You’ve probably heard of Amazon’s expansion into tech products with the Amazon Echo, but have you ever heard of Cheetos chapstick?
Both are examples of brand extensions. Many brands look to leverage their existing brand equity to introduce new products, tapping into established consumer trust and loyalty while expanding market reach and revenue.
Brand extensions are common in growing organizations, but trouble can occur when a brand strays beyond what it’s known for. It risks failure from stretching too far outside its norm and confusing consumers along the way. (See: Cheetos Chapstick above)
What is a brand extension?
A brand extension is when a brand goes outside of their known category, usage occasion, or audience. Or said another way, a brand known for one thing is now considered for something — or someone — else.
There are six common ways to do a brand extension.
1. New Occasion Brand Extensions
In a new occasion brand extension, a brand considers another time and purpose in which a customer might use a derivative of their product.
E.g. Arm & Hammer Baking Soda, well known as a baking ingredient, became a deodorizer — extending from cooking in the kitchen to cleaning your home and body.
2. Sub-category Brand Extensions
When a brand creates a new product or service closely related to its original offering, this is considered a sub-category brand extension.
E.g. A brand that was well-known for car insurance might expand into home and life insurance.
3. Licensed Brand Extension
This type of brand extension happens when one company gives another the right to use their name, logo, product and more into their own product line.
E.g. Oreo's gives permission for their classic brand to extend into many other food products, like ice cream, cereal, and pie crusts.
4. Audience Brand Extension
A brand extends their audience when they look beyond their traditional target to find out how they can serve a new group of people with similar products.
E.g. Dove, known for women's care, extended into men's care.
5. New Category Brand Extension
This involves introducing new products in a different, but still somewhat related, category than your traditional products.
E.g. McCain, known for their fries, got into desserts - helping adults complete their quick weekday meals.
6. PR Brand Extensions
Brand extensions for PR are usually unexpected and weird to garner attention and don't lead to long term category development.
E.g. Dunkin’ adding its new energy drink flavor, “Twisted Tornado,” right around the time the movie “Twisters” premiered. The drink even made a prominent appearance in Luke Combs’ music video for “Ain’t No Love in Oklahoma,” which is on the movie’s soundtrack.1
Follow @pairedbrands on Instagram to spot examples of these kinds of extensions.
What makes a successful brand extension?
When considering a new brand extension, we recommend prioritising:
1. Empowering your team to be creative and courageous in exploring broader, out-of-the-box thinking
2. Planning resources and priorities ahead of time to leave room for experimentation. Brand extensions take time (and money) but can pay off in the long run.
3. Having a deep understanding of your audience and brand — what it is, what it's not, your distinctive assets and memory structure
4. Figuring out what consumer problem you can solve better than other brands if you extend
5. Only pursuing natural brand extensions that feel authentic
What is the difference between a brand extension, and a product extension?
A product extension, or line extension, involves adding a new product to an existing category. This typically involves adding on a new flavour or specific features to a known product line.
What are some examples of successful and failed brand extensions?
Good brand extensions include the ones we’ve already mentioned, like Oreo licensing its iconic product to other food brands, Dove serving both women and men with their body care products, or Arm & Hammer making home cleaning products and deodorant.
Some famous failed brand extensions include:
- Crystal Pepsi: A clear, citrus-flavoured version of Pepsi that deviated too far from its usual dark colour and cola taste
- McDonald’s Mighty Wings: Meant to offer a leaner protein option to customers, “Mighty Wings” were too expensive to excel for a brand known for its affordability
- Colgate’s Ready Meals: Eating microwave dinners made by a toothpaste brand just didn’t sound appealing or make any sense to the brand’s consumers
Pitfalls to Avoid When Considering Brand Extensions
While leveraging brand equity can be a powerful strategy for growth, it’s important to navigate potential pitfalls carefully.
Be Aware of Overextension:
Expanding into too many new product categories or markets can dilute your brand’s core identity. It’s essential to maintain a consistent brand message and avoid spreading resources too thin.
Don’t Neglect Your Core Customers:
In the pursuit of new markets, brands may inadvertently alienate their existing loyal customers. Ensure that new initiatives still align with the values and expectations of your core audience.
Inadequate Market Research Can Foil Your Plans:
Assuming that brand loyalty will automatically transfer to new products can be risky. Thorough market research is crucial to understand customer needs and preferences in new categories.
Don’t Skimp on Quality:
Expanding too quickly or cutting corners to reduce costs can lead to quality issues. Maintaining high standards across all product lines is essential to protect your brand reputation.
Misalignment with Sr. Management
For a brand extension to succeed, it’s crucial to have full support from senior management. Misalignment can lead to mixed messages, lack of necessary resources, and ultimately, a failed initiative.
Undering investment in a Brand Extension.
Underestimating the resources needed to support a brand extension can hamper its success. Adequate investment in marketing, product development, and infrastructure is vital to ensure the new offering meets expectations and gains traction.
Avoid Overly Misaligned Extensions:
Introducing products that don’t align with your brand’s image can confuse or alienate customers. It’s important to ensure that new offerings fit seamlessly with your brand’s ethos and values.
Avoiding these pitfalls requires a balanced approach, thoughtful planning, and a deep understanding of your brand’s essence and customer base.
By staying true to your core values and being mindful of these challenges, you can leverage brand equity effectively and sustainably.
So, what’s your next big move?
In the end, leveraging brand equity isn’t just about increasing market reach and revenue—it’s about building a deeper connection with your audience.
By introducing new products that resonate with your existing loyal customers, you not only strengthen trust but also invite new consumers into your brand’s world.
It’s an exciting journey of growth and innovation, and with the right approach, the possibilities are endless.
References
1. Luke Combs. (2024, May 16). Luke Combs – Ain’t No Love In Oklahoma (From Twisters: The Album) [Official Music Video]. YouTube. https://www.youtube.com/watch?v=J6YlaeACE4E
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