Brand extension refers to the use of an existing brand to launch new products under that same brand name.
Branding differentiates the brand name from the competitors’ brand names. It is the process by which companies distinguish their product offerings from the competition. The way in which a firm differentiates itself from rivals. Branding is a form of differentiating a firm’s products from those of its competitors.
What is brand extension?
Once a product has an established brand, it is faster and cheaper to promote new products under the successful brand.
Brand extension means using an existing successful brand name to launch new products or modified versions of the current product. Brand extension provides an increased ability to extend the brand into new goods and service categories helping to prolong brand life cycle.
Examples of brand extension
Mars extended its brand from chocolate to ice cream.
Caterpillar extended its brand from heavy machinery to shoes and watches.
Adidas and Puma extended its brand from sports equipment and clothes to personal hygiene.
Dunlop extended its brand from tires to sports equipment.
Coca-Cola extended its brand from soft drinks to coffee.
Benefits of brand extension
Let’s take a look at the main benefits of extending the brand:
- Helps with sales. A strong and positive brand image can be used to create a family of products. The same brand name is typically used to support the introduction of new products or modified products. In that way, the advertising of one product supports sales of the other products.
- Reduces risk of launching new products. When the business introduces new products under the family brand it is usually less risky because the brand is already recognized by customers. Extending the brand to new products will increase their chance of success on the market, especially when it comes to launching a new version of a product with innovative features.
- Extends brand life cycle. Companies invest a lot of money in extending their brands because a brand tends to have a much greater longevity than a product. The best example is a walkman made by SONY. While the walkman s the product is dead long time ago, the SONY brand is doing just fine. It is because a brand can be easily transferred to a related and updated product or version, but the product itself cannot. Hence, the power of branding.
Brand loyalty definitely helps to extend the brand – when firms develop and launch new products – as it makes brand extension strategies way easier to accomplish.
