Brand extension is a branding strategy that extends products based on recognizing a company’s existing product perception by consumers. The company’s current brand is known as the parent brand and gives birth to sub- brands.
There are two types of brand extensions:
- line extensions
- category extensions
Line extensions expand on a parent brand by offering extended variations in categories they already serve, such as a new flavor of a drink or a new shade in makeup. Category extensions allow companies to venture into different product spheres, such as Fossil watches extending into Fossil clothing.
Branding is how consumers recognize a product apart from similar products. Branding Services can help a company grow from an already established base into new markets. Clothing lines have recently seen a shift in size offerings for women. Before 2018, many popular retailers had limited range or no stock of plus-sized clothing for women. The average American woman wears a size 16 to 18, with many wearing larger sizes. In order to meet the needs of the average consumer, clothing stores such as Walmart and Target, as well as more trendy brands, have begun to offer brands marketed towards plus-sized figures. These line extensions have allowed for growth as more consumers can find clothing that fits their models at these retailers.
Another example of brand extension is Under Armour. This clothing brand began with the “shorty,” a form-fitting shirt designed to wick uncomfortable moisture away from the wearer. After partnerships with athletes and models and being featured in a high grossing movie, “Any Given Sunday,” the brand could expand and offer more athletic ware products such as shoes, workout gear for women, and underwear. These extensions allowed the brand to grow from a company operated from a basement to one that rivals industry giants Nike and Adidas. However, there was a drawback in this case. Quality concerns in the last winter Olympics and with UCLA basketball athletes led to teens, who were the primary demographic losing interest in the brand. This shows that poor image can impact not only the parent brand but also the extensions.
Why Extend a Brand
Brand extensions present many opportunities to benefit a company.
1. It is less expensive to extend a brand than to launch new products
First, it’s far less costly to launch a new product as an extension of a well-known brand than to launch an entirely new brand. Brand extension has built-in consumer awareness and recognition. The brand name’s familiar presence instantly communicates brand promise to consumers based on the existing brand knowledge.
2. Leads to Greater and Faster Successes
This is known as the halo effect, wherein the brand’s established brand promise and brand image carry over to the brand extension automatically. This places the brand extension in a more excellent and faster position than an entirely new brand.
3. Improve Brand Loyalty
Brand extensions can also foster a greater sense of brand loyalty, reaffirming the brand promise and consumer perceptions of the brand and sustaining brand relevance in its existing niche. Extensions can also help to extend and establish a brand’s position in new places.
What Are the Risk Associated with Brand Extensions?
Brand extensions aren’t guaranteed to be successful and can potentially damage the parent brand in some instances.
Sometimes it Just Doesn’t Fit
At times brand extension can tarnish the parent brand’s image by extending into a category that doesn’t fit appropriately with the original brand promise. This can cause consumer confusion. Even the most loyal consumers may then switch to brands that do meet their expectations.
That’s a lesson Jaguar learned after launching the inexpensive Jaguar X-Type. Marketed as a low-end, entry-level Jaguar, Ford believed it would increase Jaguar sales by 200,000 vehicles per year. Unfortunately, the public viewed the cheap Jaguar as a cheap Ford with fancy Jaguar hood ornaments and damaged the brand’s reputation in consumers’ minds. When extending a brand, it’s essential to consider consumer perceptions and fit. Mismatches in perception can quickly turn consumers away.
It is easy to want to capitalize on the success of a brand by extending into other areas. Brand extensions can enable your company to grow in value to consumers when properly executed. However, failing to understand consumer perception and fit when making brand extensions can do more harm than good to the parent brand. Keep these concepts in mind when creating brand extensions, and the choice could help your business grow.