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Brand Extension

Brand Advantage Through Brand Extension

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Not too long ago here on Branding Strategy Insider, one of my co-authors, Nigel Hollis shared three basic ways a brand can change the brand game to its advantage:

1. Expand the category

2. Disrupt the category

3. Exceed the category

I would argue there is a fourth strategy to go along with expanding, disrupting and exceeding the category. That would be to “extend” the category.

Take Colgate for example. Not only have they been successful in disrupting the category by adding Colgate® Total® to their line of toothpaste, but they have been successful in “extending” the category with products such as Colgate® Peroxyl®, a rinse for minor mouth irritations and Colgate® Orabase®, a pain relieving paste. By extending the brand experience, Colgate also extends the consumer experience while increasing their overall brand awareness through additional shelf space in the retail aisle.

There are several ways for a company to extend a brand. A company can choose to manufacture or source (often from less expensive manufacturers overseas) the new category of product. These two methods require existing sales and marketing teams to drive demand and customer commitment. However, if the company is not familiar with the extended category, they will have to invest in building a minimal level of competence or risk a possible failed brand extension.

There is another option if the new category is a perfect fit for the brand but the company has no expertise. In this instance, the company can choose to acquire a company that currently manufactures or sources the product or they can choose to license their brand to a third party. Through licensing, a brand owner or licensor can extend a brand into a new category without having to make a capital investment and go through months of business integration. The third party manufacturer in exchange for rights to the brand in the category, becomes responsible for all manufacturing, distribution, marketing and sales.  Moreover, the company (now called a licensee) is required to pay the brand owner a royalty (normally a percentage of net sales) on the Net Revenue for the total sale of branded products in the category they have licensed.

So before limiting yourself to expanding, disrupting or exceeding a brand when desiring to build a brand advantage, consider extending. And while you are at it, consider extending the brand via licensing.

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

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