What Is Brand Extension?
Brand extension, sometimes referred to as brand stretching, is a strategic move where a company leverages an established brand name to introduce a new product or venture into a different product category. This approach capitalizes on the existing brand equity to facilitate the launch of a fresh offering. By tapping into the brand loyalty of current customers, a brand extension aims to foster receptivity towards new products under the same brand umbrella. Successful brand extensions enable companies to explore new markets, attract diverse customer demographics, drive sales growth, and enhance overall profitability.
Key Takeaways:
- Brand extension involves introducing a new product that banks on the reputation of an existing product.
- For brand extension to succeed, the new product should share a key quality or feature that consumers can readily associate with the original product.
- A brand extension may fail if the new product lacks linkage to the original, appears mismatched, or generates a negative connotation.
How Brand Extension Works
Effective brand extension harnesses the reputation, popularity, and consumer loyalty linked to a renowned product to introduce a new offering. To achieve success, there must be a logical connection between the original product and the new item. Failure to establish this connection might result in brand dilution or even harm the parent brand’s image.
Successful brand extensions empower companies to diversify their product portfolio and expand market reach. They provide a competitive edge by leveraging the existing brand as a powerful and cost-effective marketing tool for the new product.
A prime illustration of effective brand extension can be found in Apple (AAPL), which has strategically used brand extension to fuel its growth trajectory. Starting with its iconic Mac computers, Apple extended its brand to encompass new product lines such as the iPod, iPad, and iPhone.
Companies that excel in brand extension benefit from the “halo effect,” tapping into consumers’ positive perceptions of their products to introduce new offerings.
Real World Examples of Brand Extension
Brand extension can take various forms, from offering the original product in a new format to combining two established brands. For instance, Boston Market ventured into frozen dinners under its brand name, maintaining consistency in its offerings.
Another brand extension approach involves pairing two familiar products, like Breyers ice cream with Oreo cookie chunks, leveraging consumer loyalty to both brands. Additionally, brand extension can extend to entirely new product categories, exemplified by Google’s expansion beyond its core search engine business to include a diverse range of products such as the Play Store and Chromebooks.
In successful brand extensions, the new product naturally aligns with a positive aspect of the original product. Companies like Arm & Hammer, Black & Decker, and Ghirardelli Chocolate have leveraged brand extension to introduce complementary products that resonate with consumers, such as deodorizing cat litter, toy tools for children, and brownie mixes.
Criticism of Brand Extension
Brand extension offers a cost-effective way to introduce new products by capitalizing on an existing brand identity to convey the message to consumers.
However, brand extensions can falter when there is a disconnect between the product lines, potentially tarnishing the brand image. Before embarking on a brand extension, it is crucial for brand managers to consider consumer perceptions and ensure alignment with the core brand essence.
An instructive case of unsuccessful brand extension dates back to Levi Strauss & Co.’s ill-fated attempt to introduce men’s three-piece suits under the Levi’s Tailored Classics sub-brand in the 1980s. Facing consumer rejection due to misalignment with the brand image, Levi’s later found success with the launch of Levi’s Dockers, a popular line of casual men’s apparel.