Horizontal Brand Extension is a marketing strategy of taking your products and services into new industries. By developing new markets for your products and services and actively diversifying your customer base, you protect your business against economic shifts. Should one industry become soft, you can pump more resources into building clients within a stronger industry.
When an industry gets knocked around by a soft economy it can have a domino effect to where not only the companies in that industry get hurt but their vendors, etc. as well. To avoid full exposure many companies are turning their marketing efforts from vertical to horizontal in an effort to safeguard against the next time the economy swings.
There are three ways to capitalize on the market recovery and build your company to be stronger than before.
- Market Extension allows you to cultivate new market segments for existing products/services
- Application Extension allows you to qualify products/services for new applications
- Product Extension allows you to develop new products/services/modifications for new markets and applications.
Challenges
New products or services must address a genuine consumer need. Unless your new product or service is developed from consumer demand it will fail. If no one can use it, no one will care and your brand will suffer. This requires extensive horizontal market research to make sure that first there really is a need and that second, you are familiar with the language of that market.
Present brand must be used to leverage to carry customers to new position. By building a bridge of relevant benefits, you can connect your brand with the market position of your new product. At first, your extension should feed off of parent’s positioning. This requires combining your market research with your in-depth brand evaluation to find a connection. What aspect of your brand can be brought into this new position for appeal?
Last but not least, your company must be able to deliver on the new brand message. You must have structures in place to deliver on your message. Whether it is done in-house or by utilizing partnerships to acquire new products, distribution channels, you must follow through on your branding or risk damaging your company. This requires an honest look at how this new venture will affect your brand. You also need to make sure that you can you dedicate enough resources to this project to see it through to success.
