Team at B2B company explore brand extension opportunities in a strategy meeting.
June 27, 2023

Brand Extension in B2B: 3 Under-the-Radar Insights

by Michael Brenner

Brand extension occurs when companies use their existing brand and reputation to launch new products, gain a new customer base, or enter a new market outside of their current offerings. 

Some of the world’s now-largest and most recognizable brands — think Amazon, Apple, GE, and the like — have attained their current positions at the top of multiple markets by executing smart and successful brand extensions. Today, with technology significantly leveling the playing field as it relates to marketing and advertising opportunities, B2B companies of all sizes are increasingly taking on brand extension as a method for growth.

If you’re thinking about a potential brand extension, you’ve come to the right place. The sections that follow will cover 3 key insights to know about brand extensions, examples to help you understand the different types of extensions, and actionable steps for exploring brand extension opportunities for your unique business.

Quick Takeaways

  • Brand extensions can be up to 5X more successful than new launches, but they also have an incredibly high failure rate due to poor planning and execution.
  • Types of brand extensions include complementary product extensions, line extensions, customer franchise extensions, authority extensions, and lifestyle extensions.
  • Executing a successful brand extension is largely about doing your research and waiting for the right timing.
  • It’s essential to have strong brand equity before taking on a potential brand extension.
  • Feedback from current customers is invaluable for understanding how potential new offerings will be received on the market.

3 Under-the-Radar Brand Extension Insights

Brand Extensions Can Be 5X More Successful Than New Launches

A study by Nielson showed that brand extensions can achieve a staggering 5X the results of brand new product launches. This is in no doubt due to the brand recognition and loyalty that’s built into a launch by a brand customers already know and trust.

The takeaway for established brands is that if they see an opportunity or need on the market, it’s worth pursuing rather than waiting for a new company to fill the gap. Your brand extension is more likely to succeed as customers are eager to solve their problems quickly without having to vet brands before they make a purchase.

. . . But Can Also Fail at An Astonishing Rate

That said, an unfortunate 84% of brand extensions also fail. We’ve all seen them — product launches by existing companies that make us scratch our heads and think: What in the world are they thinking?

Just because brand extensions present growth potential doesn’t mean they can be done without research, planning, and foresight. Brand extension offerings should offer something new to the world that adds value for consumers and/or fulfill a critical need that is prevalent in the market.

When demand, quality, and relevance are all aligned, a brand extension is likely to succeed — but when it’s missing one of those key components, you could be at risk of missing the mark.

There are Several Types of Brand Extensions

Offering a new product isn’t the only — or even the most common — way to leverage brand extensions as a growth opportunity. Here’s a list of ways B2B businesses are taking advantage of brand extension opportunities:

Complementary Product Extension

Product extensions occur when companies offer products complementary to their current offerings. Google is a great example of a B2B company who leveraged this option for growth (to boot, they did it across B2B and B2C spaces).

They launched their search engine brand in 2004, but today own a variety of products businesses use to operate, including Gmail, Google Drive and Google Cloud, as well as the suite of products included within them (Docs, Sheets, Forms, Hangouts, Calendar, etc.).

Google now bundles many of these options into the Google Workspace brand, a particularly relevant offering in a time when remote and hybrid work is more prevalent than ever.

Image showing the logos of Google’s many products launched through brand extensions and now packaged as the Google Workspace.

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Line Extension

Line extensions are when brands offer products similar to their current products, but in different forms or variations than their current products. One example is Hubspot’s variety of “Hub” products it offers with different features and functionality to support different teams within an organization.

Their offerings include Marketing Hub, Sales Hub, Service Hub, and CMS Hub, all of which operate together with their CRM platform. Clients can choose to purchase one or a combination of Hub products, depending on their needs.

Flowchart showing HubSpot’s brand extension journey from a marketing application to full-scale business support platform.

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Customer Franchise Extension

Customer franchise extensions launch new products beyond their current categories but target the same buyer segments, ensuring there is a built-in audience already for the new offering. 

Amazon did this when they launched Amazon Web Services (AWS) in 2006, which they knew could benefit their business e-commerce customers and other companies looking to operate on the cloud. 

It started out as Amazon S3 (Simple Storage Service) but now includes comprehensive cloud services such as computing, database, security, automation, and machine learning.

Graphic showing the suite of products offered through AWS.

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Authority Extension

Brand authority extensions leverage established expertise in a given niche or field to launch products unrelated to your original offerings. After establishing a solid reputation as a leader in one industry, B2B buyers trust the brand when they extend to new markets.

General Electric has been successfully executing brand authority extensions for more than a century. After starting out as an electric company in 1892, GE has grown to include divisions in major sectors such as healthcare, aviation, power, energy, oil and gas, and transportation.

Graphic displaying GE’s business divisions.

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Lifestyle Extension

Lifestyle extensions create a full community and culture around a brand, making it a given that its customers will embrace and purchase new products offered through extensions. This is the most difficult type of brand extension to execute, but one of the most effective.

Apple has been able to carve out this type of community in the tech industry — companies in tech spaces are significantly more likely to be using Apple IOS and exclusively buying Apple’s hardware products because they’re known to indicate a culture of innovation and commitment to forward-thinking technology.

Bar chart showing the breakdown of the number of companies in each industry using Apple IOS.

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How to Get Started with Brand Extensions

Now that you know the growth opportunities brand extensions can present and the types of brand extensions that businesses are using, you might be thinking: Where do I start? 

But remember: The key to successful brand extensions is that they meet real market demand. This requires thorough planning and the patience to wait for the right opportunity and timing to expand. Take these first steps to begin brainstorming opportunities:

  1. Assess Your Current Brand Equity — This step has to be an honest one. Does your brand currently have the reputation, visibility, and loyal customer base to take on a brand extension? So much of your potential success hinges on customer recognition and trust. If you don’t already have a strong sense of yours, take the time to build it first.
  1. Identify Opportunities — What pain points or challenges do your customers (or adjacent audiences) experience that need to be addressed? Where are their gaps in what you currently offer? Where do you have expertise that isn’t being demonstrated by your current solutions?
  1. Set Goals — Decide what you want to accomplish with your brand extension. Is it breaking into a new market? Adding a new customer segment to your current base? Beginning a long-term effort to expand your product portfolio? Knowing where extensions fit into your larger business goals will guide your brand strategy and action.
  1. Research Market Trends and Competitors — What do market trends tell you about potential demand for your planned brand extension? What are competitors doing similarly or differently to address the pain points or market gaps you’ve identified?
  1. Survey Your Customers — Your current customers are an invaluable resource for understanding how your brand extension offerings may be received on the market. Ask for their feedback through surveys and focus groups as you develop your plan.

Final Thoughts on Brand Extensions

Brand extensions present big opportunities for growth, but they aren’t right for every company — and they aren’t right all the time even for companies who execute them well. Rather than deciding you’ll definitely do a brand extension at a specific point in time, make a commitment to understanding your market and evaluating potential opportunities in an ongoing way.

It’s this constant awareness and growth-focused mindset that will allow your company to take on a brand extension when the need and the time is right, significantly increasing your chances of success.

Michael Brenner is a keynote speaker, author and CEO of Marketing Insider Group. Michael has written hundreds of articles on sites such as Forbes, Entrepreneur Magazine, and The Guardian and he speaks at dozens of leadership conferences each year covering topics such as marketing, leadership, technology and business strategy.