Growth is the end goal for any brand, and it is only possible by responding over time to match your product offerings with evolving customer needs. There are two well-defined ways of branching out: line extension and brand extension.
Brand extension is often confused for line extension (and vice versa). Although they have different benefits and risks, both help brands offer new products to new and existing customers.
What is Line Extension?
A line extension (also known as product line extension) is a newcomer launched in the market by a company with an established brand in the same product category. They are designed to challenge a competitor with a value offer or unique positioning, protecting the flagship brand from diluting its brand premium.
A line extension is a product that incorporates a slight twist on an established brand. It utilizes the parent brand’s name and imagery and is usually in the same general product category but doesn’t stray too far.
Extending a product line is less risky than launching an entirely new product or executing a brand extension. Consumers are already familiar with the existing products and are more likely to try the new product.
According to Iowa State University, more than 50% of all new product launches each year are for line extensions that simply have a unique flavor, size, or nutritional content. For example, many line extensions in the food and beverage industry are simply diet, organic, whole grain, gluten-free versions, or new flavors of the original brand.
Companies with well-established brands with solid consumer loyalty often use product extension tactics. For example, Colgate Calming Clean using hemp seed oil as a filler that soothes the mouth during brushing, launched in 2020 (THC is what makes people feel high when they smoke or eat marijuana, but you won’t get high brushing your teeth!).
In 2015, Unilever responded to the market preference for healthy ingredients by replacing some of the soybean oil in their original mayonnaise with olive oil and marketing it as a new product. Not only did Unilever benefit from the rising popularity of olive oil, but the variation also leaves less space on store shelves for competing products.
What is Brand Extension?
Similar to line extensions, brand extensions (often referred to as brand stretching) also utilize an existing brand’s name and imagery. What differentiates them is that they exist in a completely different product category.
Successful brand extensions are distinctly different from the parent brand but related enough not to confuse consumers. Brand extensions that confused consumers and ultimately failed include Dr. Pepper Marinade, Colgate Beef Lasagna, Zippo Women’s Perfume, Frito Lay Lemonade, and Cheetos Lip Balm. These extensions might have had a better chance of success if launched under a new brand name, although it would have cost the company significantly more money.
Brand extensions are among the most popular strategies for introducing a new product, used by companies with well‐established strong brands in the market. Brand extensions leverage the well‐established brand name for a new‐product offering when a company introduces a new product either in a different product category or in the same product category for a new market segment.
Brand extensions/category extensions should be towards adjacent product categories. For example, Apple began with making personal computers (Mac), then proceeded to personal audio (iPod), then to smartphones (iPhone), followed by smartwatches (Apple Watch). Other notable examples include,
- Callaway: from golf clubs into footwear, apparel, and golf accessories
- Starbucks: from coffee-based beverages into energy drinks
- Coleman: from gas-powered lanterns to sleeping bags
- Google: from search and extended into a hosted email service
If not executed appropriately, brand and line extensions can be risky business. Line extensions may dilute or tarnish the parent brand’s image, and they can also cannibalize its sales if they are not distinct enough. In the consumer goods industry, cannibalization happens when a line extension appears to succeed, but it is not creating incremental value. Instead, its sales are all from consumers who would have otherwise purchased the parent brand.
Our brand strategy consultants have the knowledge and deep expertise to help successfully extend your company's brand. Contact us for a free consultation.