What Is Brand Extension?
A brand extension is the point at which a company utilizes one of its laid out brand names on another product or new product category. It's occasionally known as brand extending. The strategy behind a brand extension is to utilize the company's now settled brand equity to assist it with sending off its most up to date product. The company depends on the brand loyalty of its current customers, which it expectations will make them more open to new offerings from a similar brand. On the off chance that fruitful, a brand extension can assist a company with arriving at new demographics, extend its customer base, increase sales, and lift overall profit margins.
How Brand Extension Works
A brand extension use the reputation, fame, and brand loyalty associated with a notable product to send off another product. To find lasting success, there must be a sensible association between the original product and the new thing. A weak or nonexistent association can bring about the contrary effect, brand dilution. This might harm the parent brand.
Effective brand extensions permit companies to expand their offerings and increase market share. They can give the company a competitive advantage over its opponents that don't offer comparative products. The existing brand fills in as an effective and modest marketing apparatus for the new product.
Apple (AAPL) is an illustration of a company that has a history of effectively utilizing a brand extension strategy to move growth. Starting with its well known Mac computers, the company has leveraged its brand to sell products in new categories, as should be visible with the iPod, the iPad, and the iPhone.
Companies that are able to effectively expand their brand are frequently said to benefit from the halo effect, which permits them to capitalize on the positive discernment consumers have of their products to send off new products.
Real World Examples of Brand Extension
Brand extension can be essentially as clear as offering the original product in another form. For instance, the Boston Market restaurant chain sent off a line of frozen suppers under its own name, offering comparative fare.
One more form of brand extension combines two notable products. Breyers ice cream with Oreo cookie lumps is a matchup that depends on consumers' loyalty to one or the other or both original brands.
Brand extension likewise might be applied to an alternate product category. Google's core business is a web index, yet it has an assortment of other non-publicizing related products and services including the Play Store, Chromebooks, Google Apps, and the Google Cloud Platform.
In the best models, the brand extension is natural and emerges from a recognized positive quality of the original product. Arm and Hammer delivers a freshening up cat litter under its brand name. Black and Decker makes a line of toy devices for children. Ghirardelli Chocolate Company sells a brownie mix. The creation of complementary products is a form of brand extension. The numerous assortments and kinds of Coca-Cola are a model.
Analysis of Brand Extension
The cost of introducing a product through brand extension is lower than the cost of introducing another product that has no brand identity. The original brand communicates the message.
In any case, brand extensions fail when the product lines are a distinct mismatch. The brand name might even illuminate the new product. Before sending off another product, [brand managers](/brand-the board) need to keep their target crowd at the top of the priority list and consider which products fit well under their company's brand.
An illustration of a fruitless brand extension happened in the mid 1980s when famous pants manufacturer Levi Strauss and Co. chosen to send off a line of men's tuxedos under the sub-brand Levi's Tailored Classics. Following quite a while of poor sales, the company discontinued the line. The company couldn't overcome consumers' view of the brand as one associated with tough relaxed wear and not business clothing. Notwithstanding, Levi's gained from its misstep and in 1986 presented Levi's Dockers, a line of relaxed khaki jeans and other men's apparel that has since been a consistent top seller for the company.
- Brand extension works when the original and new products share a common quality or characteristic that the consumer can quickly recognize.
- Brand extension fails when the new product is unrelated to the original, is viewed as a mismatch, or even makes a negative association.
- Brand extension is the presentation of another product that depends on the name and reputation of a laid out product.