A brand name helps customers identify what the brand is and how it is different from other brands. When thinking about what to name a new brand, it’s helpful to have a typology or a way of evaluating potential brand naming options. Ideally, the branding options in this typology should represent the set of brand naming options from which the company can choose. It should also clarify how this new brand relates to other brands marketed by the company.
The typology includes three broad types of brand naming options: (1) extension branding, (2) association branding, and (3) individual branding. These three types vary in how close or distant they are to the parent brand name. With extension branding, the name of a new offering is strongly related to (close to) the parent brand. With individual branding, the name of the new brand is unrelated to (farthest from) the parent brand. Association branding is a middle-ground option. A second thing to note is that there are different options for each broad brand naming type. Extension branding includes direct and linked branding options. Association branding has four branding options: subbranding, endorsement branding, indirect branding, and cobranding. Individual branding has two options: word-based and phrase-based.
The final thing to note is that each option can include or not include a modifier. A modifier is a descriptor that adds information to the selected branding option. It is nested in the eight branding options. We explain the meaning and significance of these branding options next.
There are two types of extension branding options that companies can consider: (1) direct-extension branding and (2) linked-extension branding.
With direct-extension branding, the company uses an existing (parent brand) name for a new business or product. For example, Google used direct-extension branding when it moved from general Internet search to maps (Google Maps), scholarly articles (Google Scholar), and shopping (Google Shopping). With extension branding, the parent brand (Google) is the single dominant driver of the new brand’s identity (e.g., Google Maps).
With linked-extension branding, a key element of the parent brand name is used to name the new product. For example, McPotato and McCafe include Mr, which is a key part of the McDonalds brand name. China’s Xiaomi, the world’s most valuable technology start-up and electronics company, has used Mi to name new products such as Mi headphones, MIUI 7 (a software platform), Mi 4i (a smartphone), and so on. Alibaba uses this branding option for its online payment system (Alipay) and online retail services (AliExpress).
It takes time and resources to build brand awareness (let alone brand admiration) for a new brand. Using an existing (parent) brand name for a new business or product lets customers transfer what they know and have experienced with the parent brand to the new business or product. Customers make these associations naturally. So companies should spend less to create associations for the new product when they follow the extension branding option, as opposed to an entirely new brand name. This is particularly true when positive extension and feedback effects can be realized.
But extension branding is not without risks, since the parent brand is vulnerable to potential dilution. If there’s no meaningful connection between the parent brand and the extension, customers may become confused about what the brand stands for, which can hurt the brand’s identity. Extensions that fail to deliver on their brand promise in the marketplace can also backfire and tarnish the parent brand’s reputation. Moreover, with extension branding, customers might generalize a mishap associated with the extension to include the parent brand.
However, when extension decisions are thought through strategically, positive extension and feedback effects generally far outweigh the risks of brand dilution.
Meaning And Examples Of Different Branding Options
Definition: Uses the same brand name (of the holding company, corporation, or product) to introduce a new offering (e.g., company, strategic business unit [SBU], or product).
• Examples: Virgin Atlantic, Virgin Money, Virgin Books, Virgin Holidays Virgin Wine; Oracle Cloud, Oracle Mobile, Oracle Database; Maersk Line, Maersk Oil, Maersk Drilling; Mi headphones, Mi 4i; Alipay, AliExpress; CAT Financial, CAT Rental Store; McPotato, McCafe.
• Definition: Adds a new brand name to an existing brand, such that the new brand is a special version of the parent brand.
• Examples: Toyota Prius, Toyota Corolla, Toyota Camry; Microsoft Xbox, Microsoft Lumia, Microsoft HoloLens; Intel Xeon, Intel Atom, Intel, Quark.
• Definition: Supports a new brand through the endorsement of the parent brand.
• Examples: Courtyard by Marriott; Disney Presents … Frozen, Big Hero 5, and other entertainment; Polo by Ralph Lauren; Solar Turbines— A Caterpillar Company, Turbomach— A Caterpillar Company.
• Definition: Indirectly associates a known parent brand with a new brand (e.g., parent name appears, but is not prominent, on packaging, in advertising, or in other marketing formats).
• Examples: General Mills: Wheaties, Cheerios, and other products; BASF: Novasil, Lucarotin, Lutrell, Lupro-Grain, Amasil NA.
• Definition: Two known brands join to produce a new brand that leverages the strengths of each brand.
• Examples: Adidas Porsche Design athletic shoes; SlimFast Godiva cake mix (hypothetical example); Disney Pixar.
• Definition: A new brand is introduced whose name is independent of and distinct from the parent.
• Examples: Lexus and Toyota; Innocent Drinks and Coca-Cola; Boeing and Apache helicopters; ESPN and Walt Disney; Alibaba and Taobao; I Can’t Believe It’s Not Butter; Bed Bath & Beyond.
Contributed to Branding Strategy Insider by: C. Whan Park, Deborah MacInnis and Andreas Eisingerich, excerpted from their book, Brand Admiration with permission from Wiley Publishing.
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