If your food brand is performing well in a product category on grocery store shelves, you may be wondering if it’s time to launch a product line extension. Extending your product line has several strategic benefits including increased profits, customer loyalty, and brand visibility.
Line Extension vs. Brand Extension
Before diving into this topic, it’s important to understand the difference between a line extension and a brand extension. A line extension is when you add new flavors, colors, ingredients, shapes, or package sizes to your food or beverage brand. Despite altering the product in some way, on the store shelf your new products would still appear side by side in the same category.
On the other hand, a brand extension allows your brand to, well, extend into a new category in supermarkets. For example, Vita Coco launched their brand with one product: coconut water. They then expanded their beverage line by offering sparkling coconut water and coconut milk, but in 2014 they crossed over into a new category by adding coconut oil to their portfolio.
Line Extensions are More Cost-Effective than Brand Extensions
Expanding the types of products that you offer can be expensive. Paying for product development in a food or beverage vertical that you’re already familiar with is less of a financial risk than crossing over into a new market segment.
By developing a variation of your current product, you’re able to leverage your team’s manufacturing capabilities, distribution channels, and knowledge of your vertical and competitor set. You already know the opportunities that exist in your space and can use them to your advantage.
Another benefit, if you have existing products in stores, is that you likely have strong retailer relationships with buyers through your company or food broker. Because of your relationships, you’ll be able to quickly and more easily make your new product available to consumers without having to drain your budget on aggressive consumer education campaigns.
Brand Extensions Increase Customer Loyalty
If you’re an established food brand that decides to extend its product range, you have a customer base who is already familiar with your product. By choosing to offer additional offerings in the same category, you’ll give customers more opportunities to purchase your products as opposed to buying from one of your competitors. Over time, this will increase your customer’s brand loyalty and keep them coming back to try new products and to continue purchasing their family’s favorites.
Take the popular fast-food hamburger chain White Castle for example. For years their frozen sliders have been available in grocery stores nationwide, but in recent years they’ve extended their product line to offer veggie and black bean sliders. By continuing to innovate on the frozen aisle, they’re reaching new customers who value convenience but may identify as either flexitarian or vegetarian.
Brand Extensions Increase Your Visibility
Announcing a brand line extension often comes with a fair amount of fanfare. Press releases are picked up by mainstream media outlets and industry publications alerting retailers, your existing customers, and new potential customers that you’re introducing a new product.
If your existing brand has grown stale, adding new products can reinvigorate your position in a category—increasing your profits and allowing you to gain a larger market share.
Unsure if your brand is ready to extend its line of product offerings? Our data and insights team can give you the tools you need to make an informed decision.