs rather than forcing them to turn to other companies to do so.
Some of the cons include:
Product failure
Obviously, the biggest risk of pursuing a brand extension is that it fails, and you end up wasting money in the process.
Negative impact on brand image
If your product flops, not only could you lose money, but you could also damage your brand image in the process. The wrong brand extensions can turn off customers and affect the performance of your core line of products.
Sacrifice quality
Finally, some brands tend to spend too much time and resources on their extensions that the quality of their bread and butter products tends to suffer. This could also turn off customers and negatively impact your brand image.
How to Pursue a Brand Extension
Clearly, a brand extension can be beneficial to your business. However, that’s only true if you do it right! Here are the steps you need to take in order to pursue a brand extension for your business successfully:
- Do your research ahead of time to ensure that the extension is something that your customers want to see from you.
- Also, make sure that the extension is something that logically makes sense for your company and won’t negatively impact your brand image.
- Come up with a solid marketing strategy for your brand extension that relates it to your current product offerings and plays off of your strong brand image. Marketing experts like Greg Gillman can help you come up with the right strategy that will seamlessly implement new products into your existing offerings.
- Test your products and ideas before you officially launch them to make sure that they’re as good as you think they are. One great way to do this is through focus groups. Investing the time and resources into testing on the front end is better than wasting them on an unsuccessful product extension later on.
Brand Extensions That Flopped
It’s not unheard of for brand extensions to flop. Here are some particularly bad examples that will make you wonder why they were even launched in the first place:
- Zippo (lighter fluid) perfume
- Colgate (toothpaste) frozen beef lasagna
- Arizona (tea) cheese nachos
Brand Extensions That Customers Loved
While there are bad brand extensions, there are also great ones that have improved our lives! Here are some examples of successful brand extensions that customers absolutely loved:
- Starbucks (coffee) frappuccino — Starbucks simply changed the temperature of their popular drinks to enter a new category effectively.
- Colgate (toothpaste) toothbrush — now this one actually makes sense!
- Aunt Jemima (pancake mix) maple syrup — while this brand originally started off making pancake mix, it seamlessly transitioned into the syrup category.
Final Thoughts on Brand Extensions
As you can see, brand extensions have their place in the current market. While they are a great way for brands to expand their influence and meet the needs of consumers, they can also be risky. However, with the right research, planning, and strategizing, you can successfully extend your brand and experience incredible growth.
Sources:
Product Diversification Strategy Advertising & Marketing | Small Business Chron
See The 10 Worst Brand Extensions Currently On The Market | Business Insider
The 10 Best Brand Extensions Ever (According To Me) | TIME Business
