What's up brand builders Stephen Houraghan here at BrandMasterAcademy.com and in this video you're
going to discover four top brand extension and line extension examples so you can understand
how big brands expand into new categories with new audiences and much much greater revenues
now growing a brand is no easy feat just ask any of the vast majority of entrepreneurs who have
tried and failed to break into their chosen market with a new product service or brand any brand
that has successfully found its footing in the market has earned a favorable reputation otherwise
known as brand equity now this equity provides successful brands with leverage now some brands
use this leverage to increase their prices while other brands use this leverage to expand outside
their original chosen marketplace the latter is known as a brand extension strategy or a product
line extension and in this video we're diving into some of the biggest successes and fails across
four of the biggest brands in the world now before we dive into the examples let's have a quick look
at the reasons that brands might choose a line extension or a brand extension strategy or just
as importantly not choose it number one audience growth a strong brand extension strategy can open
the door to millions of new users as we'll see with nike later on any brand is limited in growth
by the market that it serves now when it comes to its full potential or close to then finding
new audiences becomes more challenging and limits growth potential by extending product lines and
ultimately extending the brand they can attract broader audiences which again are only limited
by the markets they play in the more markets they play in the more potential audience growth
number two brand awareness and brand equity growth now when done right brand extension can solidify
your brand image and turn you into an industry leader apple is a solid example of a successful
brand extension strategy that enhanced brand awareness now of course at its roots apple was
a software company selling computers it had a niche audience for decades before reinventing
music players in 2001 and launching the iphone in 2007. now these product launches became an
icon of a generation and 15 years later there's a good chance that you're reading this or listening
to this video on one of the one billion apple devices that are active around the world today
number three it facilitates growth and further expansion now a successful brand extension
can lead to new product lines for brands as they explore technologies and build upon their previous
efforts and it is also an excellent way to capture a new customer base from the original brand
beginnings as it solves a greater range of needs now the more a successful extension a brand has
the more confidence consumers will have should that brand extend into their market number four
increase market share now it's not difficult to see how a brand selling a single product would
have a limited market share a brand extension strategy that manages to capture the audience's
needs or to create that want or that desire and then translates that into a great product can be
a turning point for a brand regardless of their product let's go back to the apple brand example
for a second now of course apple was already an established brand when they were selling
personal computers and they had made a huge name for themselves now had they have stayed within
that category they probably would have dominated that category for many years but in transforming
their products and extending their product line first into the music category with itunes and
the ipod and then into the mobile phone category with the iphone they absolutely revolutionized
both those categories and the brand itself had they have stayed in their lane the brand would
be a fraction of the size that the brand is today and their revenues would also be a fraction of the
size number five marketing strategy advantage now building a brand from scratch takes a lot of work
it takes years to first earn a share of the market and then to grow a loyal following and establish a
trustworthy reputation a brand extension strategy relies on leveraging existing brand equity and
brands that boast the advantage of having that kind of equity that kind of reputation in the
market they skip much of the heavy lifting when it comes to launching a new brand or a new product
without a doubt it's a distinct competitive advantage to new brands entering new markets from
a financial standpoint it's also cheaper to extend than it is to launch an entirely new brand since
you already have the channels and you're already known as a brand name within your target market
you're taking that reputation into the market with you and that's the whole point of an
extension strategy a brand extension strategy is leveraging that existing equity however this also
poses a risk companies may feel overly confident in their brand equity and not invest enough
into new product launches which could result in an extension failure and this highlights the fact
that a lot can go wrong with a brand extension strategy first brand extension isn't something
that will fix existing problems within a brand or will fix weak brand management to begin with
only a solid brand with plenty of equity and a reputation to back it up successfully
can pull off a brand extension strategy so let's take a look at some of the major risks
of a brand extension strategy number one brand dilution now brand dilution occurs when a brand
loses focus on the offering that it has the reason that it was created in the first place and who it
was created for who that particular audience is and this is often the result of expanding into
a category outside of what they're known for or launching a product that's simply irrelevant to
what their audience expects from them number two lost brand reputation now no matter how successful
a brand is a failed extension can lead to losing the reputation that it once had a failed brand
extension is a cue that the management team has lost focus and it may also suggest that there
are other failings within the business or within the brand whether it's through investor confidence
or the market perception a failed brand extension can damage the brand's reputation in some cases
damage it beyond repair as well number three damage relationships now the biggest risk of
a brand extension is breaking the relationship with existing customers and causing that feeling
of betrayal a failed extension can signal that hey maybe this brand doesn't really understand
what my needs are in a way that i thought they did so why would i trust them to solve my pain
with another product or another service it can take years to regain your audience's trust
after this kind of disappointment so let's have a look at some famous examples of brand extension
or line extension strategy starting with samsung now before samsung became a world leading brand of
smartphones it was a small grocery store in south korea in 1938 now through 1938 to the 90s samsung
expanded into a multitude of categories from banking to insurance and finally to technology
where it began to produce semiconductors and electronics by then with a focus on technology
samsung was expanding worldwide and in early 2000s the company's galaxy series launched not
only did they have a leading product in the market they also sold microprocessors to their biggest
competitor apple now in 2006 samsung dominated the market for televisions as well and in 2010
they released their first tablet into the galaxy family and also followed that up with
smart watches that joined the lineup the samsung expansion is an example of extension by authority
and they have leveraged that authority by staying relatively focused on their strengths
since around about the 90s their products belong to different categories but you'd be hard-pressed
to find someone to doubt the quality of any samsung product from a washer to a smart tv
the next brand extension example is nike now nike was created by phil knight as a
sports shoe brand called blue ribbon which later became nike and throughout the 60s and the 70s
he really grew the reputation of that business and as that brand to become known in the industry
as a top sports shoe producer now nike used that equity that brand equity that reputation to then
begin expanding into other categories and since the mid-80s nike has relied on strategic
partnerships by collaborating with stars like michael jordan in the basketball category tiger
woods in the golf category lebron james again in the basketball category and then the likes
of wayne rooney in the soccer category and these strategies have been used time and again to expand
into different categories leveraging these stars to get a foothold in those markets but again
initially this brand was created as a sports shoe brand and that's where they built that reputation
like so many other brand extension strategies this brand built a reputation in a single
market and then expanded upon that reputation expanded upon that brand equity the limited
edition strategy has proven so successful that a pair of air jordans sold in 2021 for 1.5 million
from selling running shoes out of the back of a car nike now has april for over 30 market
segments from running to basketball surfing snowboarding golf tennis soccer and beyond
the next brand extension example is colgate now there are two elements to study when it comes to
colgate and brand extension on one hand the brand has successfully dominated the dental care space
for years with colgate toothpaste launched over a hundred years ago at this stage now it's easy
to see how a toothpaste brand could easily venture into other hygiene products which is why they have
mouthwash and toothbrushes as well as toothpaste but what happens when a brand tries so hard to
extend that they end up confusing the entire market that's exactly what happened in 1986 when
colgate launched a new product now you might be thinking they probably expanded into professional
dental hardware or some other professional health service or some other professional health products
no in 1986 their master stroke was beef lasagna now you don't need to be a professional brand
strategist to guess that the now infamous frozen meal was an utter failure it is also
a perfect example of how important it is to stay relevant when it comes to a brand extension one
of the most critical aspects of a brand extension strategy is understanding what your audience wants
from you and the role that you play in their lives the next example of brand extension is
microsoft now microsoft is another example of what not to do when it comes to extension strategies
microsoft had built a reputation on software development from the beginning and they led
the market for years before apple came in and swooped into the smartphone space microsoft's
response was a failure it reacted by introducing its own smartphone iteration the windows phone
but it was already late to the party in a highly competitive smartphone environment that apple had
taken control of now this isn't the only category where microsoft has failed to position itself well
against a competitor despite windows having three quarters of the desktop os market their search
engine bing represents only seven percent of the search engine market share compared to google's
85 now of course these are all examples of massive brands and if you have a brand you
might be thinking well how's this relevant to me but small brands can extend their lines as well
they can extend their brand and go out and find new audiences with new products and new services
let me give you a quick simple example of this let's say a local cafe wanted to extend into a
different category and they wanted to leverage their reputation for quality produce and flavor
they might decide they want to extend into on-site or off-site gourmet food markets likewise a local
hair salon with passionate clientele might want a slice of the beautician market and extend through
nail salons or other beauty treatments the key ingredient to a successful extension is a brand
with an already strong reputation to leverage in the first place they need to leverage that
reputation and that brand equity but remember that reputation wasn't easily earned and
protecting it must be the first priority for any brand extension strategy now if you want
to dive deeper into brand strategy then this video will help you out but before you click
it if you want to become a master of brand hit the like and subscribe to make sure you get
new videos just like this until next time brand like a master and i'll see you in the next video