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!
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.