Posted on : 2024-04-26 03:17:55
Article : Good evening Friday management TASK 291- Does Brand extension allow companies to leverage their brand awareness to create more revenue streams?
Hailee Steinfeld is mainly known for her acting but her singing abilities bolster her esteem as a performer and stretch her brand to more audiences and fans. Just like her venture into music, companies often extend their brand to develop new products in industries where they don’t have any market share. These initiatives are called brand extensions, and they allow companies to leverage their brand awareness and equity to create more revenue streams.
Brand extension is a marketing strategy that involves a company using its well-established brand name or image to introduce a new product or product categories to its customer base. This strategy works best when the new product category is related to its parent category and is something consumers and customers want. Many companies use brand extensions because it allows them to leverage their parent brand’s brand awareness and authority to reach new demographics and open up new sales channels.
One company that does brand extensions well is Apple. Although Apple started as a technology company that makes only computers (Macs), it soon extended its product line to include music players (iPods), mobile devices (iPhones), and tech accessories (Apple Watch and Ear pods). Even though all these new products are different, the extension works because Apple didn't drift too far from its parent product category. Instead, it leveraged its brand name to make penetrating the market a success.
Depending on the type of customers you have and what you want to achieve as a brand, you need to decide which brand extension strategy is right for your company. Here are five different extension strategies that could work for you.
1. Line Extension- A line extension is when a parent brand launches a new product line in a category already familiar with its customers. With a line extension, brands don't have to create new categories.
An excellent example of a line extension is when soft drink companies introduce new flavours to their existing drink line-up. Other examples could include introducing new scents, sizes, and colours to a product line.
2. Complementary Product Extension- Another way an established brand can extend itself is by creating complementary products for its main products.
For example, Nike, a sports brand, creates various equipment, wears, and other sport-related products that complement each other. We've also seen toothpaste companies use this type of extension for their original brand by adding toothbrushes and other oral care products as new categories like Colgate paste into powder, brushes and Mouth wash etc.
3. Customer Base Extension- A company can create a branding extension for itself by launching different product categories for a single demographic.
Procter & Gamble (P&G), for example, does this well with the Pampers brand. Although P&G specializes in various products, the Pampers line focuses on making products like diapers and wipes for babies.
4. Company Authority Extension-Companies with high levels of authority in their sector can leverage this authority to create new products.
For instance, Samsung has a huge brand name in the technology space that allows them to launch different products in related categories with a measure of success. And because of its brand image, most consumers wouldn't mind using a new product, whether it's an air conditioner or a mobile phone.
5. Brand Lifestyle Extension-Who would have thought a tequila line from an energy company would sell out within a few hours? Well, Tesla did it. And it was primarily due to the personality and lifestyle of its CEO, Elon Musk.
However, Elon and Tesla are not the only ones to use a celebrity's lifestyle to extend an existing brand. Other instances include Adidas/Kanye West's Yeezy line up and Fenty (a brand under LVMH) with Rihanna.
While this is the rosy part of brand extension successes there are certain brands which failed with reasons. We will discuss on this part in our Management solution for the TASK 291 in our Good Morning Monday post 29th April 2024.
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