Top Brand Extensions

Brand extension is a marketing strategy in which a firm that markets a product with a well-developed image uses the same brand name but in a different product category. Brands use this as a strategy to increase and leverage equity.

Product extensions, on the other hand, are versions of the same parent product that serve a segment of the target market and increase the variety of an offering. An example of a product extension is Coke vs. Diet Coke

A successful brand helps a company enter new product categories more easily.

Brand extension benefits:

  • Brand extensions let a marketer take a brand with well-known quality perceptions and associations and put it on a brand in a new category. Not only can marketers capitalize on brand awareness, they can also leverage off of the associations consumers know about the parent brand.
  • Second, consumers who favorably evaluate a parent brand are more willing to try and adopt the brand extension than an unfamiliar brand in the same category. They trust a known brand name.
  • Brand extensions can also help a firm’s stock prices. Some academic research has found that Wall Street attend to brand extension announcements and that whether they like them or not depends on how much they like the parent band.
  • Brand extensions can also help consumers understand the core meaning of the brand name.

One of the principal dangers of brand extension is that the parent brand equity may be diluted. If there is a misunderstanding of consumers’ perception of the brand, it could be moved into a sector that consumers view as “inappropriate.” Quite often the parent brand will have been available for some time, enabling it to build a level of equity and trust with consumers. It will have strong credentials. Over time, its marketing has sought to build and secure these credentials within its target market. An irrelevant positioning has the ability to undermine the parent’s credentials.

TippingSprung’s second annual survey of brand extensions, produced in collaboration with marketing newsweekly Brandweek, revealed which extensions are most effective, which have potential to dilute the brand, and what makes some brands more extendible than others. Major trends in brand extensions were also uncovered.

The Top Brand Extensions.

  • best overall brand extension – Iams pet insurance
  • best liquor brand extension – Starbucks coffee liqueur
  • best co-branding/ingredient branding – The Motorola ROKR phone with iTunes
  • best extension of a magazine onto new platform – hardcover books from O, the Oprah magazine
  • most overdue brand extendion – The Tide to Go stain removal pen
  • best furniture brand extension – Antiques Roadshow
  • best extension of a not-for-profit – National Geographic

 

Read more on the subject, from Amazon.com:

Brand Extensions: Keys to success in international marketing

Brand Stretch: Why 1 in 2 extensions fail, and how to beat the odds: A brandgym workout

5 thoughts on “Top Brand Extensions

  1. This is for sure a very interesting issue for most (all, I’d guess) brand managers. The complexity of doing a brand or product extension is immense and the dangers are biiiig and real! However, if it is well planned and executed, with a brand that allows this type of extensions, the brand’s equity might increase, leveraging the whole brand/company’s financial situation.

    One tip on creating a brand that allows (more easily) for extensions: Create the brand from a concept that is relevant and connected to the target market, not the other way around. First create and test the concept-brand, and then attach the products to be sold under it. With a lot of time, resources and research this is possible.

    Thanks,
    Ron E.
    http://www.brandcurve.com

  2. The research for our book on brand extension (Brand Stretch: Why 1 in 2 extensions fail and how to beat the odds) suggested that the biggest risk of extension was not equity damage as you suggest. This is actually quite hard to do…you have to really screw it up big time…there are a handful of cases like this (e.g. in the UK Persil Power detergent rotting clothes).

    The much bigger risk is in fact BUSINESS damage…diverting time, effort and money from the core business onto brand extensions that are small. The risk is especially big when brand stretch into markets where they have no added value: what I call “Brand ego trips”. More here:
    http://wheresthesausage.typepad.com/my_weblog/2006/09/easygroups_bran.html

  3. David,

    I totally agree with you. I had the smaller brands in mind when I was talking about the equity damage, brands that can hardly survive after an extension failure.

    But your point is extremely valid as in the end, the result is the business damage.

  4. can anyone tell me how did the clorox fail when they participate in brand extension??? i think, they try to intorduce the laundary detergent,then wat happen… PLSS REPLY ME>>>>> thx. with regards…PHYU

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