Arm & Hammer has a rich history dating back to 1846. Originally, the brand sold a baking soda product, but the deodorizing benefit associated with the brand allowed it to extend into a host of products for which deodorizing is essential.
Representative Arm & Hammer products now include kitty litter, car air fresheners, changing pads, air purifiers, diaper bags and pails, carpet cleaners, toothpaste, body wash, foot care products, and more. Moreover, the deodorizing benefit has allowed for alliances with Dutch Boy Interior paint and Hefty trash bags.
In short, being a brand known for a particular benefit enables growth opportunities beyond the product's original focus.
A brand extension uses the brand on a new market offering that's in a different product category.
Brand Extension Examples and Benefits
To illustrate: Ivory was initially introduced to the market as a brand of soap known for the benefits of cleanliness and softness to skin. Those well-established benefits put Ivory in an excellent position to extend the Ivory name to new product categories in which cleanliness and softness were desirable benefits for consumers. With that in mind, Ivory extended the brand to Ivory shampoo, Ivory conditioner soap, Ivory laundry detergent, and Ivory deodorant.
Similarly, the name Honda originally referred only to the motorcycles that used its motors. However, Honda has since extended the brand name to automobiles, Honda Powersports, Honda Jet, Honda Marine, and Honda Power equipment.
In both cases, since the brand name (Ivory/Honda) was being extended to a product category that the brand had not previously competed in, the brand extension created a new path to growth.
Brand extensions offer sizable benefits to marketers:
- It can be easier and less costly for marketers to enter the current or another market with the brand extension because the brand name is already known to customers (brand awareness is high).
Customers have some knowledge about the brand, which allows them to infer what benefits the brand extension will have. Customers may also believe that the extension credibly delivers on its benefits because the brand is already known for credibly providing those benefits.
- By having several offerings associated with the same brand, the brand's meaning becomes more expansive as customers now associate multiple offerings with the brand name.
For example, Gerber means not just baby food but all types of baby care. Patagonia means not just climbing gear but all manner of sustainably sourced outdoor clothing and equipment.
If it is successful in the marketplace, a brand extension can burnish the brand's image. Thus, customers like Nike better when it's relevant to so many domains of their sporting and casual living lifestyle.
Extension branding works best when there is a substantial degree of closeness between the parent brand and the new one—particularly, when the benefits of the original product are also desirable in the extension category.
So, if the company is looking for new growth opportunities, but such closeness and shared benefits don't exist, then the company should use a different brand name for the new product.
When Brand Extensions Don't Work
Consider Disney, which markets films (Disney Studios), entertainment venues (Walt Disney World, Disneyland), live shows (Disney on Ice), a multitude of Disney toys, and Disney News. Those all make sense as brand extensions because Disney was originally known for cartoons and movies aimed at children.
But Disney is now exploring master-planned communities that will target consumers age 50+. The communities "are intended to inspire residents to foster new friendships, pursue their interests, and write the next exciting chapter in their lives—all while enjoying the attention to detail and special touches that are Disney hallmarks," according to a Disney public relationships director.
What's notable, though, is that Disney has decided not to use the Disney name on its residential communities, choosing instead to call the units Cotino.
That is probably a good idea, since at least some—and likely many—people over age 50 would feel awkward about joining a residential community associated with children's entertainment.
Another example: Bic, which is known for inexpensive plastic items (lighters, pens), extended the brand to perfumes. That product was a flop. Consumers inferred that the perfume would be cheap—or perhaps smell like lighter fluid. Neither "benefit" was of interest to most buyers of perfume.
Brand Extensions and B2B Companies
The examples in this article come mainly, but not exclusively, from B2C companies—but the lessons apply equally to B2B companies.
In all those examples, the companies cited are focused on customer benefits. B2B companies, too, have brands that convey benefits—whether or not they realize that fact. And they can extend those benefits into new areas of growth.
They key lesson here, whether B2B or B2C, is to focus on your customers.
Here is a final example of a company devoted to customers (rather than its products):
Chemical powerhouse DuPont kept a close eye on its customers' most pressing concerns—and deployed its technical know-how to create an ever-expanding array of products that appealed to customers and continuously enlarged its market. If DuPont had merely found more uses for its flagship invention, nylon, it might not be around today. ("Marketing Myopia," July-August 2004, Harvard Business Review)
