Brand Extension Strategy

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What is a brand extension strategy?


Definition brand extension strategy

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. 

Pros and cons of brand extension strategy

By using an established brand name, 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. 

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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.

Examples of successful brand extensions

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.).

General FAQ

Why is brand extension a popular marketing strategy?
Brand extensions are a useful means of marketing a business. For one: companies may find selling new products easier after earning buyers’ trust and gaining a foothold in the market, as it imposes less risk on the consumer. But also a brand extension helps demonstrate a brand’s commitment to innovation and serving a wider, more diverse audience. When already an established brand name, customers are more likely to be intrigued by a brand extension from a well-known business.
When is brand extension a good strategy?
Companies may implement a brand-extension strategy when they have new products to launch but don’t want to set up a new brand. Brand extensions also have real potential for businesses who have a solid following and loyal customer base, but also want to diversify products and reach a wider audience.

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