To grow a brand, you need a deep understanding of the needs you satisfy for your customers. Brand extension sparks that growth by exploring the value a business provides and how it can meet customer needs in a new way.
We all use brand extension offerings from companies in our day-to-day lives, but it may not be something we always recognize. Before jumping into the process of brand extension let’s get clear on what the concept means and what it looks like in practice.
Brand Extension Definition:
Brand Extension or Brand Stretching is when a parent brand expands its offerings into a new category apart from its core line of business.
Brand extension leverages a brand’s name and equity to provide more value to existing customers or create growth through new and adjacent markets. It can come in the form of a product, service, or even content.
Brand extension examples include things like:
- Colgate extending from toothpaste into toothbrushes and mouthwash
- Tesla extending from cars into home battery units and solar panels
- Airbnb extending from home rental into local experiences
- Star Wars extending from movies into toys
- Lego extending from toys into movies and television
- Facebook extending from a social network into virtual reality hardware (Oculus)
- Mailchimp extending from email service into online video content
- Your favorite restaurant extending from food into t-shirts and other merchandise
As those examples highlight, brand extension provides all kinds of growth opportunities from a strategic perspective. In addition, brand extension is a popular marketing strategy because it provides additional pathways for audiences to discover an existing brand.
As part of this definition, it’s also important to note how this is different from a line extension.
Brand Extension vs. Line Extension
With a line extension, the parent brand creates a variation of product or service within the current core category of the business.
Using some of the brands in the list above, line extension examples would include things like:
- Colgate adding a teeth whitening variation of toothpaste
- Tesla adding an economy model of electric car
- Lego adding space-themed versions of their famous building toys
Of course brand extension comes with risks, too. By definition, extending beyond your core business category means working in a space where you lack proven traction.
There’s also a chance that brand extension could have a negative impact on the core business. For example, marketers with luxury brands use brand extension cautiously in order to avoid diluting or cheapening the perceived value of the brand as a whole.
The key is to think through the extension strategically and see how it might serve the parent brand’s vision and goals. Even if you’re not ready to fully jump into brand extension, exploring the process can clarify what the brand should or shouldn’t consider.
To guide your strategy and thinking around a new extension, you can follow our B.R.A.N.D. acronym framework.
Keep Your Extension On B.R.A.N.D.
It’s important that any brand extension efforts not only embrace the qualities of your parent brand but also serve the direction of the brand.
We developed a simple framework using the acronym B.R.A.N.D. to help ensure that your extension doesn’t steer you too far off course.
Here’s what each letter represents:
B – Behavior
What customer behavior does the brand extension support that services the parent brand in some way?
R – Relevance
Is there a clear and obvious connection between the category of the brand extension and the parent brand?
A – Awareness
How does the brand extension guide customers back to other products and services within the parent brand?
N – Need
Are there growth opportunities in the parent brand around customer acquisition that the extension strengthens?
D – Delivery
Does the brand extension embody and promote the positioning and attributes of the parent brand?
To see how each of these apply, we can look at a recent example of brand extension out in the wild.
Brand Extension Case Study: Calm’s Mindful Puzzle Collection
With a valuation around $2 Billion, Calm is one of the biggest and most popular meditation apps in the fast-growing space of mental health.
Calm’s mission is to improve people’s ability to focus, relax, and sleep through meditation. In our world of non-stop information, news, and content more and more people recognize the need for this type of balance.
During the tense 2020 election results process, they famously (and hilariously) ran an ad that simply asked people to sit quietly for 15-30 seconds.
Calm’s core business line is purely digital – they provide an app that streams meditation content. From a brand extension perspective, this means that physical products represent a very different category of offering.
So, what type of products would express the value they seek to provide in a new way?
It’s not surprising that one brand extension product they offer is a meditation cushion. There’s a clear line to draw between consuming guided meditation audio and needing a comfortable place to listen to it.
A less obvious, but still very relevant example is Calm’s Mindful Puzzle Collection.
Puzzle popularity spiked significantly during COVID as people searched for distractions and activities at home.
Calm latched onto that market trend in a strategic way with their product.
Here are the ways Calm positioned their puzzles as a perfect brand extension:
- Behavior: People can work on the 7 puzzles in the set over a week to encourage a consistent routine.
- Relevance: Working on puzzles is often thought of as a very meditative activity. It keeps you focused on a very simple, repetitive task for a duration of time.
- Awareness: The product includes a free 30-day subscription to Calm’s app to bridge customers back to the primary line of business.
- Need: While meditation has grown in popularity, this product offers a way to reach a more general audience through an activity with wide acceptance and interest.
- Delivery: Each puzzle in the set connects to a key concept of meditation – i.e. gratitude, acceptance, letting go, etc. The puzzles themselves are of beautiful scenes of nature that encourage a feeling of connection. The packaging is also clean and attractive which makes it something to leave out where it will be noticed and used.
Satisfying each of the factors within the B.R.A.N.D. framework doesn’t guarantee brand extension success. But it does ensure that your new product or service fills an important need both for your parent brand and your customers.
A New Brand Extension Opportunity: NFTs
Given that brand extension involves exploring new category lines for your business, it only makes sense to keep an eye on new trends and emerging markets.
NFTs represent an entirely new form of offering for businesses.
You may have heard about NFTs related to spaces like art and collectibles. An NFT (non-fungible token), in the broadest sense, operates as a digital certificate of ownership for a unique asset.
As with any emerging market, the opportunities around the NFT space are constantly evolving. Big brands like Taco Bell and Coca-Cola are already experimenting in the space with digital art.
But there are even more creative ways to think about NFTs in terms of brand extension.
Digital entrepreneur, Kevin Rose, hosts two podcasts, Modern Finance and Proof which focus on cryptocurrency and NFTs.
To extend that, he’s building an exclusive community for NFT enthusiasts. And as you might guess, customers can purchase membership to the community through an NFT token.
For those that purchase one of these 1000 unique membership tokens, they get access to a digital community, early access to content, and the ability to attend exclusive in-person events.
From a brand extension perspective, this allows their brand to offer something that connects to their primary podcast offering but with a whole new line of value.
By utilizing a membership community, the brand can deepen relationships and authority in the space and extend the brand out into the physical world.
Brand Extension As A Growth & Strategic Exercise
When you think about growing a brand, it’s natural to look first at line extensions related to your current offerings. This is where the business has proven traction and expertise.
However, to provide more value to your current customers and reach beyond that existing audience brand extension can provide a wide array of growth opportunities.
Using our B.R.A.N.D. framework helps to spark growth in two ways:
- Explore and vet out new brand extension ideas
- Create deeper clarity around the parent brand’s value, attributes, and goals
With a little thought and guided effort, you can discover lots of interesting, new growth opportunities while also making your primary brand stronger and more valuable.
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