Branding

What is a Brand Extension?

Expanding your brand portfolio can be extremely difficult, but can a brand extension be the right path for your company?

By

The Editorial Staff

on

Mar 27, 2021

What is a brand extension and how does a brand extension work?

A brand extension is a new product or service that is created by the same company that already has a certain product or service.

Brand extensions can be used to expand the market reach of your product, introduce new products, or increase profits. A brand extension can also be used to increase sales and awareness for an existing product. It can also help with marketing and advertising efforts.

What are the benefits of a brand extension?

A brand extension is a new product or service that is created in order to increase the reach of the business. It can be anything from a new product, to a service, or even an entire brand. Some companies invest heavily in research and development before trying, where other companies start with buying an already established company and the merging it to the existing brand, if it is a fit.

Brand extensions are often used when there is a need for growth and expansion. They can also be used by companies who want to expand their market share by introducing new products and services that suit different types of customers. There are many benefits of brand extensions such as increased revenue, increased customer loyalty, and increased profits. However, there are some risks and downsides to this strategy as well such as potential cannibalization and dilution of focus on the original brand. A brand extension is not something you create overnight and it takes a lot of consideration and research before even trying to enter a new market.

What are the risks of a brand extension?

A brand extension is when a company creates a new brand that is different from the main product. The idea behind this is to increase the company’s market share and appeal to new consumers.

However, there are risks involved with this strategy. A brand extension can lead to confusion among consumers, diluting the value of the original product. It can also lead to negative reviews on social media platforms like Yelp and TripAdvisor, which could damage the reputation of both companies.

The riskiest part about a brand extension is that it may not be profitable for the company or lead to losses in revenue and market share.

What are some examples of brands that have had success with their brand extensions?

There are many examples of brands that have had success with their brand extensions. One example is Coca-Cola which has used their brand extension to create a new product for the health and wellness market. Another example is Apple which has used its brand extension to launch new products such as the iPod and iPhone.

Some brands have also found success with their brand extensions by using them to enter new markets or expand into different areas of business. For instance, Starbucks has used its coffee chain to enter the tea market, and Nike has used its athletic apparel company to enter the shoe market.

Good examples of brand extensions

  1. Google
    Coming from the mission of making a search engine, that would help you find answers quickly. Today they have a range of products, which serve your everyday purposes, not just looking for answers. They have engineered simple solutions to big tasks in your everyday life with their extensive range of brand extensions.
  2. Apple
    From being only a computer manufacturer to being one of the biggest media companies in the world Apple has actually moved in the same space always. The need for a computer has evolved and too has the product range Apple offers. With many brand extensions within hardware, they have now started to move into the software space with music, movies, etc. All extensions are related to their main mission: Giving people the opportunity to perform and stand out with products, that work seamlessly.

Bad examples of brand extensions

  1. Amazon
    Amazon has moved in the ecommerce space since its birth, but manufacturing has never been the strongest side of the online giant. The Amazon Fire Phone was a move to disrupt the duopol of Samsung and Apple in the phone space, but the product did not get a good start. There were too many flaws, the price was too high in comparison and the apps were bad. As it might seem like a great brand extension, the execution was abysmal. The Fire Phone was quickly out of the landscape again and Amazon keeps their fingers from manufacturing phones.
  2. EasyJet
    People love to watch movies on the plane, so EasyJet thought it was a good idea to build on the cinematic experience, just without the jets. Being a low cost airline the movies would be offered to be seen in cinemas for as little as 20 cents. This started an outrage in the movie industry and large production companies refused to show their movies with the new brand extension. The extension ended up transforming to a DVD company, but ultimately ended up being sold for pennies to Amazon (a disciplin they are incredible at).

What should I consider when deciding to create a brand extension?

Looking at the good and the bad examples of brand extensions, there are a lot to factor in befor starting an adventure into new markets. Ultimately you have to have some sort of synergy between your current portfolio and the new venture. You might think your target audience is the perfect match for an extension, but have you also thought about the need, the competition and the entry barriers? Below you can find several other questions, that you need to ask before engaging in planning a brand extension:

- What is the purpose of the extension?

- Who are your target audience and what are their needs?

- How will this extension make your brand more attractive?

- Will it help in increasing sales and profits?


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