The business world is full of examples of established brands that have leveraged their authority to introduce new products to their client base. Brand extension or stretching can bring numerous benefits for big companies but isn’t a sole advantage of the high and mighty.
Looking in-house for profitable solutions
For small businesses hoping to extend their brand, the first step would be to look in-house for by-products that add value. If you own a popular bar, you might have enough space and clients to transform your place into a thriving music venue. This can be extended further to build partnerships with drinks companies or host venue for live broadcast of a popular sports league or entertainment show.
Everyday brand extensions that bring us value
Think of Google extending its core search business to YouTube, Play Store, Google Cloud, and hardware like phones and laptops or Red Bull becoming a media company. They reduce the cost of introducing a new product by relying on the same production lines and trusted teams that have a track record of making and marketing. When successful, the lower cost of entry has the potential to increase profit margins for the new product and the company.
The importance of understanding what you stand for
Brand extension can have disadvantages where the new product deviates from the core values of the parent brand. In the case of the bar, your most ardent clients might be coming there for the beer and the intimate conversation after a long week. Introducing music or cameras might chase them away. They might also be fierce craft beer lovers which will pose problems if you collaborate with a global beer brand.
Alignment and collaboration
The trust you command in your niche has enormous value for adventures and collaborations that strengthen your relationship with your primary market or start collaborations that target new markets. While doing only what you can manage, there should be an alignment of values in every case so that old and new team members chase the same goals.
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