Brand Extension, also known as brand extension, helps businesses take advantage of established brand strength for new products or services. Thanks to that, businesses save on marketing costs thanks to existing reputation, effectively increase revenue and enhance brand recognition. Let’s find out with GOBRANDING what is Brand Extension ? Popular brand extension strategies today.
I. What is Brand Extension?
Brand Extension is a strategy to leverage the power of an established brand to develop new products and conquer new markets.
Simply put, Brand Extension is a strategy of using a reputable brand name, trusted and loved by customers, for a new product. Thanks to that, the new product is launched with enthusiastic support from the brand’s current loyal customer base. At the same time, it creates a potential customer base by penetrating a new market.
II. Benefits of Brand Extension for businesses
Brand extension is a smart strategy to break through and conquer the market. Here are the benefits that Brand Extension brings to businesses when applying this strategy:
- Expand your customer base: Brand Extension strategies increase your chances of reaching new customers, attracting previously untapped demographics.
- Revenue growth: Expanding your brand into new markets creates more opportunities and potential for increased sales, which in turn boosts profits and enhances brand value.
- Save on Marketing costs: Taking advantage of existing brand reputation, new products are easily trusted by customers, helping to save on advertising costs for new products.
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- Increased customer trust: Customers are often more open to trying new products from reputable brands, and are more confident in product quality.
- Effective promotion of existing products: New product launches attract attention to the brand, while effectively promoting existing products, boosting overall business for the entire company.
III. Disadvantages of brand extension for companies
Brand extension has many benefits for businesses, but it also has some potential disadvantages. Here are some common risks and solutions to minimize them:
- Damage to the parent brand image: When launching a new product that fails or is of poor quality, it will lose prestige and even affect the reputation of the parent brand.
- Brand overload: Brand Extension in too many industries dilutes the brand in the market, causing brand boredom in the minds of customers.
- Limited market access: Relying too much on brand reputation to save on marketing costs can result in new products receiving little attention and not reaching the maximum customer base.
Besides the above disadvantages of Brand Extension, the extension strategy may also encounter some other challenges such as:
- Complex and difficult management due to the need to coordinate many products and markets requiring large resources.
- Ensuring consistent quality for all products when developing Brand Extension in the market is a difficult problem for the company.
- High risk of competition in new markets, new products.
Therefore, Brand Extension is a double-edged sword, requiring businesses to carefully evaluate the benefits and risks before implementing. The following are notes when implementing a market expansion strategy and developing new products:
>> In addition to developing a Brand Extension strategy, businesses also need to conduct periodic brand audits to assess their level of recognition and position in the market.
IV. Brand extension strategies and specific examples
After understanding the advantages and disadvantages of the Brand Extension strategy, let’s learn about some popular types of brand extensions with real-life examples from major brands:
1. Brand line extension
Product line extension focuses is a brand extension strategy that on developing new products in the same category that the business already has. This is the least challenging method compared to other types of Brand Extension because it takes advantage of the existing product portfolio and uses the existing production infrastructure, distribution system and marketing channels for the product. As a result, the business can easily reach potential customers but still save on market research costs due to experience in this field.
For example:
- Coca-Cola: Coca-Cola expanded into variants like Coke Zero, Diet Coke, Vanilla Coke,… based on the flavor of its drink.
- Head & Shoulders: Head & Shoulders from anti-dandruff shampoo, the brand expanded to hair care products such as shampoo, conditioner, hair mask,…
- Samsung: Samsung smartphone brand expands into product lines such as tablets, smartwatches, wireless headphones, etc.
2.Additional product extensions
Complementary product extension is a Brand Extension strategy that focuses on developing new products in a new category or new product line that can be combined and used with the company’s existing products. This type of extension brings many benefits such as attracting new potential customers, increasing new revenue streams, improving customer loyalty and strengthening brand positioning.
Typical example of complementary product extension strategy:
- Adidas: Sports shoe company Adidas expands into sportswear, sports accessories, sports smartwatches, etc.
- Dove: Dove expanded from soap to general hygiene products such as shower gel, lotion, deodorant, etc.
- Samsung: From a brand that provides smartphones, Samsung has expanded to household appliances such as televisions, refrigerators, washing machines, etc.
3. Expand customer base
One of the Brand Extension strategies is to expand the customer base, focusing on developing products for new demographics that the business has not reached before. This type of brand extension brings in new revenue streams from new customer bases, conquers new markets, enhances brand recognition, and is not completely dependent on a specific customer group.
Typical example:
- Dyson: From high-tech vacuum cleaners, the Dyson brand has expanded to high-power fans, hair dryers, air purifiers etc. attracting customers interested in high-end home appliances.
- Starbucks: The Starbucks coffee chain has expanded into selling food. Bottled drinks, souvenirs, etc., attracting customers who want. To experience culinary and convenient shopping.
- Uniqlo: Affordable fashion brand Uniqlo expands into. The premium Uniqlo U line, attracting high-income and fashion-conscious customers.
4. Expanding brand lifestyle
Brand lifestyle extensions leverage the strength of an existing brand to launch products that are relevant to the lifestyle of the target audience. This type of brand extension helps the brand become more clearly identified with certain values and lifestyles, connects with customers through shared lifestyle experiences and interests, and creates new revenue streams from lifestyle-related products or services.
Typical example:
- Red Bull: An energy drink brand famous for sponsoring and organizing extreme sports events, attracting young customers who love dynamism and personality.
- Harley-Davidson: The legendary motorcycle marketing special database company not only sells bikes but also creates a “biker” lifestyle with accessories, apparel, events and a close-knit community.
- Starbucks: The coffee chain not only sells drinks but also creates a space to relax, work, and meet, becoming a part of many people’s modern lifestyle.
>> You might be interested in how to develop a Brand Portfolio for your brand portfolio.
V. Tips for implementing a successful Brand Extension strategy
Brand Extension is an extremely important strategy, aiming at development, increasing revenue and consolidating position in today’s fiercely competitive market. However, to successfully implement it is not easy, businesses need to pay attention. To the following points to develop an expansion strategy in the future:
- Understand customer needs: Businesses need to identify the desires and consumption trends of target customers through market research and customer data analysis. In particular, organizing group discussions and customer interviews to collect direct feedback.
- Unify the core brand message: Brand extensions must be consistent with the image, values and core messages of the parent brand. Businesses need to aim to strengthen and enhance brand recognition in the market, avoid diluting the brand. And stray too far from the core business of the business.
- Testing new products before launch: Testing for the product should be conducted with a small group of customers. To evaluate its response and effectiveness. The effectiveness should be monitored and tweaked accordingly, especially listening to customer feedback to improve their experience.
In addition, businesses also need to note:
- Have adequate financial and human resources: Brand bt lists expansion requires significant investment resources, so businesses need to ensure they have sufficient financial and human resources to implement this strategy.
- Choosing the right partner: Businesses can consider cooperating with reputable partners to support the Brand Extension process.
- Effective Risk Management: Identify and potential assess risks associated with the expansion strategy and develop effective risk mitigation plans.
By applying the above tips, businesses can increase their chances of success in expanding their brand and achieving their business goals.
