7.4 Implementing successful brand extensions
3 min read•july 18, 2024
Brand extension strategy is all about leveraging a strong brand to enter new markets. It involves carefully positioning the extension, aligning it with the parent brand, and crafting a marketing mix that resonates with the target audience.
Implementing a brand extension requires a phased rollout plan and ongoing adaptation. This includes market testing, prioritizing key markets, and continuously gathering feedback to refine the strategy and maintain brand equity.
Brand Extension Strategy
Brand extension positioning strategy
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- Identify unique selling proposition (USP) of brand extension
- Differentiate from competitors (features, benefits, quality)
- Align with parent brand's core values and identity (mission, vision, personality)
- Define target audience for brand extension
- Demographic (age, gender, income), psychographic (values, interests, lifestyle), and behavioral characteristics (purchase habits, )
- Ensure alignment with parent brand's target audience to leverage existing customer base
- Establish brand extension's market positioning
- Determine price point relative to competitors and parent brand (premium, parity, economy)
- Identify key benefits and features to emphasize in marketing communications (performance, convenience, style)
Marketing mix alignment
- Product
- Ensure product quality and consistency with parent brand standards (materials, manufacturing processes, quality control)
- Develop packaging design that reflects parent brand's visual identity (logo, color scheme, typography)
- Price
- Set pricing strategy based on market positioning and target audience (skimming, penetration, competitive)
- Consider parent brand's price point and perceived value to maintain brand consistency
- Place
- Select distribution channels that align with parent brand's existing network (retail stores, online platforms, wholesalers)
- Ensure availability in relevant markets and retail outlets (geographic regions, store types)
- Promotion
- Develop integrated marketing communications plan
- Advertising (print, digital, broadcast)
- Public relations (press releases, events, sponsorships)
- Social media (content creation, influencer partnerships)
- Sales promotions (discounts, coupons, contests)
- Leverage parent brand's equity and reputation in promotional activities (co-branding, endorsements)
- Communicate USP and key benefits of brand extension (product demonstrations, testimonials)
- Develop integrated marketing communications plan
Brand Extension Implementation
Phased rollout plan
- Conduct market testing and gather feedback from target audience
- Refine product, pricing, and promotional strategies based on insights (focus groups, surveys, beta testing)
- Prioritize key markets for initial launch
- Consider market size, growth potential, and competitive landscape (demographics, economic factors, )
- Develop a timeline for gradual expansion into additional markets
- Allocate resources and budget for each phase of the rollout (personnel, inventory, marketing spend)
- Collaborate with distribution partners and retailers for successful launch
- Provide training and support materials for sales staff (product knowledge, sales techniques)
- Ensure consistent brand messaging and product placement (point-of-purchase displays, shelf space)
Strategy adaptation based on feedback
- Establish key performance indicators (KPIs) to track success
- Sales volume, market share, customer satisfaction, and brand awareness (revenue, units sold, Net Promoter Score, brand recall)
- Regularly gather and analyze market feedback
- Customer reviews, social media sentiment, and sales data (ratings, comments, engagement metrics)
- Identify areas for improvement and make data-driven decisions
- Adjust marketing mix elements as needed to optimize performance (product features, pricing, distribution, promotion)
- Monitor competitor activities and market trends
- Adapt brand extension strategy to maintain competitive advantage (innovation, differentiation)
- Continuously assess brand extension's impact on parent brand equity
- Ensure consistent brand image and prevent dilution of parent brand's value (brand tracking studies, customer feedback)
Key Terms to Review (17)
Aaker's Brand Equity Model: Aaker's Brand Equity Model is a framework that identifies brand equity as a combination of brand loyalty, brand awareness, perceived quality, brand associations, and other proprietary assets. This model helps businesses understand the value of their brand in the market and emphasizes the role of strong brands in driving consumer preferences and business success.
Apple's iphone: Apple's iPhone is a line of smartphones designed and marketed by Apple Inc., first launched in 2007, that combines a mobile phone, an iPod, and an internet communication device. This revolutionary product has significantly impacted the smartphone industry and exemplifies successful brand extension through its innovative features and consistent branding.
Brand associations: Brand associations are the attributes, feelings, and experiences that consumers connect with a brand, forming a mental image that influences their perception and behavior towards it. These associations play a crucial role in shaping brand identity, perception, loyalty, equity, and even strategies for brand extensions, as they help consumers make sense of what the brand stands for and how it differentiates itself in the marketplace.
Brand dilution: Brand dilution occurs when a brand loses its strength or value due to overextension, inconsistent messaging, or negative associations. This weakening can stem from various factors, including poor brand extensions, inappropriate partnerships, or a failure to maintain quality standards. Understanding how to manage and avoid brand dilution is essential for maintaining a strong brand identity and ensuring long-term success.
Brand fit: Brand fit refers to the alignment and compatibility between a brand and its extension, ensuring that the new product or service resonates with the existing brand identity and consumer expectations. This connection is essential for successful brand extensions, as a strong brand fit can enhance consumer acceptance and perceived value, ultimately leading to greater success in the marketplace.
Brand Loyalty: Brand loyalty refers to the consumer's commitment to repurchase or continue using a brand's products or services consistently over time. This loyalty often leads to a preference for a brand, even when faced with alternatives or changes in price, making it a critical aspect of effective branding and management strategies.
Category extension: Category extension is a branding strategy where a company leverages an established brand name to introduce new products in a different category than the original offerings. This approach allows brands to capitalize on existing customer loyalty and brand equity, creating opportunities for growth while also presenting unique challenges in brand perception and market positioning.
Colgate's Kitchen Entrees: Colgate's Kitchen Entrees refers to a failed brand extension attempt by Colgate-Palmolive, a company traditionally known for its oral care products, where it ventured into the frozen food market. This initiative is a prime example of how not all brand extensions succeed, highlighting the importance of alignment between a brand's core identity and the new product category. The unexpected move created confusion among consumers, as they struggled to connect Colgate's strong reputation in dental hygiene with food products.
Consumer Backlash: Consumer backlash refers to the negative response and resistance from consumers toward a brand, product, or marketing campaign due to perceived misalignment with their values or expectations. This reaction can stem from issues like poor quality, unethical practices, or failed brand extensions that don't resonate with the audience. Understanding consumer backlash is crucial for brands, especially when implementing new strategies such as brand extensions, as it can significantly impact brand reputation and consumer trust.
Consumer familiarity: Consumer familiarity refers to the extent to which consumers recognize and are comfortable with a brand or product due to prior exposure. This familiarity can significantly impact consumers' purchasing decisions and their openness to trying brand extensions, as it builds trust and reduces perceived risk associated with new products under the same brand umbrella.
Keller's Brand Equity Model: Keller's Brand Equity Model, also known as the Customer-Based Brand Equity (CBBE) model, is a framework that emphasizes the importance of building strong brand relationships with consumers to create brand equity. This model outlines a pyramid structure with four key stages: brand identity, brand meaning, brand response, and brand resonance, which helps brands understand how consumers perceive them and how to create lasting connections that drive loyalty and business success.
Line extension: Line extension refers to the strategy of introducing new products that are variations of an existing product line, leveraging the established brand name to target a broader audience or specific market segment. This approach helps optimize brand architecture for growth by utilizing existing brand equity and expanding market presence, leading to a more robust overall brand portfolio.
Market fit: Market fit refers to the degree to which a product or service satisfies the demands and needs of a specific target market. Achieving market fit indicates that a product resonates well with customers, leading to strong sales and customer satisfaction. It's essential for successful brand extensions, as understanding the existing market helps brands determine if their new offerings will meet consumer expectations and fill a gap in the market.
Market Share: Market share is the portion of a market controlled by a particular company or product, often expressed as a percentage of total sales within that market. Understanding market share helps businesses assess their competitive position and devise strategies to differentiate themselves, enhance brand equity, and optimize growth opportunities.
Perceived Risk: Perceived risk refers to the potential uncertainty or negative outcomes a consumer associates with a purchase decision, influencing their likelihood of engaging with a brand or product. This concept encompasses various dimensions, including financial, functional, physical, social, and psychological risks. Understanding perceived risk is crucial for brands as it affects consumers' willingness to try new products, especially in the context of brand extensions.
Sales growth: Sales growth refers to the increase in revenue generated from sales over a specific period, often expressed as a percentage. It reflects a company's ability to expand its market presence, increase customer base, and enhance product offerings. Understanding sales growth is essential for evaluating the effectiveness of branding strategies and extensions, as well as assessing the return on investment for branding initiatives.
Sub-brands: Sub-brands are distinct brands that are part of a larger parent brand, designed to target specific market segments while leveraging the equity and recognition of the parent brand. They allow companies to diversify their offerings and cater to different consumer preferences without diluting the main brand's identity. Sub-brands can help in enhancing customer loyalty and expanding market reach through tailored messaging and positioning.