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Brand Extension Definition, Advantages and Disadvantages

Brand Extension Explained

A brand extension is where a pre-existing brand creates a new product or creates a sub-brand to sell a new product. Brands do this in order to tap into a new or growing trend, to exploit profitable niche markets or even to re-enter the public’s consciousness by exploiting the brand’s established customer loyalty and reputation. These new products are often related to the original brand offering but not always. Food and Drink brands do especially well in this.

Most brands, especially nowadays, take part in brand extension due to the constant pressure to innovate and stay relevant in today’s crowded market. Brand Extensions should not be confused with a Line Extensions – where a brand simply adds a new product to an already existing line (such as a new flavour/variant). A potential disadvantage of a brand extension is that it exposes the brand to a whole new area of the market. Whilst broadening the offer can seem like a good idea (especially from an incremental sales and profit perspective) but in reality, it can be incredibly risky and damaging to the brand overall if it fails, such as EasyJet’s EasyCinema.

A successful brand extension should seem like a natural progression for the brand and so to make it loosely similar to the previous product would be a wise idea (otherwise the original brand may be damaged). If done correctly, a brand extension not only brings more profit to the company but also opens up more possibilities and revives the public’s interest.

Is your idea for brand extension strategy viable?

If you want to understand and develop a brand extension strategy then we suggest you consider the following:

  • As with all new products, consider the current market and if there is a desire for the product. Concept and product testing are ideal to assess whether there is interest in your ideas.
  • Compare the old brand with the new. Are they somewhat similar or perhaps too similar which could lead to cannibalisation? Does it feel like a natural progression?
  • Is your brand’s customer base large and strong enough to support a new product and will they follow into that part of the market?
  • Do your customers trust you and do your ideas fit with your brand values? Perhaps considered a focus group, conducting a survey, etc. ?

You can find other glossary terms at the Market Research Society’s Glossary or more information about Vision One’s branding and brand research services