Brand Extension: What It Is, How It Works, and Real-World Examples
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Summary:
Brand extension, often referred to as brand stretching, is a strategic marketing approach where a company utilizes its existing brand name to introduce a new product or product category. This leverages the reputation, popularity, and customer loyalty associated with the established brand to propel the success of the new offering. In this comprehensive article, we will explore brand extension in-depth, examining its workings, the factors contributing to its success, real-world examples, pros, cons, and frequently asked questions to offer a complete understanding of this marketing strategy.
Brand extension: exploring the strategy, factors, and impact
Brand extension is a vital marketing strategy used by companies to leverage the strength of their established brand names when introducing new products or product categories. This approach, sometimes referred to as “brand stretching,” is rooted in the belief that utilizing a well-known brand can instill trust, recognition, and loyalty among consumers, making them more receptive to new offerings from the same brand.
In this comprehensive guide, we will delve into the world of brand extension, examining how it works, the essential factors that contribute to its success, real-world examples, pros, cons, and frequently asked questions to offer a complete perspective on this marketing strategy.
How brand extension works
Brand extension operates on the principle of using the existing brand equity, reputation, and customer loyalty associated with a well-known product to introduce a new product. To achieve success, a logical and relevant connection between the original product and the new offering is vital. A weak or non-existent association can result in a negative outcome, known as brand dilution, which can harm the parent brand’s image and value.
Successful brand extensions are a valuable tool for companies seeking to diversify their product range and increase market share. The established brand serves as a cost-effective marketing instrument for the new product, as it benefits from the positive perception consumers have of the parent brand. This marketing strategy aims to capitalize on consumer trust and loyalty, making them more receptive to new products under the same brand name.
One prominent example of successful brand extension is Apple (AAPL). Beginning with its iconic Mac computers, Apple has effectively leveraged its brand to introduce products in new categories, such as the iPod, the iPad, and the iPhone. This strategy has allowed Apple to capitalize on the positive consumer perception of its products to launch new offerings.
Factors contributing to the success of brand extension
Several factors play a pivotal role in the success of brand extension:
Relevant association
A logical and relevant association between the original product and the new offering is crucial. Consumers should immediately recognize the connection, ensuring that the brand extension aligns with their expectations and values.
Brand trust and loyalty
The established brand’s reputation, trustworthiness, and customer loyalty are valuable assets. Consumers are more likely to try new products under a brand they trust, which can lead to a faster acceptance and positive perception of the new offering.
Competitive advantage
Brand extension can provide a competitive edge by allowing companies to diversify their product offerings. This diversity can make the company more appealing to consumers and give it an advantage over competitors who don’t offer similar products.
Cost-effective marketing
Utilizing the existing brand as a marketing tool for the new product can be highly cost-effective. Companies don’t need to build a brand identity from scratch for the new offering, saving both time and resources.
Real-world examples of brand extension
Brand extension takes various forms, depending on the company’s goals and the relationship between the original and new products:
Line extension
Some brand extensions involve offering the original product in a new form or packaging. For instance, the Boston Market restaurant chain launched a line of frozen dinners under its own name, offering similar fare.
Product combinations
Other brand extensions combine two well-known products. Breyers ice cream with Oreo cookie chunks is an example that relies on consumers’ loyalty to either or both original brands.
Diversification
Brand extension may also be applied to a different product category. Google, known primarily as a search engine, offers an array of non-advertising related products and services, including the Play Store, Chromebooks, Google Apps, and the Google Cloud Platform.
In successful brand extensions, the new product’s introduction is natural and arises from a recognized positive quality or characteristic of the original product. For example, Arm & Hammer produces a deodorizing cat litter under its brand name, capitalizing on its reputation for odor control. Black & Decker manufactures a line of toy tools for children, and Ghirardelli Chocolate Company sells a brownie mix, both building on the established positive image of the parent brand. The creation of complementary products is a form of brand extension, allowing companies to meet consumer needs more comprehensively.
Frequently asked questions
What is the primary goal of brand extension?
The primary goal of brand extension is to leverage the reputation, recognition, and customer loyalty associated with an established brand to successfully introduce new products or product categories under the same brand name. This strategy aims to capitalize on consumer trust and positive brand associations.
What are the key factors contributing to the success of brand extension?
The success of brand extension relies on several key
factors, including a relevant association between the original and new products, the trust and loyalty consumers have towards the established brand, the competitive advantage it provides, and the cost-effective marketing offered by using the existing brand as a tool for the new product.
Can brand extension lead to a competitive advantage?
Yes, brand extension can provide a competitive advantage. By diversifying their product offerings and using an established brand as a marketing tool for the new product, companies can make themselves more appealing to consumers and gain an edge over competitors who don’t offer similar products.
What happens when brand extension goes wrong?
When brand extension goes wrong, it can lead to brand dilution and harm the parent brand’s image. This typically happens when the new product is unrelated to the original brand, seen as a mismatch, or creates a negative association with the brand name. Brand managers must carefully consider the fit between the original brand and the new product to avoid these pitfalls.
Are there any instances of brand extension failures and successes?
Yes, brand extension has seen both successes and failures. An example of an unsuccessful brand extension occurred when Levi Strauss & Co. attempted to launch a line of men’s three-piece suits under the sub-brand Levi’s Tailored Classics in the early 1980s. The line was discontinued after poor sales because it conflicted with consumers’ perception of Levi’s as a brand associated with rugged casual wear rather than business attire. However, Levi’s learned from this experience and introduced Levi’s Dockers in 1986, a line of casual khaki pants and men’s apparel that has been a consistent top seller for the company.
Can a successful brand extension have a long-lasting impact on a company’s growth?
Yes, a successful brand extension can have a profound and long-lasting impact on a company’s growth. By introducing new products or product categories under an established brand, companies can access new markets, increase market share, and maintain a strong, positive brand image. This can lead to continued growth and a competitive edge in the market.
Key takeaways
- Brand extension leverages an established brand’s reputation and customer loyalty.
- A relevant association between the original and new products is crucial for success.
- Successful brand extensions can provide a competitive advantage and diversify a company’s offerings.
- Cost-effective marketing is a key benefit of brand extension.
- Unsuccessful brand extensions can lead to brand dilution and harm the parent brand’s image.
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