What is Brand Extension?
What???? A Tide dry cleaners? Why not? In 2010, Proctor & Gamble detergent brand, Tide, launched the Tide dry cleaning franchise (Bloomberg Business Week). But this isn't the only place that Tide has made its mark other than the detergent aisle at the grocery store. They've also branched out into laundry accessories such as washing machine bags for delicate items and even a lint roller. These are all prime examples of brand extension.
So what exactly is brand extension? And how does it help build a successful brand?
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Brand Extension Examples and Definition
Brand extension is a marketing strategy in which a brand name is applied to products, another business or some other entity that is substantially different from the original. The goals for brand extension can include:
Expand Sales Opportunities. When a product has become successful, reaches a state of maturity in the product life cycle or is typically an infrequent purchase, it may be difficult to squeeze additional sales from the core markets. Other than attempting to expand into new markets, which can be challenging in itself, another way to expand sales is to offer other products and services for existing brand loyal customers to buy. Example: Because buying a motorcycle is not a frequent purchase (a one-hit wonder sale), Harley-Davidson branded apparel, parts and accessories provide additional revenue streams between motorcycle vehicle purchases and create solidarity in the Harley owning community.
- Click here to learn more about product life cycles
- Click here to learn more about "one-hit wonder" sales
Resurrect or Revamp a Brand. If a brand has been around for a while—or has even disappeared—from the marketplace, it still may have a high recognition value and positive identification. Applying that brand name to a different related product, service or business can pump more life into a brand and generate revenues. Example: Slinky® spring toys have been popular for decades. The brand expanded into the promotional products market with Slinky notepads that have the same appeal as the original Slinky toys.
What is Line Extension in Marketing?
Line extension is NOT the same as brand extension, although they are related.
Line extension means that a company is offering a different variety of product within the same product line. Going back to the Tide example, as of this writing, there are 19 versions of Tide liquid detergent, nine powder detergents, plus throw-in-the-washer detergent pods and stain removers. These are simply more products similar to the original one which is a detergent. Other examples of line extension include:
- A line of hair care products that includes shampoo, conditioner and styling gels. While the products do different things, they are all hair care.
- A manufacturer of canned vegetables may offer corn, green beans and peas. While the vegetables are different, they are still all canned vegetables.
Brand extension, as shown in the earlier discussions, involves offering a completely different product, service or business. Using the examples just discussed, here is how it could become brand extension:
- The line of hair care products opens up a chain of hair salons.
- The canned vegetable manufacturer could veer off into offering cookware in which to cook the vegetables. They could also open a chain of restaurants... a bit far fetched, but a possibility.
How are Brands Extended?
Any time a business ventures into a new market or business model, the cost can be extremely high, especially if it is not within their core competencies. Again going back to the Tide example, Proctor & Gamble is a product manufacturer, not a dry cleaning conglomerate. In the Bloomberg Business Week news item referenced earlier, it reported they hired a recognized expert to help launch the franchise.
Brand extension can be accomplished with strategies such as:
- New In-House Department or Division. This is the most expensive way to go. If a company decides to take on the manufacturing or development of a new product, service or business, it may require significant investment in manufacturing, personnel, property, equipment, marketing, advertising and much more. Some organizations may have little choice other than to do it themselves due to a variety of reasons including security, privacy or quality control issues. Even if done in-house, the company may need to hire outside consultants and legal counsel to guide them through the startup and management of the venture. Click here to see occasions when it might be time to hire outside help.
- Franchising. If the business' expertise is not starting and growing business, they can hire franchising experts either on staff or on a consulting basis to help them create an attractive franchise model and support system for franchisee investors. This is an area best left to the experts!
- Licensing. Instead of manufacturing or offering a service themselves, a business may choose to license their business or brand name to another organization who already offers a desired product or service. The licensor receives a fee or a share of revenue for the use of the brand name. Again, because of the myriad of legalities involved, it's best to consult legal and licensing professionals to assist.
- White Label Goods. A slight variation on the licensing arrangement, particularly in the retail arena, is the purchase of blank or "white label" goods on which an organization puts their brand. Click here to learn more about the use of white label goods. Another variation on this strategy would be to partner with an existing, popular brand to bolster acceptance in the market. An example of this would be the NFL team names that are placed on popular athletic brand sportswear, such as Nike. In this second variation, both brands are marketed together on the same product. As with all other types of brand extension strategies, white label or dual brand agreements require professional marketing and legal advice.
While brand extension can be done at any time during a product's life cycle, it is typically done after the brand has developed a positive image and following over time. The extension serves to leverage the organization's existing goodwill and identity for greater sales opportunities and public relations benefits.
Disclaimer: Featured brands are used for illustrative purposes only and do not suggest affiliation or endorsement. The author/publisher has used best efforts in preparation of this article. No representations or warranties for its contents, either expressed or implied, are offered or allowed and all parties disclaim any implied warranties of merchantability or fitness for your particular purpose. The advice, strategies and recommendations presented herein may not be suitable for you, your situation or business. Consult with a professional adviser where and when appropriate. The author/publisher shall not be liable for any loss of profit or any other damages, including but not limited to special, incidental, consequential, or other damages. So by reading and using this information, you accept this risk.
© 2014 Heidi Thorne