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Why is Brand Extension a Profitable Strategy?

Posted by Rishabh Arora

With the evolution of market, many new brands have saturated the markets with a lot of ‘me too’ products. The level of competition has made the established brands to explore new options that are related to their current set of operations. When a relatively successful and renowned brand is looking to come up with new products that coexist with their existing products, it is popularly called as brand extension.

To quote a few examples, if an established shoe making company decides to launch a shoe polish brand of its own, then it can be considered as an example of brand extension. In the outsourcing industry, if an established call centre that is primarily into providing lead generation services to its clients, decides to extend its operations into business development for its clients with the new set of processes in place, then it can be considered as an example of brand extension in services industry.

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Let us now examine in detail as to why is brand extension is widely accepted as a profitable strategy across the market:

Thinking beyond the box

A successful brand is considered to be a powerhouse with its immense ability to pull customers, and this power can be used beyond the boundaries of brand’s traditional market. Established brands make use of efficient lead generation services to make reasonable amount of profits for their extended brand vertical. Brands opting for extension are able to excel as they are able to think beyond the box and excel by choosing for a strategic alliance with the right partners.

Reduced risk

When an established brand is trying to make waves into a new product category, it has a certain backing of its loyal customers and brand promoters which will increase the chances of wide acceptance of the new product. Rather than coming up with a new brand altogether, it is a much wiser decision to extend an arm of the existing well-established brand. Trusted lead generation companies UK also advocate the fact that the brand equity of an established brand makes the introduction into a new product category a relatively inexpensive affair.

Quality cues

In the outsourcing industry, the existing set of expertise is considered as a quality cue for the new range of services that an established call centre is looking to come out with. If any call centre service provider has expertise in providing its clients with quality lead generation services, then this can be taken as a cue for the future if the same lead generation firm is looking to enter into social media support services in the near future.

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Increases brand visibility

A brand extension into a new and related product category might turn out to be a masterstroke as it will not only make the new product/service more visible due to extensive advertising but will also give a push to the existing products/services as well. Collaborating with leading lead generation services agency will certainly pave way for determining the target market for the new product and coming up with feasible leads to garner sales for the brand in both the new product category as well as other offerings of the same brand.

Uncovers every niche

With the trends showcasing the continuous increase in the levels of competition, it becomes important for brands to go for extension in their current set of offerings. Coming up with a product in the new category will act as a catalyst for the brand and will certainly be the right step towards uncovering every niche and exploring opportunities for further growth.

Creation of a dynamic market environment

When a brand decides to enter into a new product category and add a new product under its umbrella, it generally leads to a response from the competitors. Lead generation companies UK, having broadened their horizons into new services are now beginning to face stiff competition from their competitors. This actually breaks the monotony of the market and makes it a dynamic environment to operate in.

Catering to different segments

Going for a brand extension will play a pivotal role in giving a deeper meaning to the brand. This will showcase the existing set of customers of the brand that the brand is willing to go the extra mile to cater the needs of every segment possible. The lead generation services agencies often launch new set of services as it sends a signal to the industry that they are willing to cater to different segments, be it a small business or a large business conglomerate.

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We can safely conclude from the above discussion that brand extension is not just another run-of-the-mill act, but an actual opportunity to explore more about the markets. Established brands have started resorting to brand extension as it provides a rather profound definition to their existing set of operations. Brand extension has not only come across as a tool to survive but a weapon that helps a brand thrive despite tough times. 


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