Understanding Brand Extension

Definition of Brand Extension

“Brand extension uses the leverage of a well known brand name in one category to launch a new product in a different category.”

Four Types of New Products

There are four types of new products. The traditional new product uses a new brand name. The flanker, line extension and brand extension all use an existing brand name.

Traditional New Product

When a company launches a new brand in a category where they have not previously had an entry, it is called a traditional new product.

Flanker Brand

When a company launches a new brand in the same category where they have other entrees, it is a flanker brand. Using military language, the new brand is “flanking” the existing brand they have in the category. So this is done for a number of reasons. Sometimes a new brand name is used because the flanker is targeted to a different segment.  But another reason to introduce flankers is to have more shelf facings in a section and capture more sales due to increased exposure.

 Line Extension

Often a company will expand their product line with new varieties or versions. These new products use the same brand name as the original parent product. Line extensions are the most common type of new product and help expand interest as well as shelf exposure.

Brand Extension

Brand extensions, in contrast to the others, use an existing brand name owned by the company to launch a new product in a category where that brand has not had a presence.

The components of the definition of brand extension

  • It is a new product
  • It should use a well known brand from a different category
  • The brand should have a competitive advantage with customers in the new category

Well known brand name

A potential client wanted us to help extend Crosse and Blackwell (a sauce brand). Research showed people did not recognize the brand or incorrectly thought they made electric drills (Black & Decker) or were a law firm!

Leverage with customers of the new category

By definition, a brand extension is a product in a different category from the parent brand. Our study of Snickers revealed that ice cream bars do not necessarily sell to the same people who buy Snickers candy bars. So what is important is what ice cream bar customers know of and think of Snickers. Leverage requires customers in this new category to perceive the new brand extension as superior to existing competitive products. This is competitive advantage. 

Leverage is not the same thing as consumer acceptability

Marketers often spend too much effort on extending brands into categories just because consumers allow it. If consumers thought Dole vegetables would be a reasonable brand extension, that does not mean it is a good one. If there is no competitive advantage of Dole vegetables versus existing brands of vegetables, it will likely fail. Entering a new category is always a risky undertaking. There is a steep learning curve in production, distribution, promotion, etc. But most of all, we are competing for consumers’ business where they have loyalties to established brands. Why should anyone switch to something new and untested? That is what a new brand extension (like any other new product) must provide. It must offer a strong reason why the consumer in the new category will prefer us to what they are buying now.

Note the connection and leverage of this brand extension: