Understand Brand Extension and Its Types to Develop Business and Sales
Brand extension is a business strategy that can take a brand to a new level and market that can increase business profits. Many large companies in Indonesia use brand extension as a step to expand and develop their brands.
However, brand extension must be carried out effectively and on target. Otherwise, it will only create unwanted losses.
Learn more about brand extension, starting from the definition, advantages, risks, to examples of its application below.
Definition of Brand Extension
Brand extension is a business strategy by introducing and selling new products in a product line that is already well-known in the market. This new product usually has similar quality or characteristics to the existing product line.
Investopedia says, with this quality, the product is more acceptable to the market and consumers more quickly.
Businesses also rely on consumer loyalty in the success of brand extension. This strategy is considered successful when consumers accept the product by buying, the business reaches new markets or potential consumers, sales increase, and profits increase.
Meanwhile, brand extension is said to have failed when the new product is not related to the main product and gets a bad response from the market.
Why is Brand Extension Important for Business?
At a glance from its definition, brand extension is believed to be able to bring in new consumers and increase sales. In addition, here are other reasons why brand extension is important for business:
- Brand extension helps businesses stay ahead of competitors and strengthens brand image in a specific industry or field.
- Brand extension utilizes product lines that are already well-known and sought after by buyers, therefore the brand remains the main choice for consumers when there is a new type of product.
- Businesses can answer consumer needs with new products, especially if loyal consumers have expected a new product line from the brand.
- Pre-existing brands and products are also effective and inexpensive marketing tools to promote new products.
Advantages and Disadvantages of Brand Extension
Advantages of brand extension
- get new consumers and markets
- increase sales to business profits
- become free marketing and promotional materials
- can increase consumer loyalty
- increase consumer trust
- return consumer attention to old products
Disadvantages of brand extension
- can cause changes in brand identity
- weaken sales of old products because new products are more attractive
- consumers get bored with brands that appear on various products
- too many products and quality decreases
- using this strategy too often, marketing efforts are in vain
Types of Brand Extension
Reporting from Ramotion, brand extension is not limited to making and selling new products. There are various types of brand extensions that can still increase sales. Here are the types:
Product extension
Product extension is a brand strategy to create and sell new products that are different or to complement existing products. The main goal is to avoid a decrease in existing consumer loyalty.
Product extension is also a low-risk and inexpensive type, but can reach new market segments and consumers with different preferences from the main product.
Line extension
Line extension means that a business offers a new type or variant of the main product. This means that the business does not make a 100% new product. One form is a new taste or variant of a food or beverage product.
This strategy aims to target buyers who are bored with old products, but just need a refresher with a new variant. However, it can be high risk if there are too many variants, so that consumers get bored.
Company expertise extension
This type of brand extension is used when a business uses the technology and innovation they have to create a new product. Businesses also maximize their innovative image to build consumer trust to buy the new product.
An example is when there is a vacuum brand that is famous for its high-quality and innovative products, they can use this to create products other than vacuums. They could make an air purifier and it will definitely still sell because the brand is already well-known.
In reaching new markets, it is important to maintain brand identity.
Brand distinction extension
This strategy relies on in-depth market research. Businesses must understand consumer demographics and the needs or problems faced in an area. Through this, businesses can carry out brand distinction extension by offering solutions through their products.
This strategy does not require businesses to create new products, but rather to maximize the sales reach of existing products. For example, moisturizer and sunscreen brands can research which areas or regions in Indonesia have the highest levels of sun exposure. After finding it, businesses can focus their sales in those areas.
Lifestyle leverage extension
Brand extensions related to consumer lifestyles must start with a strong brand image. Businesses must be able to create products that are different or of much higher quality and specifically for certain lifestyles.
For example, a running equipment brand will have a greater opportunity if it targets a group of consumers who like to run. So by prioritizing running events or promotional materials related to this hobby, sales and product reach will be wider.
When a business has succeeded in creating the right image, the strategy is only to create the right product variants and new products that make it easier for consumers to pursue their hobbies or live their lifestyle.
Example of Brand Extension Application
Pepsodent
This famous toothpaste brand in Indonesia initially only had one variant. After ensuring that their product is the main choice of consumers, they start doing line extensions by releasing new toothpaste variants based on consumer needs.
Apple
Apple is a technology product that has a very dominant brand extension strategy. Starting from computers, then laptops (MacBook), iPhones, iPads, to airpods.
Oreo
Just like Pepsodent, Oreo prioritizes vanilla flavor or variants as its initial product. After becoming famous, they started experimenting with various unique flavor variants.
It can be concluded that brand extension is the best strategy to attract new consumers and greater profits.
If you want to develop your brand and business, it is important to learn this. Don't worry, you can learn brand extension in the Strategic Brand Management program from the Prasmul-Eli short program.
You will gain knowledge and various direct experiences from professionals and branding experts. Interested? Click here to learn more and register for the program!
