Introduction
In today’s fast-paced world, brands are looking to expand their boundaries and gain a competitive edge over their rivals. One of the most popular ways to do this is by implementing brand extension and brand stretching strategies. Both of these strategies involve introducing new products or services under an already established brand name in the market.
Brand extension involves the introduction of a new product or service that is related to the existing products or services of the brand. On the other hand, brand stretching involves the introduction of a new product or service that is not necessarily related to the already existing products or services of the brand.
In this article, we will delve into what brand extension and brand stretching mean, the benefits of implementing these strategies, and how to implement them.
What is Brand Extension?
Brand extension is a brand strategy that involves introducing a new product or service under the umbrella of an already established brand name. The new product or service must be related to the already existing products or services of the brand. This strategy works well when the new product or service has a clear connection with the existing brand name, and it is seen as a natural extension of the brand.
For example, McDonald's is known for its burgers and fries. The company introduced a new line of breakfast products, including muffins, pancakes, and coffee. Even though breakfast items are different from the primary products the brand was known for, they are still related to the food industry and therefore fit well under the McDonald's brand name.
Brand extension helps to strengthen the brand name by creating a broader range of products and services. It enables the company to take advantage of its already established brand equity and cut costs that could have been incurred in the introduction of a new brand.
What is Brand Stretching?
Brand stretching or brand expansion, on the other hand, is a brand strategy that involves introducing a new product or service that is not necessarily related to the already existing products or services of the brand. This strategy requires a more significant amount of effort as it involves the creation of an entirely new product line, which may not be associated with the already established brand name.
For example, the Virgin Group with interests in various industries such as music, airlines, and mobile phones, expanded into the financial services industry, which was not directly related to any of its existing products or services. The company launched a range of financial products such as bank accounts and credit cards under the Virgin Money brand name, thereby stretching its brand into new markets.
Brand stretching helps the company expand its market share and reach new customers outside its usual target audience. This strategy enables the brand to leverage its existing brand equity and reputation to establish itself in a new industry and build credibility with its customers.
Benefits of Brand Extension and Brand Stretching
Implementing brand extension and brand stretching strategies comes with many benefits. Some of these benefits include:
- Reduced costs: The introduction of new products under the existing brand name helps cut costs that would have been incurred in the creation of a new brand name entirely. The new product can leverage the brand name, logo, and reputation of the already established brand, reducing the marketing and advertising expenses.
- Increase in brand equity: Brand extension and brand stretching strategies enhance the overall brand equity. The introduction of new products increases the brand's visibility and popularity, resulting in an increase in the brand’s perceived value by the customers.
- Expansion of market reach: Both strategies help the company reach new customers outside its usual target audience. This not only helps increase sales but also helps in establishing brand credibility and customer loyalty.
- Effective use of brand value: Introducing a new product under an already established brand name helps the company make effective use of the existing brand's reputation and perceived value. This, in turn, helps the new product gain a competitive edge in the market.
- Risk mitigation: The introduction of a new product or service under an already established brand name helps to reduce the risk associated with introducing a completely new brand name in the market. Extending the brand reduces the risks that come with new market entry, which usually comes with high costs and uncertainties.
Conclusion
Brand extension and brand stretching strategies are essential for any brand looking to expand its boundaries and maintain its relevance in the market. These strategies help the brand leverage its already established reputation and equity, cut costs, and reach new customers. When implemented correctly, these strategies can help the brand to increase its profitability, promote its growth, and establish itself as a market leader in new industries.