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.
When done effectively, brand extension should allow an organization to:
- Further strengthen and build the brand franchise
- Enhance the chance of success of new business development
- Reduce the cost of new business development
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 Issues
- What are the core and extended associations (e.g., attributes and benefits) of the parent brand, and are those associations meaningful in the new categories being considered?
- Can a relevant, differentiated and sustainable new product or service offering be developed within given time and resource requirements?
- What is the size, growth, and competitive intensity of the new category? Can core competencies be leveraged in a meaningful way?
Brand Extension Approach
- Assess and confirm a brand’s equity, including its core and extended associations
- Inventory, assess and prioritize high potential growth categories
- Develop specific branded propositions within these areas of opportunities, including required equity bridges
- Develop an entry strategy and plan, including make vs. buy decisions and portfolio management guidelines, resulting in new growth opportunity areas