This is a guest post courtesy of the lovely Lucy.
Could brand extension be for you? Keep reading and let’s find out.
Please make her feel welcome in the comments below with any questions or insights of your own. Peace.
Are your sales stagnant?
Ready for something new for your brand?
A brand extension could be just what your company needs to boost your bottom line.
Here are the ins-and-outs of brand extension: what it is, when you should do it and how you can implement it for your company.
What is Brand Extension?
In marketing terms, brand extension is a strategy in which a company with a well-developed, utilized or big selling product uses the same brand in a different product category or for a different target market, usually with the goal of increasing sales and leveraging brand equity (otherwise known as the worth of the associated brand name.)
Brand extensions can come in two forms: spin-offs and product extensions. A spin-off is using the brand name and image with a completely new product line.
One example of a spin-off is Virgin Group, which began as a record label but now includes transportation, video and music stores. The second type, product extensions, are the same product and brand name, but tweaked to target a new audience.
An example of product extension is Pepsi Max and its advertising campaign geared toward men.
For companies who want to try something new but want to minimize financial risk, brand extension can be a great solution. You can potentially use consumers’ pre-exisitng ideals about your product to enhance their perception of a new product without spending thousands of dollars on advertising and promoting a new product (and creating new branding.)
When Should You Extend Your Brand?
The first consideration is customer perception of your brand as it stands. You should have strong sales, loyal, returning customers and good brand recognition in focus groups.
Before embarking on a brand extension plan, survey customers on their thoughts and feelings and take a good look at sales. You should see consistent sales for at least two years before thinking about extending your brand.
The second consideration is whether or not extending your brand would make a positive impact on your bottom line. Product development, testing, production and marketing are all part of a huge financial investment, and your company has to be ready for it.
Although a successful brand extension campaign should increase sales, thus giving you a return on that initial investment, an unsuccessful campaign can damage a brand beyond repair (and drain a budget).
An extension must make sense in the context of your brand and your product line or service line. For instance, a jewelry company might extend their brand to include fragrance, but wouldn’t extend their brand to include cheesecake.
Extending your brand comes with risks. Adding new products or services to a weak brand can dilute the brand, making it difficult for consumers to connect.
A low-quality brand extension product when a brand is known for high-quality items can lead to a dissonance for your customers. Of course, the financial investment can also lead to problems within the company.
How Do You Do It?
Once you’ve decided to take the step toward brand extension, you have to decide how you’ll design, develop and produce your new products or services. The most logical place to start is your own company.
Undertaking the manufacture of your new product or the supply of a new service yourself simplifies the process because you’re relying solely on your own organization.
Another common way to extend your brand is to partner with another company who already makes the product or supplies the service. In this scenario, you’d license your name to the company, who will make the product or supply the service.
You may also consider outsourcing the manufacture of a product or service, then placing your brand on it. The most complicated way to extend your brand is to merge with or acquire a company who makes the product or supplies the service, and thus become one company.
Deciding which route you’ll choose for extending your brand depends upon your budget, how quickly you want to manufacture your product or supply your service, your staff and workforce. Each company has different goals.
What About Advertising?
The biggest key to successfully advertising a brand extension is consistency. Your product must have the same look, feel, similar design and messaging as the original products in your brand, or must be aligned with your general brand.
Product extensions and spin-offs alike can require significant marketing efforts, including television advertising or magazine ads, but also may include much more cost effective means, like blogger outreach, social media marketing and “street teams” – your best customers who are brand ambassadors for your new product.
Have you tried to extend your brand? Was the attempt successful? Why or why not?
Yo… thanks for reading this far! If you found this post useful I’d love it if you could share it with your own network of pals. BGB’s growth thanks you.