Is Your Company Ready For A Brand Extension?

Most brands build a name for themselves by offering one specific type of product, or line of products. But some of the most powerful companies in the world got to where they are by deviating from this initial lineup; instead, they introduced a completely new and unrelated line of products, featuring the same branding, and found even more success. These new, unrelated products are known as a brand extension.

Depending on how they’re released, they can be massive successes or embarrassing failures for your company. So how exactly do brand extensions work, and is it the right time for your company to launch one?

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IMAGE: JLB HOMES

Examples Of Brand Extensions

If you’re confused about the nature of brand extensions, it’s best to understand them through some real-world examples. On their blog, Attest offers some interesting hypothetical brand extensions, as well as some easily identifiable examples of brand extensions done right or wrong:

  • Michelin guides, which the French tire company has used to rank and review world-class restaurants for over a century.
  • The Guinness Book of World Records, which began its life as a marketing giveaway for the Irish dry stout.
  • Cheetos lip balm, which, while amusing, wasn’t exactly a top seller.
  • Zippo perfume, which for some reason, never caught on.

Why Brand Extensions Can Be Valuable

Brand extensions have high potential value for a few reasons:

  • They capitalize on existing brand equity. If your brand already has thousands to millions of raving followers, and significant recognition in the community, any new products you launch under the brand will receive some instant recognition. Think of it as a jumpstart for practically any product you launch—assuming you have the reputation to support it.
  • They extend your company’s reach. Launching a new product is an opportunity for more revenue, and a chance to target new demographics. If you’ve already expanded the reach of your core products, brand extensions are a way to increase that reach even further.
  • They diversify your company’s holdings. Diverse portfolios are better protected against volatility and are much more stable in the long term. Adding a new product line is a way to hedge your bets against unexpected fluctuations in any one area.

Is A Brand Extension Right For Your Company?

So is your brand ready to launch a brand extension? Consider these factors:

  • Brand recognition and equity. How much equity does your brand already have? If your brand is only a year or two old, you’re probably still working on building recognition and familiarity with your core brand; introducing a new product line now might only cause confusion. However, if you have many years of experience and a strong network of followers, any product you choose to launch will instantly have a better chance of success.
  • Consumer demand. You should also consider the specific product you’re trying to launch, and gauge how much demand there would be for it. Most failed brand extensions were half-baked ideas that weren’t exhaustively researched before development and launch. Survey your existing customers, as well as the general population, to determine how much demand there would be for this product well before you start investing in its development.
  • Stability and risk tolerance. How stable is your company currently? Are you seeing a consistent stream of revenue? How much risk would you be able to tolerate? Brand extensions are best reserved for established, stable companies that are looking to add another stream of revenue to an already functioning operation. They aren’t last-ditch efforts to recover a failing business and shouldn’t be used by a brand that’s desperate to stabilize.
  • Finally, how feasible would it be for you to develop this product? How much time and money would it cost for you to do this, and how would that affect your other offerings? Do you or does someone on your team have the experience and resources necessary to oversee this project, or would you need to outsource it?

Brand extensions aren’t for everyone, despite their potential advantages. They’re a significant investment that could hurt your brand as much as they help it, so consider your options carefully before moving forward.

If you are interested in even more branding-related articles and information from us here at Bit Rebels then we have a lot to choose from.

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IMAGE: BUSINESS COMPUTING WORLD

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