Brand extension is “the application of a brand beyond its initial range of products, or outside of its category. This becomes possible when the brand image and attributes have contributed to a perception with the consumer where the brand and not the product is the decision driver”
Fast Magazine published in an article their choice of best and worst brand extensions of last year:
Top best extensions:
Mr. Clean Performance Car Washes
Juicy Crittoure (a pampered pet line of doggie duds)
Brand extension is a marketing strategy in which a firm that markets a product with a well-developed image uses the same brand name but in a different product category. Brands use this as a strategy to increase and leverage equity.
Product extensions, on the other hand, are versions of the same parent product that serve a segment of the target market and increase the variety of an offering. An example of a product extension is Coke vs. Diet Coke
A successful brand helps a company enter new product categories more easily. Continue reading →
1. Develop a beneficial cobranding deal with a good partner Someone who brings something of value to the table that you don’t have. Starbucks’s deal with United Airlines put Starbucks coffee on United flights worldwide and allowed both sides to achieve important brand objectives.
2. Reach out for a brand extension. Time magazine had a very popular section in the back of the book that featured interesting people. A brand extension turned that section into People magazine. People magazine was a dazzling success — so much so that it launched its own brand extension: Teen People magazine.
3. Leap into new distribution channels. Putting Starbucks on United flights cobranded the cup of coffee. Putting whole-bean and ground coffees into more than 30,000 grocery stores created a complementary channel for an existing product.
4. Jump into new product categories. Think about Ralph Lauren’s line of paints, which are now sold in home-improvement stores. The company unearthed a new category and a new distribution channel. Martha Stewart started with a cookbook. Today, if I need garden clogs, I’ll buy them from her. Starbucks became the maker of the best-selling coffee ice cream in grocery stores around the nation in less than six months.
5. Create a new subbrand. Nike is a big brand — but Air Jordan is a tremendously successful subbrand. Toyota is a big brand — but Lexus is such a successful subbrand that most car buyers don’t even think of it as the child of a parent company (which may be the best compliment you can pay any subbrand).
Brand extension is “the application of a brand beyond its initial range of products, or outside of its category. This becomes possible when the brand image and attributes have contributed to a perception with the consumer/user where the brand and not the product is the decision driver”.
Brands exist for the long-term. They establish trust in consumers’ minds. They are a company’s most valuable assets and they should be treated very carefully. Every change to the brand should be viewed in terms of its long-term impact on consumers.
Marketers have long recognised that strong brand names that deliver higher sales and profits (i.e. those that have brand equity) have the potential to work their magic on other products.
The two options for doing this are usually called “brand extension” and “brand stretching”.
Brand extension refers to the use of a successful brand name to launch a new or modified product in a same broad market.
A successful brand helps a company enter new product categories more easily.
For example, Fairy (owned by Unilever) was extended from a washing up liquid brand to become a washing powder brand too.
The Lucozade brand has undergone a very successful brand extension from children’s health drink to an energy drink and sports drink.
Brand stretching refers to the use of an established brand name for products in unrelated markets.
For example the move by Yamaha (originally a Japanese manufacturer of motorbikes) into branded hi-fi equipment, pianos and sports equipment.
When done successfully, brand extension can have several advantages:
Distributors may perceive there is less risk with a new product if it carries a familiar brand name. If a new food product carries the Heinz brand, it is likely that customers will buy it
Customers will associate the quality of the established brand name with the new product. They will be more likely to trust the new product.
The new product will attract quicker customer awareness and willingness to trial or sample the product
Promotional launch costs (particularly advertising) are likely to be substantially lower.
Most companies know how to extend their brands by leveraging organizational competencies and determining unmet customer needs. However, surprisingly few have a strategic approach briefing in place to ensure that potential new product areas are consistent with a brand’s identity. Even an outstanding new product concept, satisfying a significant unmet customer need, will not succeed in the market if it is launched under the wrong brand identity.
Here is a four-step road map to make sure that future new products or services complement, or better, enhance the current equities of the brand.
1. Determine brand and category associations.
The first step in determining brand relevance is to begin with a comprehensive assessment of what your brand and those of key competitors in the category currently stand for in the minds of customers.
Even an outstanding new product concept, satisfying a significant unmet customer need, will not succeed in the market if it is launched under a brand identity for which it is a poor fit. The foundation of this assessment is qualitative customer research (e.g., focus groups and in-depth interviews), which provides the richness and depth of response needed to construct an accurate portrait of your brand and the category. The research should focus on uncovering the key associations customers link to the brand and competitive brands in the categories (e.g., product or service features, functional, emotional, and self-expressive benefits, and personality).
2. Develop brand extendibility proxies.
Once the six to eight key associations have been identified for the brand and category, proxies should be carefully chosen for each one. To accomplish this, turn each association into a continuum of attributes and benefits that range from “close in” to “far out” relative to where customers perceive the brand to be today.
This continuum begins with a proxy that’s relatively close in and ends with one that is a significant stretch from how customers perceive the brand today, with several points in between. It’s important to remember that these proxies were strategically chosen to represent distinct points on a continuum. The proxies chosen may or may not represent good new product opportunities for the brand (i.e., customer unmet needs). What’s more important at this point is that they provide the basis for rich conversations with customers as to how the brand can and cannot be extended in the future (i.e., brand relevance).
3. Conduct brand extendibility research.
Once brand and category associations have been determined and representative proxies selected, it is imperative to go back to customers to solicit their input.
A variety of stimuli can be used for the chosen proxies to facilitate brand extendibility research discussions, including white paper concepts, representative images, and actual products or prototypes. During focus group customers are asked for their opinion as to how well each product, service, feature, or benefit fits with the brand in question.
Once again, it’s important to remember that we are mostly interested in understanding customer rationales for why something does or does not fit with the brand.
4. Create brand extendibility guidelines.
The final step of this approach is to take the insights obtained in the previous step’s customer research and develop guidelines detailing how the brand can and cannot be effectively extended. Customer feedback (i.e., which proxies are in, which are out, and the reasons why) needs to be interpreted and translated into guidelines for extendibility.
Once an adequate number of guidelines has been established, it’s helpful to prioritize them because they won’t all be of equal importance. One way to think about this is to establish several guidelines that are imperatives. What this means is that unless a potential new product or service opportunity satisfies these guidelines, it should not be considered for marketplace introduction. Other guidelines would be deemed important but not mandatory. In other words, if a potential new product or service opportunity satisfies this guideline, it should be considered favorable.
Mentioned here before, [tag]brand extension[/tag], is the application of a brand beyond its initial range of products, or outside of its category.
Many brand extensions are simply bad business ideas. Just because consumers would accept chocolate pudding from Nestlï¿½ doesnï¿½t mean this is a good business idea. The category may be dominated by another company. Nestlï¿½ may not be able to efficiently manufacture the product. The margins in the new category may be too small to justify the investment, etc. Launching a brand extension that is an orphan in the category can be a prescription for failure because the item cannot generate sufficient sales to be adequately supported and defended.
“the application of a brand beyond its initial range of products, or outside of its category. This becomes possible when the brand image and attributes have contributed to a perception with the consumer/user where the brand and not the product is the decision driver”.