When I first entered the marketing world, I had no idea what brand extension was or why it was important. It was just fancy marketing jargon to me. Yet, a trend began to emerge which helped me to understand extension marketing. I noticed that some new products seemingly flew off the shelves while others sat idle collecting dust. Extending your brand is a science and it requires thoughtful implementation. It doesn’t always work, but when it does, it’s like rocket fuel for you business.
What is brand extension in marketing? Brand extension in marketing is when a company uses their brand awareness to launch new products in either new or similar industries. Whether companies use their existing customer base, intellectual property, expertise, or existing product knowledge, brand extension marketing provides new opportunities to drive customer value.
If you have a great business with a loyal customer base, you might be a prime candidate for brand extension. Let’s dive into the when, why, and how a company might look to extend their brand. We’ll even discuss some famous examples along the way. Everyone loves a good Steve Jobs story.
What is brand extension in marketing?
Brand extension marketing is when a brand leverages their well-established image or brand to offer new products or services under the same brand. This is one the best marketing strategies available for companies with a great reputation. The name of the game is trust.
You’ve seen brand extension all around you. Every-time you walk into well-known stores like Walmart or eat at famous establishments like McDonalds, you’ve seen brand extension in action.
Companies are constantly looking for ways to expand their presence into the homes and businesses of their loyal customers. If you’ve ever eaten a cheeseburger at McDonalds and then eaten a salad the next time, that’s brand extension. Have you ever bought both the shampoo and conditioner from the same company? Brand extension. How about when you bought a power drill and then went back for the companion bits? That’s right, brand extension.
Companies are constantly looking for ways to increase your brand loyalty so that you buy more products from them. We love brand loyalty so much, we even wear brands on our clothes. We are a culture of inclusivity and companies are always looking for ways to take advantage of our need to belong.
What is an example of brand extension marketing?
Brand extension marketing is all around you. The next time you are in a store, take a look around the aisles and try to find different products by the same company. They are by “extension” using their brand to market new products.
Let’s look at a few popular examples of brand extension marketing.
Apple Inc. Brand Extension
From 1976 to 1985 Apple produced three basic products: computers, drives, monitors, and printers. All of these make sense. They are in the same family of products—personal computing.
Year after year, Apple would produce new computers, laptops, printers, drives, and mouses—and this was expected. And then Steve Jobs embarked on a journey and took a massive risk. He decided to extend the brand into new horizontals.
The truest form of brand extension occurred when Apple released the 1st generation iPod. A company known for personal computers and printers was now launching itself into the world of digital music by using its brand name. They didn’t start a new company or build a different corporation, it was an Apple Inc. product through and through.
Fast forward to today and over 400 million iPods have been sold. It was a pretty successful brand extension idea I’d say. From that point, Apple Inc. was able to launch other horizontal products like iPads, Apple watches, and the world famous iPhone.
Mitsubishi Brand Extension
Mitsubishi can trace its origins all the way back to 1917 to its shipbuilding days. In 1917, Mitsubishi released the first Japanese production automobile—the Model A. And for nearly 100 years, Mitsubishi has been one of the largest automobile manufacturers in the world.
Fast forward to today, you can find Mitsubishi products in many industries using their powerful brand name: electrical, materials, chemicals, banking, defense contracting, printing, and more. Time and time again, Mitsubishi has used its powerful name to launch new products.
Consumers believe in the quality of the product because of the good-will Mitsubishi has built over 100 years.
Sports Stadiums Brand Extensions
Growing up, I fondly remember going to Comiskey Park and Wrigley Field to watch baseball games. I’d watched the now defunct Seattle Sonics in Key Arena and the Seattle Mariners play in their old baseball field called the Kingdome.
All of these examples are brand extension marketing. All of these stadiums have allowed large companies or county’s to buy the rights to their naming and marketing of the venue.
When I was young, I didn’t connect Wrigley Field to be associated with Wrigley Gum or the Kingdome to be named after King County, Wa. As I grew older, the dots connected and I realized this was brand awareness at its finest.
Many Chicagoans still call Guaranteed Rate Field–Comiskey. Probably because Guaranteed Rate Field is the worst named sports venue on the planet. Really? Guaranteed Rate Field? Come on guys.
Celebrity Brand Extensions
People with expansive social status often find it easy to brand their likeness/image into new fields, products, or services. This happens all the time in the world of entrepreneurship. Prestigious business owners can successfully leverage their own celebrity to launch a new product.
Take for example Steve Jobs. As we talked about earlier, his company Apple Inc. was already a titan in the computing and digital electronics world. And yet, Steve Jobs had a very ambitious plan to infiltrate the big screen. Using his status, Steve Jobs paid $5 million to George Lucas for the technology rights to Pixar and invested $5 million cash as capital into the company to become the chairman of the company.
This was huge news. By this time, Steve Jobs was world famous and every investor in Silicon Valley took notice of the transaction. Steve Jobs—as a brand—fueled the interest and belief of the company. Pixar went on to create Toy Story, A Bug’s Life, Finding Nemo, The incredibles, Cars, and hit after hit after hit.
Brand extension mission accomplished.
How can brand extension work for your small business?
Brand extension is an amazing way to launch new products and build confidence behind an existing product rebranding. Whether you’re a self-made restauranteur, blogger, or real estate agent, you can use your established brand to offer to new services. And, you don’t need a marketing degree to make it happen.
People know who you are and trust your business. Once you’ve created that initial relationship, it might be the perfect time to leverage customer confidence and launch another extension to your brand.
My friend, Mike the landscaper
A great friend of mine has a seven-figure landscaping company. I’m so proud of him. When he started, he only had a few guys with a truck, trailer, and determination. He was known for mowing lawns and laying down mulch in flower beds. Sweat equity was his middle name.
As his local notoriety grew, so did his ability to expand his brand. He went on to build a snow plowing business from the same brand name. Different niche, same brand.
The snow plowing grew his business even more and it was time to expand the brand again. He started a Christmas lighting service from the same brand. People knew the lights would look great because their yards always looked amazing. His brand helped him establish new and exciting offerings.
And the best part? His original mowing business built a great email list and Facebook community which helped him extend his brand with ease. He already had satisfied customers to pitch new services and products. He could also take a poll and ask questions of his happy customers to gauge interest before expanding.
My friend, Josh the real-estate marketer
A good friend of mine Josh is a great real estate marketer. He’s built a massive seven figure business helping real estate agents in the U.S. and Canada market themselves on Facebook. With thousands of satisfied clients, he’s been able to expand his brand.
Last year he began offering admission to an entrepreneur training group to help growing businessmen and businesswomen expand their brands and/or start their first business.
He’s done an amazing job leveraging his previous brand to expand his new brand. He’s on pace to achieve eight figures soon. Check out his site to learn great tips and tricks.
If you have a great business, you can easily try and launch a new product with very little risk. In fact, Josh showed me how simple his landing pages are and how much revenue they create for him—it’s pretty unbelievable. When you are ready to launch that new idea, try our awesome landing page recipe for your new idea. You’ll have customers ready and waiting.
How many types of brand extensions are there?
There are many types of brand extensions methods which give you great opportunity to expand your business. Expanding your brand into new territories and products is an exciting adventure. Let’s talk about some of the most popular types of brand extensions.
Types of brand extensions
- Companion extension: A companion brand extension is when you have a product already established and you launch another product that is connected to the original product. For example, you might have a well established hand soap and you decide to launch a face soap under the same brand. They make sense together because they have similar niche anatomy. A companion extension is often sold with the same customer type in mind.
- Product extension: A product extension is when a completely new product is launched under the same brand. This product is often quite different from the brand’s popular product(s). For example, Amazon was known as a digital marketplace for consumer goods and then decided to extend their products into computer programming. They began offering server technologies and web technologies through a new product called Amazon Web Services (AWS). What does AWS web servers have to do with buying the latest New York Times best seller and two-day shipping? Nothing at all, but you trust Amazon and so you trust AWS.
- Expertise extension: Expertise extension happens when a company has expertise in a niche or industry and expand their expertise into other categories or products. We see this expertise extension in the automotive industry often as car manufacturers like Honda, Mercedes, Tesla, and Mitsubishi take their mechanical expertise and apply it to other products beyond cars (bulldozers, cranes, wagons, lawn mowers, recreational equipment, and spaceships).
- Vertical extension: Often times a company with proprietary technology or ingredients can launch their products into new verticals. For example, if you are a popcorn company and you are selling delicious popcorn to movie cinemas around the country, it would make sense that you could offer caramelized popcorn to local fairs and trade shows by using the same popcorn ingredients. You’re entering a new industry vertical by leveraging existing products or technologies.
- Horizontal extension: Horizontal extension is when you find a new industry to use the same branded product. This is really common in pharmaceutical industries. The drug Prazosin (minipress) was first approved for hypertension, but it’s now approved for the use nightmares. The markets and use cases are totally different, but the product is the same. You also see horizontal extension in the pickup truck industry. Not only can you market it is as a family car to tow boats and explore mountains but you can also market it to the service based businesses like carpenters, plumbers, and landscapers.
- Brand distinction extension: Brand distinction is when a company is “known” for something—typically an emotional response to the brand (loyal, prestige, luxury, safety, regal, novel, etc). Porsche is known for luxury and speed whereas NASA is known for innovation and exploration. Companies can leverage those persona distinctions to launch new products. Tesla launched SpaceX and consumer confidence in their product was high. They leveraged their innovation and engineering quality distinctions to raise money and launch us into outer-space.
- Component extension: A component extension is when a brand is able to offer a variation of the same product to customers. If you are selling mens winter trench coats with wooden buttons, it’s reasonable to assume you could also offer mens winter trench coats with a zipper as well. The component of the product is slightly different, but the product is much the same.
- Customer extension: One way a business can improve their revenue is by leveraging their existing customer base. We call this “low hanging fruit”. If you are selling ladders to your engineering customers, it would make sense to offer non-slip ladder tape to the same customer base. Car dealerships are infamous for this. You’ve already purchased a car, why not add tinted windows, remote starter, upgraded Sirius radio, and extend the warranty. Or how about those Amazon recommended products on every product page? Yep, customer extension in action.
There are so many ways a company can extend its brand to new vertical and horizontal industries while leveraging existing customers and finding creative ways to attract new customers. If you have a great brand already, it’s time to think of new ways to provide value.
What is the advantage of brand extension marketing?
Brand extension marketing provides a plethora of advantages and very few disadvantages. Let’s explore the many advantages that brand extending can bring to your business:
Brand extension advantages
- Awareness: Because your brand is already well-known and established, you can skip the rapport building process of your product marketing and sell to existing customers. Skipping this step makes product releases much more predictable. If your current clients aren’t buying, you may need to go back to the drawing board.
- Speed: You already have a great brand and a team of dedicated employees which can accelerate your brand extension. Starting with a customer extension or component extension is a great way to use your same team to expedite speed-to-market time.
- Testing: A brand that has existing customers can test the idea of their product inexpensively. Once you have a clear idea of how you plan to expand your brand, use your existing email marketing list, social media group, or in-store customer conversations to pitch your idea. If you current customers love the idea, you’ll have warm buyers ready to go. If they don’t like your idea, you’ll know exactly why and what to change. Raving fans are much more valuable than cold traffic opinions.
- Customer LTV: Expanding your brand with new offerings will significantly improve the lifetime value (LTV) of the customer. The more products you can offer, the more likely you’ll be able to capitalize on their loyalty to satisfy their needs. While you might not become a one-stop-shop, you can certainly become a second and third-time shop.
Brand extension isn’t a perfect science. There are some scenarios where expanding the brand could be a bad idea. Think about the following points before you extend your brand.
Disadvantages of brand extension
- Brand dilution: If you’ve built your brand on novelty or an amazing singular experience, some customers might see your new product extension as “selling out”. For example, if you have a barber shop known for great haircuts and conversations and you suddenly offer male skin care products at the checkout desk, your clientele might feel you’re diluting the experiencing with silly products. Brand dilution often happens in service based business.
- Overextension: If you are running a tight budget, new products rarely save businesses from the graveyard or accelerate them past the death-rattle stage. In fact, many businesses that are running thin margins should double down on what’s working to create capital for brand extension to reduce exposure and risk. Brand extension isn’t a recipe for saving a business, it’s a recipe for expanding an already successful brand. And yes, there are unicorn stories where one, big, bright idea saved the company, but this is the exception.
- Expertise failure: Sometimes we confuse success with expertise. Just because we are successful with one business model or product doesn’t mean our expertise will carry over to new product industries. Before you extend your brand into new territories, ensure you have adequate expertise and team competency to follow through successfully.
- Awareness: There will be times when there are great ideas at the wrong time. Awareness is a huge component of business success and if your idea is too unique, creating awareness around your product or service could be an uphill battle. In 1990 General Motors created the first electric car called the EV1. Do you remember it? Ya, me neither. It was too early and product awareness became a huge challenge. America just wasn’t ready for this electric beauty.
Is brand extension marketing different than line extension marketing? Brand extension and line extension are completely different marketing strategies. A brand extension is when a company moves into new product territories and line extension is when a company takes an existing product and slightly expands the line. For example, a wedding cake shop might begin to offer bridesmaid cakes as well (line extension) or they might add wedding invitations to their brand offering (brand extension).
What are some luxury brand extension examples
Mercedes is a luxury car manufacturer and has been known for their quality engineering since introducing the 1901 Mercedes to the world. Using their luxury brand, Mercedes has expanded into creating motorcycles, buses, semi-trucks, vans, and stage buses. Mercedes started as a luxury car company and has sense expanded their brand into nearly every 2, 4, 6, 8, 10 and 18 wheeled machine on the road.
Hermès is a luxury fashion brand known for high-end runway fashion. Originally, Hermès was started as a harness and bridle workshop serving French noblemen in the early 1800’s. It wasn’t until 100 years later that their first couture apparel collection was offered to the public Currently some of their biggest products are purses, but their original bags where made for horse saddles stagecoaches. They’ve expanded their brand over 200 years to offer new and exciting fashion lines.