As you may know, brand extension is a marketing strategy in which an organization that markets a product with a well-developed image uses the same brand name but in a different product category. Brand managers use this as a strategy to increase and leverage brand equity.
Product or line 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.
Brand Extension Benefits:
1. Brand extensions let a marketer take a brand with well-known quality perceptions and associations and put it on a brand in a new category. Not only can marketers capitalize on brand awareness, they can also leverage the associations consumers have of the parent brand.
2. Consumers who favorably evaluate a parent brand are more willing to try and adopt the brand extension than an unfamiliar brand in the same category. They trust a known brand name.
3. Brand extensions can also help a firm’s stock prices. Some academic research has found that Wall Street pays attention to brand extension announcements and that whether they like them or not depends on how much they like the parent band.
4. Brand extensions can also help consumers understand the core meaning of the brand name.
One of the principal dangers of brand extension is that the parent brand equity may be diluted. If there is a misunderstanding of consumers’ perception of the brand, it could be moved into a sector that consumers view as “inappropriate.” Quite often the parent brand will have been available for some time, enabling it to build a level of equity and trust with consumers. It will have strong credentials. Over time, its marketing has sought to build and secure these credentials within its target market. An irrelevant positioning has the ability to undermine the parent’s credentials.
TippingSprung’s second annual survey of brand extensions, produced in collaboration with marketing newsweekly Brandweek, revealed which extensions are most effective, which have potential to dilute the brand, and what makes some brands more extendable than others. Major trends in brand extensions were also uncovered.
The Top Brand Extensions.
- best overall brand extension – Iams pet insurance
- best liquor brand extension – Starbucks coffee liqueur
- best co-branding/ingredient branding – The Motorola ROKR phone with iTunes
- best extension of a magazine onto new platform – hardcover books from O, the Oprah magazine
- most overdue brand extension – The Tide to Go stain removal pen
- best furniture brand extension – Antiques Roadshow
- best extension of a not-for-profit – National Geographic
More here.
The Blake Project Can Help: The Brand Licensing Audit
Branding Strategy Insider is a service of The Blake Project: A strategic brand consultancy specializing in Brand Research, Brand Strategy, Brand Licensing and Brand Education
