What is Market Extension?
Market extension is a marketing term which means the production of more variety of products for a particular brand. While often confused with another term, market expansion, the two are different in the sense that market expansion is about widening a product’s reach geographically i.e. going international, going multi-state etc.
Market extension is usually mobilized by evolving consumer needs. For instance company X was established and its product is white t-shirts. The business does well, and there seems to be every indication that selling other colors of t-shirts will do good as well. Customers start asking for t-shirts with collar too, so company X begins manufacturing that as well. This is called a market extension because they are serving more needs for their customers.
Another example is if company X only initially sold small, medium and large sized t-shirts. However there is no competition for plus sized individuals, so they begin selling these t-shirts as well. They now cover a broader market, thus it is also an example of market extension.
Sometimes, market extension mergers happen, when two companies with the same products but different target markets merge so that they can reach a broader market range.