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Brand extension vs. product extension

Published: 28/04/2014 | AUTHOR: Tom Hunter

Brand_Product Extensions Minis_755x350 wide

By extending branding to new spin-off products, companies such as Ferrari have managed to almost double their annual revenue. The concept makes sense; building a brand is a costly affair, so once that brand is established, why not use its influence to exploit other markets? You need only look at the likes of Richard Branson and Virgin Airlines / Wines / Media / Mobile / Holiday / Galactic etc to see how successful brand extension can really be.

Product extension, like brand extension, aims to leverage brand equity, although in this case it’s to gain a bigger chunk of the market you’re already in rather than to branch out into new markets altogether. In many cases this could be a safer bet – MINI played a masterstroke when it introduced its bigger models, the Clubman and the Countryman. Although MINI-purists may have baulked at the not-so-mini MINIs, it opened up the brand as a practical possibility to families.

All this paints a rosy picture, yet brand extension and product extension can have their pitfalls. The Aston Martin Cygnet was without doubt the most contradictory product launch back in 2011, and remains a contentious example of product extension. The souped-up Toyota iQ cost £31,000 new and when it was released in 2011 sales were slow.

The Cygnet wasn’t a terrible car in itself. In fact, despite its hefty price tag it received glowing reviews from some sides, but regardless of how successfully it was pulled off, it was fundamentally incompatible with the Aston Martin brand. The runt of the Aston litter, it’s a little bit cramped, a little bit slow and seems to go against most of what Aston Martin stands for.

Brand extension and product extension both hold opportunities for leverage of brand equity, but your brand may be one of the most powerful assets you have, so be sure you’re not damaging it in the process.

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