Brand Extensions: Is It The Right Model For Your Company?


In yesterday’s post we looked into ways of extending your brand without changing your product. Today we will investigate if the brand extension model works for the SME sector and review how you assess if you should extend your current proposition or not.

The initial innovators of brand extension were big corporations such as Starbucks and Coca Cola. These corporations understood that their brand recognition would extend into other areas and how having an established brand identity would significantly reduce the risk of entering a new sector. But will it work for the SME sector?
Is extending your brand offering right for your business?

In most cases, entrepreneurs start the company formation process because they have experience and knowledge of the sector they are about to enter on their own. Yet, if you have established a brand and are considering breaking into a new sector, it is likely you don’t have the same level of experience you have in your own area. So how do you know if it is the right thing to do?

The most important thing to establish, before you consider entering a new market, is whether your existing brand and proposition is relevant to the sector. For example a budget brand such as Aldi, extending their brand into low cost white goods would work as it is consistent with their brand concept of good value for money. However, if they choose to enter a high-end market such as designer clothes, it would have little relevance and therefore would confuse their existing consumer base and fail to gain market share.

What do you know about your current brand?
If you are using your current brand proposition as a platform to extend into another market, you must first understand how you established the equity in your current brand.

It is important, to understand why customers buy from your brand and identify if the emotional motivation that drives your customers to buy, is relevant to the market you wish to enter.

For most businesses considering a brand extension, the objective is to obtain an incremental income. However, brand consultant Mark Jeffery, thinks that brand extension should be integrated into your overall brand strategy. He comments “Offering new products and marketing, allows you to communicate with a different demographic and subsequently build equity and relevance in your current brand.”

If you have decided to go ahead with extending your brand it is important to research your current proposition and gain a comprehensive understanding of market perception. Deconstruct your current offering and think of ways your new offering will differ from your current proposition while staying under the same brand umbrella.