What is brand extension, and when would you use it?

As your brand grows, you may want to use a variety of strategies to increase your reach or provide more value to customers. Brand expansion is a common strategy for this.

Brand extension, also known as “brand stretch,” is when a company uses its existing name and branding on a new product. Instead of trying to launch a new product with a novel, standalone brand, the company leverages customers’ existing trust to encourage them to show equal consideration for and trust in a new product.

Using brand extension correctly can help many companies successfully break into new markets or expand what they can offer to customers. However, it must be done with a lot of care and consideration. Otherwise, it may undermine your brand—not accentuate it. You could even end up making a product that nobody wants.

There are several benefits to brand extension. Here are some of them:

Reaching new demographics

Brand extension can often help companies reach new groups or demographics that didn’t previously have any interest in the brand. This group may be interested in using your products when you connect with them in another way.

Increasing overall sales

Through your brand extension efforts, you can often increase overall sales.

New products offer a new source of revenue. At the same time, connecting the old product with the new can help increase interest in both products and raise overall engagement with your brand. As a result, you may also see an increase in sales of your old products.

Making the most of existing brand equity

Brand extension is intended to help you take advantage of your current brand equity.

Over time, customers may have built up trust in your brand. They know that you will deliver quality products, that you have practices they can count on, and that they can use your brand as a fast and effective solution for their needs. As a result, they feel confident in what you offer. With brand extension, you extend that equity to the new product.

Giving you an advantage over competitors

Brand extension can help establish a vital advantage over your competitors. Since you already have existing brand equity to leverage, you can push your new product or service ahead of your competitors, allowing you to launch your brand into an existing market or open it in a new one with more confidence.

There are several types of brand extensions that companies may use to branch out or try new corners of the market.

Product line extension

A product line extension occurs when a brand releases a new product line that aligns with a category the company already covers. This new line of products may be intended to replace a current product offering. Or, the goal may be to expand the company’s existing offerings.

In some cases, companies use this strategy to test new options for their customers.

Complementary product extension

Your brand already offers a specific product that your customer base likes, understands, and supports. When you offer a complementary product extension, you are offering a product that builds on that current line. For example, if you offer kitchen supplies, you might branch out and offer seasonal decor or decor for other areas of the home.

Customer base extension

Customer base extensions are primarily performed by large parent companies that already have an extensive customer base. They launch a new product category under the existing parent company with a new product line and branding.

This strategy allows the parent company to expand their offering and, in many cases, reach a demographic they weren’t previously able to connect with.

For example, Gilette was known for their razors but they were able to launch a skincare line for their large existing customer base.

Company authority extension

A company authority extension occurs when a company that is a well-established authority in one field provides a product that is generally related to another field.

Most often, this occurs in the technology industry. For example, a tech giant might expand to offer a new product or solution.

For a company to successfully navigate a company authority extension, they generally need to be a known authority in their field in which other customers place a high degree of trust. An example of this could be Google’s expansion into the autonomous vehicle industry with Waymo.

Brand lifestyle extension

A brand lifestyle extension occurs when a brand is highly dedicated to a particular lifestyle and has a customer base that is equally committed. The brand then provides a new product that also aligns with that lifestyle.

The new product doesn’t need a direct relationship with anything the company currently offers, but it should offer some sense of connection to the lifestyle the brand represents.

Yeti, the outdoor product brand, did this with their iconic cooler box. They expanded into a range of new products while remaining true to their premium, high-quality roots.

Category extensions

A category extension launches a new product that is a natural extension of the company’s existing product line but is not directly related to any of them.

Many tech companies use category extensions to expand their offerings and deepen their connection to their customer base. For example, Apple expanded from computers into mobile phones and wearables.

Derivative extensions

While category extensions launch a new product line under the same brand name, derivative extensions launch a new product line under a similar product umbrella but with its own branding and product name. This strategy leverages the trust customers have in the existing brand but allows the new product to develop its own following.

For example, if your company previously sold clothing but you want to expand into shoes, you might choose to give the shoes their own brand name and branding while still linking them to the parent brand.

Co-branding

Co-branding means launching a new product in collaboration with another brand. In some cases, it can be used when a new brand wants to partner with an existing brand and take advantage of the connection it already has with customers. In others, it can be used to launch a new product line in connection with an existing one but with its own unique branding blend.

A classic example of co-branding is the partnership between Nike and Apple for the Nike+ product line.

Licensing

When companies engage in licensing, they expand their existing product offering with licensing agreements with other companies.

This approach is common with food brands, which may want to expand their product lines without having to set up entirely new manufacturing processes. They may offer licensing of their brand and flavors to similar brands. For example, a coffee company might decide to allow a jelly bean manufacturer to duplicate their signature drinks.

If you want your brand extension to be a success, be sure to keep these principles in mind.

Understand your brand identity

Know who you are and how customers perceive your brand. If you’re going to expand your product offerings, make sure they fit within the existing brand. A completely new product offering that requires rebranding may be unlikely to succeed. It could even interfere with your existing customer base and the sense of connection and trust you have built.

Identify opportunities and gaps in the market

Take a look at the existing market and consider what opportunities exist. What aren’t your competitors offering, especially in the places that your brand could potentially fill? How do those gaps relate to your brand?

Be alert for opportunities and prepared to take advantage of them while simultaneously tying them back to your overall brand identity.

Conduct market research and analysis

Do your research before launching any brand extension or new product. Get to know your target audience and existing customer base. Take a look at your competitors and consider what they’re doing and how your brand fits into the existing space.

Failure to do your market research before a new product launch could leave you floundering.

Maintain consistency and relevance

Ensure that your new product offers the following two things to your customers:

1. Consistency with your existing products: if you provide a high-quality product now, your new line should offer the same to your customers.

2. Relevance: if it doesn’t solve customer pain points or offer something valuable to them, chances are they’ll choose not to follow your brand in the future.

Leverage existing brand equity

As you launch your brand extension, make sure you’re taking full advantage of your existing brand equity. Share information about your new launch with your followers and fans. Show how your product fulfills the needs of people who are already using your brand’s offerings. Aim to provide more value to people who already trust your products and what you have to offer.

Adapt and innovate

Strive to do something new and innovative with your new product line. You’re not just trying to carve out a place for your new line in an existing market; you’re trying to offer something new and useful to the customers who already trust your brand.

Be prepared to adapt as you go, whether that means checking to see how customers are responding to your product or changing up your marketing to maximize results.

Build strong brand partnerships

Show the ties between your new line and your current brand, and build strong partnerships with other brands in your industry. That strong sense of connection can help carry your new line as you expand.

Continuously monitor and evaluate performance

As with all changes to your brand, make sure you are monitoring and evaluating your new line’s performance. Keep an eye on how customers are responding to the new product, and be prepared to pivot if necessary.

Brand extension can bring with it a number of potential challenges.

• You may inadvertently dilute your brand by offering a new product that doesn’t fit within your existing line. That change of direction and focus may confuse customers and make it more difficult for them to recognize what you have to offer.

• If your new product is too much like the old one, it can end up causing a decline in overall sales or percentage of market share. This may be because customers can’t decide which one is the best fit for their needs.

• If your new product doesn’t maintain the same level of quality you originally offered customers, it can lead to a decline in overall customer trust in your brand.

• When your new product line doesn’t fit with your target audience’s needs, it can cause confusion and reduced interest in your brand’s offering.

Pay careful attention to industry best practices and ensure that your new product line aligns with your existing branding and target market. This is key to ensuring your brand extension is successful.

Many brands have successfully launched brand extensions. The following companies took stock of gaps in the market and looked for ways to move into them:

• Apple: computers to smartwatches and smartphones

• Michelin: tires to motoring accessories

• Reese’s: candy (Reese’s Peanut Butter Cups) to cereal (Reese’s Puffs)

• Starbucks: coffee to ice cream and coffee shops to home-brewing products

• Food Network: TV shows to kitchen items

• Gillette: razors to wider shaving supplies and skincare

• Colgate: toothpaste to wider oral care (such as toothbrushes)

• Honda: cars to lawnmowers

• Sunkist: juice to vitamin C tablets

While many brands have been successful with their brand extensions, others have struggled to reach the same level of success. The following are examples of where highly successful brands failed to achieve their brand extension goals:

• Levi’s tailored classics

• Pillsbury’s frozen microwave popcorn

• Samsonite’s outerwear

• Arm & Hammer’s underarm deodorant spray

• Colgate’s kitchen entrees

Coca-Cola has used a variety of brand extensions—think Diet Coke, Cherry Coke, and Coke Zero—to fill existing gaps in the market.

Nike has successfully used brand extension strategies to grow its brand. For example, where it once just offered shoes and apparel, the company now sells sports equipment, apps, and more.

Line extensions occur when a brand offers a new product line that fits within and expands its existing product offerings. An example would be if Nestle started offering a new type of candy bar.