Brand extension strategy refers to the use of an established company’s name or brand to enter a new product class or industry.
Perhaps one of the most well-known giants of brand extension is Amazon. In 1995, Amazon began as an online bookseller. Since then, the brand has extended into everything from music, grocery delivery, consumer goods, movies and more.
Now that you’ve got your core product, how do you extend your brand? Here are our top four ways to create a brand extension strategy.
This refers to creating new products that already fall within a current product line or category. Think of it as upgrading an existing product or introducing new sizes or colors. This is probably the easiest strategy to implement because you’ll already have the product base.
It works especially well for products with a lower price point as customers often want a product in multiple sizes or colors.
What other products go hand in hand with your product? Things that complement your existing products will increase your average basket spend. You could even compile the products into a bundle to increase revenue.
An example would be a calendar company. They could offer complementary products, such as diaries, pens, and stickers. While you’ll be creating new products, they’ll still fall within the same niche.
This is where your buyer personas and user segmentation comes into play. Focus on one specific demographic or quality to create a product to suit their needs.
Think about travel agents. Their customers love to travel. Instead of shopping around, travel agents can sell them their plane tickets and currency and travel insurance.
Customers will know about your high-quality products if you have brand recognition in your industry. That means you can offer them a wide range of products they will buy. This works especially well for technology companies.
Sky started as a telecommunications brand for television and broadband but now has a mobile phone network, streaming service, and Sky Glass smart TV. They’ve built a reputation and have expanded based on their brand recognition.
By using an established brand name and recognition, companies can begin selling new products more easily because they’ve already earned consumer trust.
If done right, brand extensions can even help to improve perceptions of the existing brand.
A comprehensive look at what product management is and how to distinguish what good product management looks like.
However, brand extensions must be carefully considered by the company that is looking to implement it.
There are a few pitfalls that can spell trouble in brand extension strategy. For one, if the product category is not closely related to the company’s core product, customers may be confused or ignore the extension altogether. Or, if the brand’s new product is unsuccessful, it may lead to overall damage to the brand and its other products.
Apple - Apple began as a personal computer company. They have since extended into MP3 players, wireless headphones, credit card providers, a music streaming service, and more.
Google - Google started as a search engine in 1998. Now, they are also the top email service provider, a top business suite provider, and a leader in AI.
Mailchimp - Mailchimp, a popular email marketing platform, recently extended into the paid display ads space (Facebook ads, etc.).
While there are many stories of successful brand extensions, there are plenty that didn’t work out quite as well.
The company easyGroup, most famous for airline easyJet, decided to open their own cinema, charging as little as 20p per ticket. However, film distributors decided against showing their films in the easyCinema. easyGroup lost revenue and was unable to pay the rent. They rebranded as a DVD rental company, LOVEFiLM, before ultimately selling to Amazon.
Unsuccessful strategies can happen to the biggest companies too. Pepsi launched Crystal Pepsi back in the 1990s. Crystal Pepsi had the same cola flavor without the dye, making it crystal clear. But a mix of poor marketing and market research led to Crystal Pepsi flopping. Customers had no idea what the product was meant to be, and Pepsi soon shelved it.
Amazon is well-known for being a go-to place to buy pretty much any product under the sun, but their own ideas don‘t always work. The Amazon Fire phone was set up to challenge Apple’s iPhone and Samsung’s Galaxy phones. But the Fire phone was too expensive to entice customers away from either competitor. The Fire phone was a case of a reactionary product launch, as opposed to innovative — it didn’t solve the problems customers actually had, merely added a product to a busy marketplace.
You will learn why is product management vital for managing internal initiatives with IT teams and much more.