A brand extension, simply put, is when a brand moves into a new product category while still competing in its original category. Brand extensions can benefit the parent brand in several ways, including:
Brand extension is one of the most common ways for an established brand to achieve meaningful growth. In our last post, The important Role of Demand in Successful Brand Extension, we described three factors and their collective contributions to successful brand extensions—demand, solution, and brand relevance. We spoke in great detail about the demand and importance of identifying an unmet need or desire in brand extension (or, if one doesn’t exist, the brand must first find a way to create the need or want—a more difficult, but viable path). Here we will focus on the second factor, the solution.
Brands must continually grow to thrive and maintain relevance, however, achieving and sustaining profitable growth is a challenge. One of the most common ways for an established brand to achieve meaningful growth is through brand extensions, but many brand leaders struggle with how far they can (or should) stretch their brands’ boundaries. Play it too safe, and ho-hum line extensions will underwhelm customers; stray too far from the brand’s core positioning, and you risk diluting or causing irreversible damage to your brand’s valuable equity.