Expanding Your Brand: The Power of Brand Extension
When one of the established brand names of a company is used on its new product or new product category, it is known as brand extension or brand stretching.
Updated: May 31, 2024
When one of the established brand names of a company is used on its new product or new product category, it is known as brand extension or brand stretching. A brand extension uses the already established brand equity of a company to help it launch its newest product.
To make this strategy successful, the new product should have something in common with the original product that consumers can easily recognize and relate to. This helps to strengthen the brand and make the brand extension work effectively. When the new product is unrelated to the original there is a mismatch and brand extension fails. It can even create a negative association.
Working of Brand Extension:
- Brand extension leverages the popularity, reputation, and loyalty of a well-known product to introduce a new product.
- For brand extension to succeed, there should be a logical association between the original product and the new item.
- If the association between the original product and the new item is weak or nonexistent, it can lead to brand dilution and harm the parent brand.
- Successful brand extensions allow companies to diversify their offerings and gain market share.
- Brand extension can provide a competitive advantage over competitors who don't offer similar products.
- The existing brand used for the extension acts as a cost-effective and efficient marketing tool for the new product.
Real World Examples of Brand Extension:
The brand extension generally arises from a recognized positive quality of the original product
The original product can be offered in a new form by Brand extension.
Two well-known products can also be combined as another form of brand extension.
Brand extension can also be applied to a different product category. For example, the core business of Google is a search engine, but it also has other services and non-advertising related products including the Google Apps, Play Store, Chromebooks and the Google Cloud Platform.
The production of complementary products is a form of brand extension. For example, there are varieties and flavors of Coca-Cola.
The cost of introducing a new product is reduced by relying on the same production lines and trusted teams that have a track record of making and marketing. The lower cost of entry in to the market for the new product and the company has the potential to increase profit margins.
Important Things to Consider for Brand Extension:
The cost of launching a product by brand extension is lower than the cost of launching a new product directly. The original brand serves as an effective marketing tool for the new product that has no brand identity.