Brand extension (brand stretching) is a marketing strategy that uses a company’s existing successful brand name for a new product or modified product in a new category. The brand extension strategy helps the company to extend and move the brand to another category.
Example: Dettol – Dettol bath soap, Dettol sanitizer, Dettol shaving cream, Dettol liquid hand wash, Dettol liquid adhesive bandage, Dettol pain relief spray and Dettol antiseptic cream.
There are a lot of celebrities and personalities who created their name as a brand successfully. Ralph Lauren (American fashion designer) is a very good example; he started his clothing brand and extended to other categories.
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Brand Extension Vs Brand Line
Brand extension and brand line, both are marketing strategies that are used for the promotion of products. The main difference between brand line and brand extension is in the product category type.
In brand line, the focus is on color, flavor, and theme, but in brand extension, the focus is on the category. It is because the customer wants segmentation, variety, capacity utilization, and something that is the counter of competition. The common example of the brand line is diet cola and coca-cola zero sugar.
The company sometimes does not clarify its goals which are risky; the brand line extension adds variety to its existing product to attract more clients.
It also means expansion of product like if someone has the brand of wedding ‘Lehanga,’ then they can expand into wedding Mehendi and frock.
Brand extension means expanding the brand like they expand the products as party dresses, casual dresses, and formal dresses.
Companies can extend their product at any time, whenever there’s a conflict with their competitors; then they take the risk of brand extension. Any new extension affects the entire company’s reputation. Brand line and brand extension both need the marketing and promotion of their product after extending.
- Brand line example– Magi noodles, Cadbury dairy milk, coca-cola.
- Brand extension example– APPLE, Ferrari, etc.
When you introduce unrelated new product the brand extension fails and creates a bad association as well. For example, Colgate Lasagna.
Types of Brand Extension
Following are the 8 types of brand extension.
Companion Product Extension
Companion product extension is a complementary form of strategy which helps in sales promotion. For instance, if you buy one product, then you have to buy another product as well because one product creates the demand for the other product. Therefore, companies take advantage of introducing companion products in the market.
Like vim bar and vim sponge. In this marketing strategy, the company extends the product in the form of a companion.
Example: Gillet razor to Gillet shaving cream.Dove shampoo or Dove conditioner.
Product Form Extension
In product form extension, the product form is different from other product categories. It is easier when you do it properly. It adds variety into the existing product and the Company usually adopts this strategy in its brand.
Example: Amul milk to Amul condensed milk. Butter, cheese and ice cream. You can see that the company just extends the form of the product.
Extension of Company Expertise
Using the product category name as an extension along with the main brand, Japanese companies mostly use such expertise extension. If the company is an expert in more than one field, then it adds the brand name with its function.
Example: Honda scooter, Honda cars, and Honda lawnmowers.
Customer Franchise Extension
In the customer franchise extension, companies use this strategy and extend their product category according to the needs of the customer.
Example: Johnson baby oil, Johnson shampoo, Jonson powder, and Johnson baby lotion.
Extension of Brand Prestige
In brand prestige, you offer a lot of different categories of products, but all of these products have a common brand name and a logo which adds prestige value to it.
Example: Amazon, Ali express and Daraz, etc.
Extension of Brand Distinction
If the brand is popular due to certain attributes, then it introduces new products by changing its form. For instance, if the company has a brand of hair oil, then it’ll extend in the forms of baby oil and relaxing oil.
Example: APPLE, the apple brand launches different sorts of products through the Extension of brand.
Component Brand Extension
In component brand extension, a brand can extend because of its association with its customers. For instance, if the Customers have the association with Nescafe, it’s because they like the taste of it, now the Nescafe brand can extend the brand in the form of biscuit and milk supplements. We can say that every extension strengthens the parent brand.
Example: Nescafe chocolate, Nescafe biscuit, Nescafe milk supplement.
Customer Base Extension
The company can extend its clients who grow the business by selling the products of their favorite brand. Oriflamme, a cosmetic brand, is a very good example of a customer base extension. Their marketing strategy is based on its customers. They daily extend their consultants who help them to grow their online business. Brands usually acquire such status with their customers over a long period of time.
Example: Prepaid forex card by Thomas cook.
Advantages of Brand Extension
Reduce Financial Risk. A company can reduce financial risk through its brand extension. Launching a product sometimes more risky, therefore the company extends the brand category and reduces the financial risk.
Increase Brand Image. If the brand has an image of offering one product only, then the company cannot attract a wider range of audience and achieve success. Therefore, through brand extension marketing strategy the company can offer different sorts of products and increase its brand image.
More Likely to Accept the New Products. The customers usually accept the new products launched by the parent brands. It makes them feel good when they go out for shopping, it’s because they want a variety in the product and the company provides them.
The Cost of Developing a New Brand is Saved. Customers usually support the new product launched by their favorite brand, which not only saves the cost but it also reduces the chances of loss.
Saving Promotional Advertising Expenses. The startup brands usually invest a lot of resources on advertising for the promotion of their brand. If you have the opportunity to extend the product with the parent brand, then it would save a lot of time and resources.
Consumer Seeks for a Variety. Customers usually get bored with one type of product over time, and they want a variety in the products of their brand. If you provide them what they’re looking for, then they won’t get bored with your brand. The variety in the product is essential for the brand to survive.
Disadvantages of Brand Extension
Lead to Loss of Reliability. If the company extends the brand name too long, then it will lose its reliability. It’s because the company can’t be perfect in all product categories, and customers will start using the product of the other brands. Once the trust of the people is lost, then they won’t buy it.
New Products can Damage the Core Product Brand Image. The brand image should be unique and positive. Customers not only buy the product, they also buy the brand image along with it. However, it’s hard to maintain the positive and uniqueness of your brand. It is very risky at the same time, because if the customers find certain attributes of the extended product undesirable, then it’ll tarnish the whole image of the brand.
A Brand Extension may have a Spillover Effect. There is a bond between the parent brand and its new product, the brand extension can create a spillover effect.
Brand Extension may Discourage Innovation. If a brand starts launching a variety of products, then it will be disastrous in many ways. The company’s focus would be on quantity rather than quality of the product. As a result, customers would find a variety of products, but there won’t be any innovation in the core of the main brand.
Brand Extension Examples
Starbucks – Coffee-based beverages into energy drinks
Starbucks was the brand of a coffee and people used to like the taste of it. Then Starbucks launched the energy drinks, Starbucks brand used and applied the component brand extension marketing strategy.
Ferrari – from exotic sports cars to theme parks
Ferrari is an Italian luxury car; it began its journey as sports cars, and then extended the brand and launched the theme parks. The Ferrari brand used and applied the brand prestige extension.
Callaway – from golf clubs into footwear, apparel and golf accessories
Callaway is a company which builds gold clubs, then after that, the company started launching other products that are relevant to golfers. First, they started offering golf club, and then they started producing other products which golfer use like umbrellas, bottles, gloves, and etc.
All the above examples proved one thing that if you apply the marketing strategy rightly, then the brand extension will be successful. The process is quite difficult.
It is because the customers want a variety in their dress, foods, and drinks and almost in everything. They just don’t want one form of dresses. They want a wedding dresses, night suits, party dress, work dress, bath dress, evening wear, and clubwear. If the brand extension works well; then it would make the company a big brand.