As consumers, we see and use brand extensions every day without even realizing it. Whether we are sipping a new Pepsi-owned product while watching TV, checking out the frozen aisle of the grocery store, or online shopping for a new moisturizer - most likely the product fits under a parent brand and is an extension of what the company originally offered.
Why do companies have brand extensions? If you guessed money, you’re right! While some companies thrive off of mastering one product only, the real reason companies have brand extensions is that they can be extremely profitable - if successful.
While most people will commonly talk about brand extensions in relation to physical products, they can also exist with digital products. Keep reading as we guide you through the ins and outs of brand extensions with examples, plus how you can start to brainstorm an extension of your own.
What is a brand extension?
Let’s get the definition of “brand extension” straight first. On the outside, it sounds like a fancy corporate marketing term, but in reality, it’s pretty straightforward.
A brand extension is when an established business or company starts selling a new product or a product in a new category using its brand name.
Brand extensions are an easy way for companies to diversify their product offerings for their current audience, but also a convenient method to invite a new customer base into the company’s realm. Typically, this helps increase sales. The main strategy behind a brand extension is that when a company already has a loyal customer base and a trusted brand name, it’s more likely the same audience will purchase a new product under the same brand.
The difference between brand extension and line extension
Instead of getting into the nitty-gritty of every way you can create a brand extension for your products (there are a lot), the two that all entrepreneurs should be familiar with are a brand versus a line extension. While they are both forms of product extensions, there are a few key differences.
A brand line extension is where a brand releases one of its products with a twist - ever heard of Coke Zero Sugar or Diet Coke with Lime? It’s the same product in a new line - but, it has an enticing flavor to draw Coca-Cola’s loyal audience back to try it. Generally, line extensions are less risky since it’s within the same product category. Sometimes, a brand line extension is also called a vertical extension because it can also apply to products with tiered options. TVs are a great example of this as you can buy the same TV in a different size or with more features added - to put it simply, you can choose more affordable options or a fancier version within the same brand product.
On the flip side, a brand extension is an entirely new product in a new product line - we’re looking at you, Dyson Supersonic™ hair dryer. Dyson is a great example. Once only known for its vacuum products, the company used its technology to expand its products into the beauty industry by releasing an innovative hair dryer as well as other hair styling tools. And it paid off - big time. In some consumer segments, more people now know about Dyson’s hair dryer than its latest vacuum cleaner. This is also known as a horizontal brand extension - where a parent brand creates an entirely new product underneath it.
Real-life brand extension examples
As we mentioned earlier, brand extensions are prevalent everywhere these days. We know we’ve thrown around a few examples already, but here are five more real-life brand extensions to reference to help you brainstorm:
- Topo Chico Hard Seltzers
Topo Chico is a well-renowned mineral water maker hailing from Mexico and is now owned by Coca-Cola. It has a recognizable bottle, taste, and logo. Its latest brand extension is Topo Chico Hard Seltzer - spiked sparkling water. The company entered a new product category by selling alcoholic beverages and it has seen major success due to the brand’s established authority in the beverage space. It paid off - its new product was the third-fastest hard seltzer brand selling nationally last year.
- Apple Watches
Apple - we all know it and most likely use or have used some of its products in the past. Since the company originated with a line of computers, its Apple Watch product is a clear example of a brand extension. The product itself can literally be seen as an extension of the iPhone - while at first, the success was slow, with a strategic marketing effort and a focus on health and fitness, Apple users jumped to buy the new product. Plus, the Apple Watch has a brand line extension itself as Apple continually releases updated ones with different pricing tiers.
- Fenty Skin by Rihanna
After Fenty Beauty generated $550 million in revenue in the first year, it became one of the most successful celebrity-fronted brands. With the established authority and loyal audience of Fenty Beauty, Fenty Skin was born. Rihanna launched her skincare line in a strategic way; Fenty Skin is marketed as a gender-neutral and inclusive skincare - unlike many existing skincare brands. This is an excellent example of a brand extension that has invited a broader audience into a parent brand.
- Amazon and Whole Foods
When Amazon bought Whole Foods, everyone did a double-take. But, this unlikely combination ended up revolutionizing how people buy and order groceries. It is a unique brand extension example because when Amazon purchased Whole Foods, the grocery chain kept its own branding. However, using Amazon’s powerful loyalty program for discounts on groceries, the delivery service successfully extended its brand into a new category.
- Star Wars Franchise
The entertainment industry is famous for brand extensions! Sequels, spin-offs, and TV adaptations are all ways that entertainment companies create brand extensions. Star Wars is a great example with several different franchises, TV shows, video games, books, merchandise, and even a theme park at Disneyland. The Star Wars franchise has created extremely loyal customers and Disney has recognized this and not only cultivated new audiences around it but profited well from its various product extensions.
How to develop a brand extension as an online entrepreneur
While it’s easy to think of brand extensions in relation to physical products, for online entrepreneurs, the options for extending your brand are endless.
What’s great about digital products is that you already have an established audience and niche waiting for you to release more content, whether it’s free or paid. The obvious way to incorporate a brand extension is to offer more digital products that relate to your core offering. For example, have an online course? Offer one-on-one coaching to go alongside it, a branded podcast that is named after your course, or even offer physical products, like a journal or checklist, to accompany the online lessons.
Craig Beck is an excellent example of an online knowledge entrepreneur who has used his brand to create several brand extensions. Using Kajabi, Craig has launched a variety of digital products - not only does he have extremely popular and successful sobriety coaching, but he has extended his brand to include personal coaching and investment coaching! He has successfully extended his coaching brand into different categories which has allowed him to grow his audience and revenue.
Before you dive headfirst into creating your brand extension, remember that your brand strategy and goals should always be top of mind. Sometimes a brand extension won’t make sense for you. Even though you might see something a competitor is doing or you want to replicate a fun idea you saw on TikTok, pause and consider if it will keep your branding cohesive, and, more importantly, if your niche audience would identify with it.
Developing a brand extension as an online entrepreneur should come in three crucial parts:
- Research: We cannot stress this enough, research! And we specifically mean audience research. Surveying your core customer group is critical for brand extensions. Without your loyal followers' support, you can most likely expect a product to flop. Send a survey out in your community, lead an online focus group, or have a town-hall Instagram live so you can get your audience’s opinion.
- Create with your parent brand in mind: When creating your brand extension, make sure you don’t distance your product from your parent brand. Whether you want to have the same brand name, logo, theme, or line, you want your brand extension to be recognizable.
- Beta test: Beta tests are common among digital products and software. A beta test is where you release your new product or update to a small group of users first to see their reactions, work out any issues, and more. It’s a great way to test the waters and receive feedback before you waste time and money on developing a full brand extension that could be unsuccessful.
The best part about testing a new brand extension for digital products is that you’ll hardly have to spend money - you can offer your new course or membership site for free without having to spend manufacturing money on a physical product. We call that a win-win.
Words of caution when it comes to brand extensions
We’ll be blunt - brand extensions can fail if done poorly. Remember the IHOb/IHOP debacle of 2018? IHOP extended its brand by offering new burgers and, in a publicity stunt, changing its logo to IHOb. While it garnered attention, many thought it was more of an April Fools Joke instead of a brand extension. After fans and competitors ridiculed the company online, there was no official success of its new and improved products (burgers) and it ended in embarrassment for the restaurant chain.
Amazon’s Fire Phone failure is another example of a poorly executed brand extension. After seeing success with its Kindle line, Amazon decided to launch a phone. But, the iconic brand’s phone was incompatible with many apps, and expensive, so in the end, consumers didn’t want it. Amazon failed to do thorough audience research to find out if their consumers would actually purchase such a phone.
What lesson can we learn from these failures? Do your research and use your audience as the key resource for new ideas and digital product launches. Be careful of venturing into a new niche where you have less authority - it could cost you.
Growing your brand and product
If you’re an online entrepreneur looking to extend your brand in the right way, completing the right research and vetting will enable you to create brand extensions that will increase your current audience and invite new members into your fold.
If you’re ready to grow your brand and launch new products, Kajabi is here to help make it a success. Whether you're launching a new podcast, online course, or coaching program to extend your brand, get started with your free 14-day trial here.