As companies grow and their products reach the maturity stage it becomes a natural process for them to introduce new products or services. One of the most common ways companies expand and diversify their portfolio is through brand extensions.
What’s a Brand Extension?
A brand extension is when a company launches a new product in a different category and uses an existing brand name they own. This new product has the existing brand name (often the parent brand name) attached to it. So, what are the two main reasons companies use brand extensions?
- Companies hope to leverage their current customer base and following they have.
- Companies also seek to take advantage of existing brand loyalty and leverage it for the new product or service offering(s).
The major benefit of using a brand extension tactic is that it provides consumers with a sense of familiarity with the new product offering coming to market. Consumers have this recognition or sense of trust towards the new product because they have been exposed to the parent brand in the past.
The Dangers of Brand Extensions
Investopedia provides an excellent synopsis of the dangers associated with unsuccessful brand extensions:
“For brand extension to be successful, there usually must be some logical association between the original product and the new one. A weak or nonexistent association can result in brand dilution. Even worse, if a brand extension is unsuccessful, it can harm the parent brand.”
Examples of Brand Extensions
Here are some of our favorite examples of good and bad brand extensions provided by Adweek.
The Good– ZzzQuil Nighttime Sleep-Aid: This was a sleep aid created by the makers of NyQuil. This is a logical and good brand extension because their parent brand is used to treat common colds. Providing a product to aid in restful sleep falls within the function or scope of their pre-existing products and brand meaning.
The Bad– Arizona Nachos ‘n’ Cheese Dip: What words come to mind when you think of the company Arizona? Perhaps you think of words like tea, drinks, and refreshments. It’s clear that Arizona is associated with “beverage products”. They have a pre-existing history with creating and offering new beverages to consumers. Even though beverages and food go together the brand extension of a nachos and cheese snack wasn’t the most logical association to the beverage-based Arizona brand.
The Ugly– Zippo The Woman Perfume: Zippo must have thought there was a chance for them to enter the perfume market. However, this is not a logical brand extension when compared to what they do for their main business. Zippo unsuccessfully tried to make a link between lighters and perfume. Even the Zippo perfume container looks and functions like a lighter. Lighters are not particularly known for pleasant smells so consumers rejected this perfume line quickly.
As you can see, brand extensions must be conducted and executed with caution. Successful brand extensions always have logical associations linking them to the parent brand(s). Are you thinking of extending your brand in the near future? H2H Consulting can help guide you towards a logical and successful brand extension.