Want to move into a new product category? Learn the rules of Extendonomics.

By John Parham
 
Brand extensions are one of the best ways to enter new product categories and expand a brand’s franchise. They offer companies the most efficient method to gain distribution, name recognition and acceptance. But successfully moving from one store aisle to another isn’t as simple as slapping the same logo on a different package.
 
To find out what makes successful brand extensions tick, we teamed up with Dr. Edward M. Tauber, who first coined the term brand extension in 1979, to conduct an exhaustive study of more than 500 brands across every category. We looked at top names like Starbucks, Martha Stewart, Snickers, Crayola, Better Homes and Gardens, Ralph Lauren and many others. Our most compelling discovery: There are only 10 ways to successfully extend a brand into a new product category.
 
We’ve taken these 10 strategies-or more accurately, leverage points-and created the rules for what we call Extendonomics. These principles outline the 10 dimensions a brand can own and leverage to succeed in a new category. When you know what you’re leveraging, you’ll have critical insight into how to approach every aspect of a brand extension, from the advertising to the package design.


1. Shift the Form

Sometimes launching a successful brand extension is as simple as changing the form of an existing product. You might change your brand’s method of delivery, method of preservation or retail placement. Starbucks hit this strategy out of the park when it introduced ready-to-drink beverages in 1996. The coffee giant opened up a $704.4 million market by allowing consumers to grab a bottle of Frappuccino at the gas station or grocery store. All thanks to new packaging and retail placement.

2. Transfer a Component

Your brand might be so closely associated with a flavor, ingredient, scent, color or other component that you “own” it. What do consumers most closely associate with your brand name? You may be able to leverage that component to extend into new categories and channels. Just consider the Pantone brand: It successfully transferred a key component, color, to everything from cuff links and messenger bags to Visa cards and even a hotel.

3. Transfer a Benefit

With this strategy, you take a benefit closely associated with your brand and use it to create a product in a different category. The catch? Your brand’s accepted benefit has to matter to customers in the new category. Arm & Hammer is a classic example of transferring a benefit. The brand’s flagship product is baking soda, and it’s widely known for a functional benefit: eliminating odors. It’s why consumers stick boxes of Arm & Hammer in the fridge or sprinkle a little baking soda in the bottom of the trashcan. To leverage this benefit, the company expanded into categories where people care about making their noses happy: laundry detergent, dryer sheets, pet products and toothpaste. Smart package design reinforces the strategy. A cat litter box reminds consumers that it’s made with “odor eliminating baking soda” while a deodorant cap proudly declares that it’s “powered by baking soda.”

4. Leverage a Special Expertise

People trust a brand that’s an expert. If consumers look to your brand for knowledge about a specific topic, you may be able to leverage that expertise to launch a successful brand extension. Take Food Network. It's practically synonymous with great food. So we helped the brand leverage this expert status to launch a line of cookware, utensils, kitchen textiles and other cooking products at Kohl’s. Who wouldn’t want the collected wisdom of Food Network behind them in the kitchen? To bring the network’s personality and expertise to life, the line’s packaging features photography with people using the products and copy with a warm human voice. All packaging includes a “What the Pros Know” box with quick cooking and entertaining tips to reinforce the brand’s expert status. A color palette of fresh greens brings the network’s energy to the shelf and gives the brand a proprietary color in the new category.

5. Sell Companion Products

Some products go together like peanut butter and jelly. Or chips and dip. Shoes and socks. No matter what category you’re currently in, there’s probably something your customers already pair up with your brand. Try offering products frequently used with your parent product to create a brand extension in the companion category. Colgate, for instance, sells both toothpaste and toothbrushes while KitchenAid puts its name on mixers and utensils.

6. Leverage Your Customer Base

It’s no secret that relationships are important in business, and brand extensions are no exception. If your brand doesn’t own a specific component or benefit, you may need to turn to your core customer base to extend your brand. This strategy relies solely on the trust and rapport you’ve built up with consumers. Nickelodeon played off its strong reputation with families to extend the brand to a kid-themed resort in Orlando.

7. Leverage a Lifestyle

If your brand is associated with a certain lifestyle, you can extend into product categories that reinforce that lifestyle. Many lifestyle brands own a distinct visual style that translates to a wide range of products. This look and feel represents a way of life that might encompass everything from values and interests to a distinct culture. The Better Homes and Gardens brand represents a love for home, and we helped them take this home-centered lifestyle from the magazine to more than 1,000 products sold exclusively by Walmart. To help leverage this lifestyle component, packaging and in-store messaging featured the brand promise, “Fall in love with your home all over again.” Our research revealed that a love of entertaining family and friends was the number one reason people decorate. To reinforce this emotional component with consumers, the packaging featured warm colors and product photography that showed lamps and dishes in the context of a home setting instead of on an isolated background.

8. Leverage a Celebrity Expertise

Many products leverage the name of a noted celebrity to boost sales, but some stars are famous for more than their faces. A celebrity might be seen as an expert at anything from cooking to managing money. And an expert celebrity’s endorsement can help you enter any category where consumers value that expertise. Martha Stewart lends her name and domestic goddess status to product lines ranging from mattresses and paint to pet products and craft supplies.

9. Leverage a Celebrity Lifestyle

Everyone wants to live like a celebrity (at least for a day). When a star represents a specific lifestyle, his or her endorsement can help launch products in categories related to that lifestyle. Jessica Simpson’s clothing line gives fans a taste of her flirty, fashionable and fun life. Her brand includes handbags, shoes, jeans, coats, dresses, eyewear and more.

10. Change the Game

Sometimes a brand has a few flaws. It might have negative associations, or the overall brand just feels dated. These realities can hold you back from launching brand extensions. Unless you change the game. How? Use modifier words to change the perception of your brand and enter a new category. Old Spice shook off its “grandpa’s shave lotion” reputation by adding the words “Red Zone.” This high-energy phrase helped the brand feel modern and move into the deodorant category.
 
Want to learn more about the 10 Ways to Extend Your Brand? Download the full research paper. BP
 
John Parham is president and director of branding at Parham Santana, the Brand Extension Agency. He has spent the past 25 years developing big picture strategies for his client’s branding, licensing and seasonal programs. He also contributes to Parham Santana’s Extendonomics blog, which covers the latest brand extension news, trends and best practices.