Brand extension — or brand stretch — is a means for companies to enter new categories with existing brands. It is based on the premise that brands are valuable assets that can and should be strategically and selectively extended.
Rather than build a brand from scratch, stretch existing ones to new categories. This provides economic leverage, increasing the chance of new business success while also reducing costs.
Countless examples exist where brands have effectively extended into new product categories. When done right, it’s a win-win. Successful brand extensions build upon the equity of the parent brand and the entire portfolio benefits.
Business category analysis, focused ideation, and brand extension research are required inputs to stretching brands. When done effectively, brand extension should allow an organization to:
The benefits of brand leverage vs. new brand creation include immediate awareness, trust/comfort, accelerated trial, competitive insulation, distribution leverage, margin enhancement and spending efficiencies.
Brand Extension Strategic Approach
Brands can be highly elastic—the key is not to violate the “essence” of the brand. There are two basic ways to extend brands. The first involves a logical extension, where consumers naturally follow the brand to related categories. If you wear Nike running shoes and need tennis shoes, chances are you’ll at least consider Nike. It’s a logical extension from one category to the next.
The second approach uses focused ideation, brand research, and equity bridges that marketers create for consumers to cross. Nike used this strategy to enter golf equipment, with Tiger Woods serving as an equity bridge for its clubs, balls, and related equipment (categories the company would later exit).
While both approaches can be successful, the second requires more focus but offers a higher potential payoff. Companies extending into further-out categories are rewarded with greater business growth. Brand elasticity begets elasticity. The broader the brand platform, the easier it is to extend into other categories.
Brand Extension Research Issues
Brand Extension Research Approach
Extending brands involves defining existing equities, then identifying new opportunity areas through business analysis and concept optimization. Here are the steps:
Unsuccessful Brand Extension Examples
While selective brand extension makes sense, brands can be stretched too far, risking equity erosion and poor business performance. There are a number of unsuccessful brand extension examples.
Remember the Starbucks Via instant coffee line? Or perhaps you had a beer or glass of wine at one of the 400 or more stores participating in Starbucks’ “Evening” program before it exited the concept.
Likewise, Nike has extended beyond running shoes to become a lifestyle brand, including apparel and equipment across multiple categories. They’ve also bridged to backpacks to store and carry shoes, balls, and equipment. Just because you can extend or license a brand, doesn’t mean you should.
Brand and product managers can be reluctant to stretch brands, and concerned about overextension. Lessen the risk by examining brand-category attractiveness through a structured approach and targeted brand research. If you do this and employ brand management best practices, significant, profitable growth is often just a brand extension away.
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