Brand extensions are a great route to access new markets and customers. But they can be risky when approached haphazardly, as many well-known brands have discovered.
Let’s not forget Colgate’s failed expansion into the frozen food market or Virgin’s ill-advised move into the wedding dress industry with a chain of shops that quickly shut down.
However, the payoff can be huge for businesses that get it right. Companies like Coca-Cola and Apple have built global brands off the back of successful brand extensions.
This article looks at the ingredients for an effective brand extension, some common pitfalls to avoid, and 29 examples to inspire your brand extension strategy.
What is a Brand Extension?
A brand extension is when a company uses its existing brand name for a new product line or service. For example when Starbucks launched its range of coffee beans and coffee makers under the existing brand so consumers could enjoy the Starbucks experience at home.
Types of Brand Extensions
There are several different types of brand extensions a brand manager should consider:
Perhaps the most common form of brand extension, a line extension is the introduction of variations of existing products under the same brand name. A line extension allows businesses to capitalize on existing customer trust and loyalty in the core brand. This could be a good option if you have a successful range of products that could benefit from additional variations.
For example, when social media software Hootsuite launched new analytics tools to complement their existing social media scheduling software - discussed in more detail below.
Complementary product extensions
A complementary product extension is when you introduce new products or services related to and complementary to an existing core product category. It offers additional value to your customer base, boosts customer loyalty, and creates new income streams.
An example is Apple's range of hardshell cases for the Mac and MagSafe silicone cases for the iPhone, which it offers customers as an add-on when they purchase core Apple products.
Customer base extensions
A customer base extension is focused on growing a customer base among a new demographic. This can be an effective brand marketing strategy for companies looking to diversify their customer base and increase brand reach.
Look at your industry. Are there customer segments that are currently under-served? In the examples below, I look at how Shopify dramatically increased its customer base by launching a version of Shopify for enterprise-level businesses.
Company expertise extensions
Company expertise extension refers to leveraging existing skills within a company to brand into new areas or industries. For companies with substantial product development and tech capabilities this can be an effective way to tap into new markets and broaden revenue sources.
HP’s move into 3D printing is a good example of a company leveraging existing capabilities to enter a new industry and generate massive profits - more on that below.
Brand lifestyle extension
Brand lifestyle extensions involve expanding a brand into services or products that cater to another area of the consumer’s life and align with the brand's values. Lifestyle extensions are a good fit for companies looking to build a deeper connection with their customers, thereby increasing customer lifetime value and retention.
Amazon has implemented several successful brand lifestyle extensions. Beginning with the Amazon marketplace, the company has since branched into diverse markets, including business-focused purchases, music, and, recently, physical stores. All these moves have helped boost Amazon's brand equity with its customer base.
Advantages of Brand Extensions
Brand extensions can be hugely rewarding if executed properly - nearly 60% of consumers prefer buying new products from brands they already know. Benefits include:
- Cost savings: Brand extensions can be a cost-effective way to enter a new market and target new customers because you can leverage your existing brand equity and resources. This means brands can launch new products without the substantial marketing spend or product development costs required to launch a brand from scratch.
- Competitive advantage: Brand extensions are a popular way for businesses to grow market share and retain competitive advantage. This is particularly important in competitive markets like SaaS, where brands must constantly innovate to compete with other startups.
- Risk mitigation: While brand extensions are not without risk, it’s still a lot safer than launching a new brand from scratch. You already have brand recognition and market expertise, which you can use to your advantage. That’s why extensions are 5 times more successful than brand-new product launches.
- Faster adoption: Customers are far more likely to try out a new product or service from a company they know and trust. With brand extensions, you can leverage existing customer awareness and trust to secure faster adoption rates and immediate customer feedback to inform your strategy.
- Increased market share: Through well-executed brand extensions, businesses can quickly enter new markets and tap into new customer demographics, thereby increasing market share and diversifying revenue.
- Increased customer loyalty: Most importantly, an effective brand extension will enhance the customer experience and boost awareness of your brand. Launching products or services that complement your existing range improves customer perception of your brand, which translates into more sales and increased customer retention.
Disadvantages of Brand Extensions
When considering a brand extension it's important to explore the potential pitfalls should the brand extension not go to plan. The most obvious disadvantages include:
- Brand dilution: If a brand extension doesn’t go well with the target market, it can negatively affect the entire brand image and damage customer trust and loyalty. To avoid this, it’s vital to carry out extensive market research to ensure a potential brand extension will enhance customer experience and reflect your core brand values.
- Customer confusion: If a brand extension doesn’t make sense to consumers, it can cause confusion among customers and even lead to the existing products or services losing customer sales. Think carefully about how a potential brand extension fits your existing products and the wider brand - if it’s not in line with your brand vision and values, it might be one to avoid.
- Cannibalization of sales: If a brand extension competes directly with an existing brand or service, it can draw sales away from the original products and even reduce market share for the business. Analysis of your target customer persona will help you clearly pinpoint their needs and challenges so you don’t offer competing product solutions.
- Dilution of resources: Brand extensions can put much pressure on your existing resources. For example, if your development team spends all its time working on a new app, your existing software could suffer. A thorough analysis of your existing resources will help you identify gaps in your resources to create a realistic brand extension strategy.
29 Useful Brand Extension Examples to Inspire You
To help you avoid these pitfalls and create a brand extension that works for your business, we’ve compiled the top tech brand extensions to inspire your brand extension strategy.
1. The Apple iPhone
Believe it or not, Apple was once a humble computer company, but it has become a trillion-dollar company through a series of successful brand extensions. The Apple iPhone is the most widely used device in the world, with 1.46 billion users, and its success comes down to Apple’s ability to understand what consumers want and need even before they do. Through collaboration between Apple's hardware, software, and product teams, Apple was able to create a powerful but user-friendly phone that customers love.
Takeaway: Understanding your customers’ needs and creating user-friendly products is the foundation of a successful brand extension.
2. Amazon Web Services (AWS)
AWS is a great example of a company expertise extension. While building the world’s biggest e-commerce platform, Amazon encountered a number of tech issues, which they solved by creating their own world-class cloud computing and infrastructure system. It soon became apparent that software developers everywhere were crying out for these same solutions, so AWS was born.
The success of AWS (it’s now used by 1.45 million businesses) lies in both Amazon’s ability to use its existing technology and capabilities to solve problems for consumers and its ability to adapt its brand proposition.
Takeaway: Look out for opportunities in other markets where you could use your existing expertise to solve consumer issues.
3. Google Maps
When Google launched Google Maps, they leveraged the brand's core strengths - superior user experience and technology innovation- to create a mapping service that now has 1 billion monthly active users. This brand extension perfectly fits Google’s search service, allowing consumers to answer all their travel questions without leaving the Google ecosystem. For the search engine, it meant more advertising opportunities and increased consumer data it could use to further grow the business.
Takeaway: Seamless integration between existing products and brand extensions is vital to encourage new users and deliver superior customer service.
4. Microsoft Office 365
Microsoft Office, traditionally known for its Windows operating system and suite of office tools, introduced Microsoft Office 365 after spotting a need among its customers for more flexible and collaborative productivity tools. The success of this cloud based service used by 345 million people demonstrates Microsoft’s thorough understanding of the needs of its customers and how best to meet them.
Takeaway: Pay attention to how your customers use your existing products and use brand extensions to cater to their developing needs.
5. Samsung Health
With the launch of Samsung Health, Samsung, a business originally known for creating electronics, successfully gained a new customer base and significant market share. The brand extension worked because it married together Samsung’s technology innovation, which consumers know and trust with consumer demand for fitness and wellness tracking. Since its launch in 2012, the app has grown to 64 million monthly active users.
Takeaway: Consider your ideal customer profile. Can you improve other areas of their lives with your existing technology?
6. Adobe Creative Cloud
In the early 2000s, Adobe’s market research revealed that users were adopting more flexible working methods. Consumers no longer worked in one place using one Adobe product. Instead, they were looking to use multiple integrated document management tools that could be accessed wherever they chose to work.
By honing in on these changes in working practices, Adobe was able to repackage their existing products into an online subscription-based model more suitable for their customers' developing needs. Creative Cloud has been a huge success with nearly 50 million members, enabling Adobe to retain its market share and brand loyalty in a competitive market.
Takeaway: Brand extensions are an effective way to retain your competitive advantage as working practices change.
7. LinkedIn Learning
LinkedIn’s foray into online education through LinkedIn Learning makes total sense when considering LinkedIn’s mission to support professionals to excel in their careers. LinkedIn Learning enables professionals to boost their skills through online courses and certifications, which users can share with their network via their LinkedIn profiles.
The extension perfectly complements the existing brand offering, helping to grow customer loyalty and trust in the LinkedIn brand through its 27 million users.
Takeaway: An effective brand extension will reflect your brand vision while improving the overall customer experience.
8. Salesforce Einstein
Salesforce Einstein is a suite of AI tools offering advanced analytics and data insights that integrate with Salesforce’s existing CRM platform. Salesforce launched Einstein in response to the growing demand from their target audience for AI-driven insights and automation. In so doing, they improved user experience and maintained their competitive advantage in the market.
Takeaway: A successful brand extension relies on staying responsive to your customers’ needs and creating products that will support them.
9. HubSpot Service Hub
HubSpot has traditionally been known for inbound marketing and sales software, but with the HubSpot Service Hub, the company ventured into the world of customer service by combining the expertise of its sales, marketing, and customer services departments. HubSpot takes a holistic view of the customer journey, and providing its users with customer service software means they can support their users’ needs seamlessly from customer acquisition through to customer retention.
Customers were impressed with Rick Mirsky, founder and CEO of Ecom Diversify, commenting, “Service Hub has been a game-changer for us…Having all of our customer data in one place fosters better collaboration and ensures that we're approaching every interaction with the full context of that customer's experience with us."
Takeaway: It’s vital to take a holistic view of the customer journey so that brand extensions integrate seamlessly with existing products to increase customer retention.
10. Zoom's Cloud-Based Phone System
Zoom Phone is an example of a complementary product extension that saw Zoom expand from video communications into voice calls. According to Zoom, they “saw an opportunity to provide a cloud business phone solution that is as simple, reliable, and easy to use as our video platform.” By leveraging its existing technology and brand reputation for reliability, Zoom has been able to create a comprehensive and integrated communication solution for businesses, which was purchased by 4 million customers in under 4 years.
Takeaway: You can strategically diversify into complementary markets by identifying untapped markets and leveraging your existing resources.
11. Mailchimp's Marketing Automation
Mailchimp founder and CEO Ben Chestnut admitted that Mailchimp’s extension into marketing automation was driven by the fact that “the email space was getting increasingly crowded”. So, the business looked at how its customers were using Mailchimp and launched its marketing automation function to help their customers meet their expanding marketing needs. In 2024, over 675,000 companies will use MailChimp’s marketing platform.
Takeaway: In a competitive market, a brand extension can enable you to increase customer loyalty and maintain your competitive advantage.
12. Intuit QuickBooks Online
Intuit Quickbooks was originally a desktop accounting software, but when it extended its brand into cloud computing, it increased its customer base to 7.1 million businesses worldwide.
What made this brand extension so successful was that Intuit was well ahead of its competitors when it made the leap to the cloud in 2001. While it may have taken some customer education in the early days, the headstart has given the company the opportunity to develop a product that has adapted in line with its customers’ growing need for real-time, accessible data.
Takeaway: Mitigate the risk of entering emerging markets by leveraging your existing brand equity through a brand extension.
13. Shopify Plus for Enterprise
While Shopify has always been known for catering to SMEs, the business has made a very successful customer base extension through Shopify Plus, which now supports enterprise-level businesses with fully customizable ecommerce solutions. According to Harley Finkelstein, Chief Platform Officer, Shopify. "With Shopify Plus, we broaden our customer base to include merchants who want a more customized product offering”. The brand extension, created through collaboration between Shopify’s product development, sales, and customer teams, is now used by major brands such as The Los Angeles Lakers, Budweiser, and Tesla Motors.
Takeaway: Look out for untapped customer bases who could benefit from your services or products.
14. Slack's Workflow Builder
Known as an instant communication tool, Slack launched its workflow builder after research showed that over 90% of paid Slack customers used some kind of app or integration alongside Slack.
With the Workflow Builder, Slack aimed to allow customers to easily create basic workflows and applications without having to leave Slack. Slack’s in-depth market research and user-friendly solution to a common problem made this brand extension successful, with nearly 1 million customers.
Takeaway: A well-executed brand extension should reinforce what your brand is known for, which for Slack is user-friendly collaboration.
15. Asana's Workflow Management
Asana’s move into workflow management fits perfectly with the company’s commitment to supporting businesses with enhanced productivity and operational efficiency. Using Asana’s existing innovative technology, the company has provided a fully integrated project management tool, ranked one of the best apps for collaboration and productivity in the market.
Takeaway: Using a user-centric approach and leveraging your existing technology will deliver a brand extension that benefits customers.
16. Trello’s Power-Ups
Trello introduced Power-Ups, allowing users to easily integrate other tools and services with their task board. This brand extension brought together Trello’s reputation for designing innovative user-centric services with their customer's need for greater customization and flexibility. The brand extension has helped the company go from strength to strength, gaining over 50 million users.
Takeaway: Recognising your customers’ priorities, in this case, flexibility and customization, will help you create a brand extension that delivers real value.
17. Canva for Enterprise
Canva significantly expanded its customer base when it launched the enterprise version of its design platform. The Enterprise product gives larger teams access to Canva’s user-friendly design platform with added brand control and collaboration features. Canva created a product that perfectly catered to this market, leading to 85% of the world’s 500 largest companies using its platform.
Takeaway: A customer base extension that is specifically designed to meet the needs of new customers can significantly increase your market share.
18. Dropbox Business
Dropbox launched an extension of its personal cloud storage service after noticing that its customers were experiencing a recurring issue - how to access their business files while working at home on their personal devices. Dropbox used its considerable technical capability to develop an option for businesses that delivers the benefits of Dropbox with added security and collaborative features, netting the business 500 thousand business customers.
Takeaway: Look for emerging challenges and issues experienced by your customers and use brand extensions to provide an effective solution.
19. Hootsuite's Social Media Analytics
When Hootsuite extended its offering into analytics, it repositioned the business as the go-to social media marketing tool.
It’s proven a hit with consumers because it fulfilled a need for marketing metrics that customers otherwise would have had to fulfill elsewhere, and it leveraged Hootsuite’s existing expertise in data analytics. As a result, Hootsuite is regularly listed as one of the top social media marketing software in the market.
Takeaway: Leverage your business USP to create a brand expansion that enhances the whole customer experience.
20. Atlassian’s Jira Software for Agile Teams
Atlassian began as a tech support service before the founders decided to start selling software products, and Jira Software was born. Noticing the trend among their customers for agile working methods in software development, they launched Jira Agile.
The software combines all the project management benefits of Jira with flexible solutions and a user interface tailored to agile teams. The ability to cater to the evolving needs of their customer base is why Jira Software is now used by 65,000+ companies.
Takeaway: Brand extensions allow you to adapt quickly to emerging market trends to maximize opportunities to grow market share.
21. Sony Playstation
Before PlayStation, Sony was primarily known for audio and video equipment. As the gaming market began to grow, Sony saw an opportunity.
It could leverage significant synergies within the business, including the company’s existing expertise in manufacturing hardware and video equipment, plus its strong brand proposition, to launch its cutting-edge gaming technology - the PlayStation. Since diversifying into gaming, the company has sold 102.4 million units.
Takeaway: To execute a successful brand lifestyle extension, combining product expertise with a strong, coherent marketing strategy is crucial.
22. SurveyMonkey CX
SurveyMonkey began as a platform for creating simple online surveys, but it continues to innovate to meet the needs of its client base. One of its most successful brand extensions has been SurveyMonkey CX, a platform through which customers can analyze customer sentiment and gain data-driven insights into the results of their surveys.
These new tools have been a success with users - according to SurveyMonkey, 92% of their users agree that SurveyMonkey CX gives their organization the insights they need to take action and improve customer experience.
Takeaway: Monitoring user metrics and customer feedback is essential to measure a brand extension's success and identify improvement areas.
23. Evernote Business
Evernote Business was an extension of Evernote’s knowledge management platform with additional collaboration features and security controls to support the needs of businesses and teams. In another example of a customer base extension, the move enabled Evernote to attract a whole new audience and build up to 225 million users across 124 countries.
Takeaway: Consider the needs of other demographics outside your current customer base to identify opportunities to build market share through brand extensions.
24. Zendesk Sell
Zendesk Sell made sense as it met the growing market demand for sales automation solutions while strengthening its existing customer support offering.
To support this brand extension, Zendesk acquired a CRM business, Base, and leveraged their technology with Zendesk’s in-house development teams to seamlessly integrate the whole Zendesk product offering. Customer Dave Savage, CEO of Mortgage Coach: “Now both teams (sales reps and support agents) have a holistic view of the customer from the solution they primarily work in.”
Takeaway: A complementary product extension can enhance the overall customer value proposition and increase brand loyalty.
25. Twilio Flex
Twilio is a SaaS business known for providing backend communications services. With the launch of Flex, it extended its brand to cater to large businesses requiring highly customizable contact centers.
The company turned to its experience working with developers and their needs when developing contact centers to make this leap. This customer insight has paid off, with over 362 companies now using Twilio Flex.
Takeaway: Leverage your existing company know-how and proprietary knowledge to create brand extensions that solve problems for new target markets.
26. Oracle Cloud Infrastructure
Oracle has extended its brand in many different directions since its origins as a database management system in the 1970s. One of the most important brand developments has been the launch of Oracle Cloud Infrastructure - a suite of cloud-based business management applications to meet the evolving needs of businesses.
Clients rave about the new cloud infrastructure's cost savings and efficiencies. Client Subaru reported that “moving to OCI eliminated on-premises expansion costs and complexity.”
Takeaway: When done correctly, brand extensions can significantly enhance customer loyalty and turn existing customers into brand advocates.
27. IBM Cloud
When technology mammoth IBM moved into cloud computing services, the business wasn’t just responding to evolving customer needs but also protecting its position in the market.
With competitors Microsoft, Google, and Amazon heavily investing in cloud services, IBM couldn’t afford not to. The brand extension has paid off, with IBM reporting that the cloud services business generated $21.2 billion for the business in 2019 and was growing rapidly.
Takeaway: In some markets, brand extensions are necessary in order to retain market share and ensure your business isn’t left behind.
28. Cisco Cybersecurity
Cisco is known for providing reliable networking technologies and solutions. So when cybersecurity issues began to worry their customer base they immediately began work on their cybersecurity solution so they could continue to offer comprehensive networking services which their customers could rely on.
To make the move, they leveraged their expertise in networking and technology while acquiring smaller brands in their space. The product category extension has brought Cisco 300,000 security customers.
Takeaway: Acquisitions or partnerships with other businesses can be a good way to acquire the resources or expertise you need to carry out a brand extension.
29. HP 3D Printers
HP, a billion-dollar company with products spanning consumer laptops to enterprise software, surprised manufacturing experts by moving into the 3D printer space in 2014.
Although manufacturing was a new market for the business, it could leverage its capabilities in 2D printing and imaging technologies, plus its global customer base, to quickly establish a strong presence in the market. Its 3D printing technology is now used by global companies such as BMW Group and Siemens.
Takeaway: Superior product innovation combined with a strong, trusted brand makes establishing a presence in completely new markets easier.
A Checklist For Successfully Implementing a Brand Extension
You may have noticed there are some common themes running through the successful tech brand extensions listed above - here they are distilled into the checklist below:
- Thorough market research: First, you must understand your target customers' needs and pain points. Secondly, you need to analyze your potential competitors. And finally, you need to understand how your brand is currently perceived in the market. This will help you identify opportunities and mitigate the risks of an extension negatively impacting the original brand. Focus groups and surveys are also a good way to test a potential brand extension with customers and identify potential pitfalls before starting development.
- Fit with existing products and overall brand: Is the brand extension consistent with your brand values? Will it complement your existing product line and improve your customer experience? Or could it cannibalize existing product sales and confuse customers?
- Use existing capabilities: Consider if you have existing technology or capabilities you can leverage for the brand extension. Creating a new brand or service without relevant experience or expertise is risky.
- Develop a high-quality product or service: Do you have the capacity to create a great product or service? Creating a subpar product can damage sales and customer trust in the parent brand.
- Market it appropriately: A new product sinks or swims on the strength of the marketing. As part of your market research, you should clearly understand your marketing audience. The value proposition needs to be clearly communicated to this audience in a way that will resonate with them.
- Monitor and get regular feedback: All the brand extension examples in my list have undergone several iterations. It's vital to use customer feedback to constantly assess how a new product category or service is received by customers. For SaaS businesses, this will likely involve monitoring data such as conversion rates, churn rates, user engagement, and performance metrics. With this information, you can refine the product and how you go to market until you find the perfect product-market fit.
Diversify and Grow
There are opportunities to expand your brand everywhere - you just need to start listening to your customers and what they need.
But don't forget to make sure it aligns with your existing brand and product line. That's the first step to reduce the chances of your planned brand extension diluting your core brand and turning into a colossal waste of money.
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