3 September, 2024

Predictive Market Research , Market research

Mastering Brand Extensions with Predictive Intelligence: Your Guide to Success

Whether adding a new flavor or variant or adding a new product category to your current offering, brand extension is an excellent way to leverage your brand’s existing equity to capture market share.

While brand extension initiatives have delivered some of the most iconic products of the last few decades (think of the iPod and the Dyson Air Wrap), the approach is not without risks. A wrong move could result in brand dilution that undermines your master brand in ways that are difficult to reverse.

So, how do you determine where your brand has consumer “permission” to go? The short answer? Research, research, research!

What is brand extension?

Brand extension, also known as brand stretching, is a marketing strategy in which a company launches new products or services under an established brand, leveraging existing brand equity and name recognition to increase the chances of success.

This could include expanding an existing category in the company’s portfolio (for example, adding a new flavor variant to a line of soft drinks) or introducing an entirely new yet complementary category that makes sense relative to the brand’s areas of perceived expertise.

There are many famous examples of successful brand extensions:

Apple leveraged its success in the world of personal computing to become one of the world’s most successful suppliers of music players, cell phones, and audio accessories.
Nike extended their brand’s category portfolio from sports shoes to apparel, accessories, and sports tech.
Tesla began creating electric vehicles, then extended its category offering to include solar panels and the Powerwall energy storage system.

What the above examples have in common is that the brand extension initiatives these companies pursued made sense in the context of their original offering. Consumers did not have a hard time believing that electric car manufacturer Tesla would be excellent at making large batteries to store solar power for homes. Similarly, it was never going to be a stretch to believe that Apple’s computer design prowess would extend to the palm-sized computer that is the modern smartphone. If Apple decided to try its hand at opening a bakery chain, however, it may have been a much harder sell.

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4 types of brand extensions (with examples)

From adding new product variants to introducing brand-new categories, brand extensions take a number of different forms.

Line extension

Line extension involves extending a brand by adding and launching new variants or versions within an existing product category. For example, CRG worked with a popular cookie manufacturer to identify new flavors that would be desirable to customers. Similarly, CRG worked with a beverage manufacturer to identify the most promising new flavors to extend their existing product line.

Product extension

Product extension, also known as category extension, involves leveraging the brand name to enter an entirely new product category. Usually, this category is related to or complementary to the existing brand offering. Colgate, for example, produced toothpaste, then extended into toothbrushes and floss – a different but related category complementary to the original product. CRG has assisted with a number of product extension efforts, including helping a baked goods brand extend into the snack food category and helping a popular restaurant brand build a presence in grocery.

Lifestyle extension

A lifestyle extension is when a brand extends its offering in ways that align with the lifestyle of the target audience. These extensions should align with both the brand’s core values and the preferences, interests, and drivers of the brand’s existing customers. For example, CRG recently worked with a popular fictional children’s character to explore how the brand could extend into food and beverage. Other examples of lifestyle extensions include musician Rhianna’s brand extension into the beauty category and Lululemon’s extension into branded community events centered around health and fitness.

Consumer segment extension

This form of extension is when a brand targets a new consumer segment by adapting its messaging, offering, and packaging to appeal to that new segment. Nivea’s introduction of Nivea for Men – a range of skin care products packaged to appeal to a male market – is a great example of consumer segment extension. The product offering is essentially the same, but with a few minor tweaks, they captured an entirely new market.

3 proven strategies and tips for successful brand extensions

Successful brand extension is a fine art that relies on a deep understanding of audience and market potential, and a realistic awareness of how your brand is perceived. To carry out a successful brand extension, keep these key strategies in mind:

Understand the market

The first step when embarking on a brand extension is to conduct thorough market research. Research should aim to identify the viability of the proposed extension relative to market demand and target audience preferences. Market research should be carried out throughout the development lifecycle to refine both the product/service and messaging.

Maintain brand consistency

Any potential brand extension must be aligned with the brand’s core values and identity and should feel like a natural fit that reinforces the brand’s reputation, rather than diluting it. Brand dilution can be caused by overextension when a brand extends too far into categories that appear unrelated to its original identity.

Test and iterate based on customer feedback

Throughout the development process, new brand extensions should be regularly tested and iterated based on customer feedback. Be sure to partner with a vendor who can carry out agile market research with a short turnaround time for quick, informed strategic decision-making.

How to use predictive research when creating your brand extension strategy

Predictive research is the best way to ensure a successful brand extension initiative. Not only does it deliver the accurate data you need to drive strategic decision-making, but it also helps surface hidden winners – breakthrough, innovative ideas that are likely to score as “high risk” in traditional surveys.

Unlike traditional research methods, predictive research leverages the collective judgment of your target audience to predict future trends, consumer behaviors, and preferences, drawing on the audience’s tacit knowledge of how they believe others will behave to mitigate the effects of bias.

With predictive surveys and prediction markets, you can test early-stream brand extension concepts, products, and messaging, and optimize and iterate according to your results, significantly enhancing your chances of success upon launch.

Confidently expand your brand with CRG Predictive Intelligence

For over a decade, CRG Predictive Intelligence has been helping insights professionals and marketers optimize their decision-making for unprecedented strategic advantage. Whether you want to add a new variant or conquer an entirely new category, with CRG’s advanced HUUNU platform you can expand your brand with confidence, leveraging crystal-clear insights to make every move the right move.

Find out more about how CRG can assist you in developing a winning brand extension strategy by getting in touch with our team today.

FAQs

What are the benefits of brand extension?

Brand extension has a number of key benefits. Because brand extension involves leveraging existing brand equity, it can result in faster entry into new markets as the brand’s credibility is transferred to the new product or service. Brand extension is cost-efficient: there’s no need to develop an entirely new brand under which to launch the new product or service, and less needs to be spent on brand awareness campaigns. When done correctly, brand extensions can deliver increased sales and market share by capitalizing on the company’s existing customer base to buy the new offering.

How do you determine if a brand extension will be successful?

Predictive research and analysis is the best way to assess whether or not a brand extension will be successful. Using prediction markets and predictive surveys, a predictive intelligence provider will be able to collect data that predicts the likelihood that a concept or product will perform in-market. CRG’s predictions have a 90% proven accuracy rate, three years out and beyond, delivering unparalleled confidence.

What are the key factors to consider when planning a brand extension?

There are several key factors to consider when planning a brand extension, including the relevance of the proposed extension relative to brand alignment, incoming market trends, market demand, consumer perception and preferences, and more.