Optionality is the availability of further opportunities after an initial investment has been made. In marketing, optionality refers to opportunities to leverage investments in a marketing asset, such as a brand name, customer franchise, or distribution network. Optionality is also known as real options and is one form of marketing leverage.
In the case of a brand, it is the use of the brand name beyond the initial covered products through a brand or line extension. The goal is to use the existing brand’s awareness, associations, and preference to enable the newly branded product to penetrate the market more quickly and for less cost than through development of its own stand-alone brand.
Optionality became especially important with digital business transformations. Many brands executed their optionality by using existing branding for their new digital offerings. An example is Netflix extending its brand from a DVD subscription service to an online streaming content service.
Examples of optionality include:
- Common Language in Marketing Project, 2021.