When a business with a well-known image launches a new product under the same brand name, it is said to be implementing a brand extension. The strategy can be as simple as shifting the form of a successful product, for example, taking a popular children's game online, or as complex as adding an entirely new product line to the company's offerings. As a marketing strategy, a brand extension can lower the risk of a new product launch by capitalizing on the core brand's relevance and appeal.
Brand extension is the act of marketing new product categories, known as spin-offs, under the umbrella of the organization's core brand.
In its simplest form, brand extension is the use of an established brand name to publicize new products. The new products typically are related to the brand's existing product categories but they do not have to be. The idea here is that consumers are more likely to accept new products if they have an established brand name. For the organization, the cost of promotion is greatly reduced since advertising the brand extension reinforces the core brand and vice versa.
For a brand extension to succeed, there must be a well-judged association between the core brand and its spin-offs. There's a risk that the brand will lose credibility if the brand name is extended too far. An example here is Dr. Pepper, which was not as successful in the condiments market as it was in soda products. For consumers, there's was no synchronicity between the two product lines. In its extreme form, overextending the brand can lead to brand dilution, whereby the parent brand is weakened through its overuse.
A well-known example of a brand extension is Nike, whose core product is sports shoes. However, the Nike brand name is also attached to products such as soccer balls, golf clothing and sunglasses, which naturally align with the brand's core sporting goals. Starbucks is another example. This company sells ice-cream based on its popular Frappuccino flavors in supermarkets and other retail outlets. Both Nike and Starbucks are successful because in each case the values and aspirations of the core brand are embodied in the extension product.
The principal task is making sure the extension product "fits" the core brand in the eyes of consumers. To achieve this level of congruence, a business has multiple options:
- Offering a line extension to the core product such as a made-to-order pizza restaurant offering frozen pizzas sold in a grocery store.
- Combining a product with a complementary product such as a coffeehouse chain partnering with a kitchen gadget manufacturer to create branded coffee grinders.
- Creating a companion product to the core line, such as a peanut butter company offering jelly.
- Leveraging a designer brand or status to enter a new market segment, for example, a men's clothing brand grows popular and then it starts branding women's clothing with its logo.
As always, a business should undertake research before selecting which potential strategy has the highest level of fit with the core brand and is most likely to be successful.