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Brand Extension – Definition, Types, & Examples, Pros & Cons

Brand extension (brand stretching) is a marketing strategy that uses a company’s existing successful
brand name for a new product or modified product in a new category. The brand extension strategy
helps the company to extend and move the brand to another category.

Example: Dettol – Dettol bath soap, Dettol sanitizer, Dettol shaving cream, Dettol liquid hand wash,
Dettol liquid adhesive bandage, Dettol pain relief spray and Dettol antiseptic cream.

There are a lot of celebrities and personalities who created their name as a brand successfully. Ralph
Lauren (American fashion designer) is a very good example; he started his clothing brand and
extended to other categories.

Table of Contents

Brand Extension Vs Brand Line

Brand extension and brand line, both are marketing strategies that are used for the promotion of
products. The main difference between brand line and brand extension is in the product category
type.

Brand Line

In brand line, the focus is on color, flavor, and theme, but in brand extension, the focus is on the
category. It is because the customer wants segmentation, variety, capacity utilization, and
something that is the counter of competition. The common example of the brand line is diet cola
and coca-cola zero sugar.

The company sometimes does not clarify its goals which are risky; the brand line extension adds
variety to its existing product to attract more clients.

It also means expansion of product like if someone has the brand of wedding ‘Lehanga,’ then they
can expand into wedding Mehendi and frock.

Brand Extension

Brand extension means expanding the brand like they expand the products as party dresses, casual
dresses, and formal dresses.

Companies can extend their product at any time, whenever there’s a conflict with their competitors;
then they take the risk of brand extension. Any new extension affects the entire company’s
reputation. Brand line and brand extension both need the marketing and promotion of their product
after extending.

Brand line example– Magi noodles, Cadbury dairy milk, coca-cola.

Brand extension example– APPLE, Ferrari, etc.

When you introduce unrelated new product the brand extension fails and creates a bad association
as well. For example, Colgate Lasagna.

Types of Brand Extension

Following are the 8 types of brand extension.

Companion Product Extension

Companion product extension is a complementary form of strategy which helps in sales promotion.
For instance, if you buy one product, then you have to buy another product as well because one
product creates the demand for the other product. Therefore, companies take advantage of
introducing companion products in the market.

Like vim bar and vim sponge. In this marketing strategy, the company extends the product in the
form of a companion.

Example: Gillet razor to Gillet shaving cream.Dove shampoo or Dove conditioner.

Product Form Extension

In product form extension, the product form is different from other product categories. It is easier
when you do it properly. It adds variety into the existing product and the Company usually adopts
this strategy in its brand.

Example: Amul milk to Amul condensed milk. Butter, cheese and ice cream. You can see that the
company just extends the form of the product.

Extension of Company Expertise

Using the product category name as an extension along with the main brand, Japanese companies
mostly use such expertise extension. If the company is an expert in more than one field, then it adds
the brand name with its function.

Example: Honda scooter, Honda cars, and Honda lawnmowers.

Customer Franchise Extension

In the customer franchise extension, companies use this strategy and extend their product category
according to the needs of the customer.

Example: Johnson baby oil, Johnson shampoo, Jonson powder, and Johnson baby lotion.

Extension of Brand Prestige

In brand prestige, you offer a lot of different categories of products, but all of these products have a
common brand name and a logo which adds prestige value to it.

Example: Amazon, Ali express and Daraz, etc.

Extension of Brand Distinction

If the brand is popular due to certain attributes, then it introduces new products by changing its
form. For instance, if the company has a brand of hair oil, then it’ll extend in the forms of baby oil
and relaxing oil.

Example: APPLE, the apple brand launches different sorts of products through the Extension of
brand.

Component Brand Extension

In component brand extension, a brand can extend because of its association with its customers.
For instance, if the Customers have the association with Nescafe, it’s because they like the taste of it,
now the Nescafe brand can extend the brand in the form of biscuit and milk supplements. We can
say that every extension strengthens the parent brand.

Example: Nescafe chocolate, Nescafe biscuit, Nescafe milk supplement.

Customer Base Extension

The company can extend its clients who grow the business by selling the products of their favorite
brand. Oriflamme, a cosmetic brand, is a very good example of a customer base extension. Their
marketing strategy is based on its customers. They daily extend their consultants who help them to
grow their online business. Brands usually acquire such status with their customers over a long
period of time.

Example: Prepaid forex card by Thomas cook.

Advantages of Brand Extension

Reduce Financial Risk. A company can reduce financial risk through its brand extension. Launching a
product sometimes more risky, therefore the company extends the brand category and reduces the
financial risk.

Increase Brand Image. If the brand has an image of offering one product only, then the company
cannot attract a wider range of audience and achieve success. Therefore, through brand extension
marketing strategy the company can offer different sorts of products and increase its brand image.

More Likely to Accept the New Products. The customers usually accept the new products launched
by the parent brands. It makes them feel good when they go out for shopping, it’s because they
want a variety in the product and the company provides them.

The Cost of Developing a New Brand is Saved. Customers usually support the new product launched
by their favorite brand, which not only saves the cost but it also reduces the chances of loss.

Saving Promotional Advertising Expenses. The startup brands usually invest a lot of resources on
advertising for the promotion of their brand. If you have the opportunity to extend the product with
the parent brand, then it would save a lot of time and resources.

Consumer Seeks for a Variety. Customers usually get bored with one type of product over time, and
they want a variety in the products of their brand. If you provide them what they’re looking for, then
they won’t get bored with your brand. The variety in the product is essential for the brand to
survive.

Disadvantages of Brand Extension

Lead to Loss of Reliability. If the company extends the brand name too long, then it will lose its
reliability. It’s because the company can’t be perfect in all product categories, and customers will
start using the product of the other brands. Once the trust of the people is lost, then they won’t buy
it.

New Products can Damage the Core Product Brand Image. The brand image should be unique and
positive. Customers not only buy the product, they also buy the brand image along with it. However,
it’s hard to maintain the positive and uniqueness of your brand. It is very risky at the same time,
because if the customers find certain attributes of the extended product undesirable, then it’ll
tarnish the whole image of the brand.

A Brand Extension may have a Spillover Effect. There is a bond between the parent brand and its
new product, the brand extension can create a spillover effect.

Brand Extension may Discourage Innovation. If a brand starts launching a variety of products, then it
will be disastrous in many ways. The company’s focus would be on quantity rather than quality of
the product. As a result, customers would find a variety of products, but there won’t be any
innovation in the core of the main brand.

Brand Extension Examples

Starbucks – Coffee-based beverages into energy drinks

Starbucks was the brand of a coffee and people used to like the taste of it. Then Starbucks launched
the energy drinks, Starbucks brand used and applied the component brand extension marketing
strategy.

Ferrari – from exotic sports cars to theme parks

Ferrari Land has opened its gates. The first #Ferrari theme park in Europe. #FerrariLandGO
pic.twitter.com/jxAsgzGPRO

— Ferrari (@Ferrari) April 6, 2017

Ferrari is an Italian luxury car; it began its journey as sports cars, and then extended the brand and
launched the theme parks. The Ferrari brand used and applied the brand prestige extension.
Callaway – from golf clubs into footwear, apparel and golf accessories

Callaway is a company which builds gold clubs, then after that, the company started launching other
products that are relevant to golfers. First, they started offering golf club, and then they started
producing other products which golfer use like umbrellas, bottles, gloves, and etc.

All the above examples proved one thing that if you apply the marketing strategy rightly, then the
brand extension will be successful. The process is quite difficult.

Wrap Up

It is because the customers want a variety in their dress, foods, and drinks and almost in everything.
They just don’t want one form of dresses. They want a wedding dresses, night suits, party dress,
work dress, bath dress, evening wear, and clubwear. If the brand extension works well; then it would
make the company a big brand.

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About The Author

Ahsan Ali Shaw

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