Brand Extension
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Page 1 Brand Extension Decision vs Individual Brand By : Vikram
Transcript of Brand Extension
Page 1
Brand Extension Decisionvs
Individual BrandBy : Vikram
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Brand Extension
An existing strong brand name can be used as a vehicle for new or modified products; for example, many fashion and designer companies extended brands into fragrances, shoes and accessories, home textile, home decor, luggage, (sun-) glasses, furniture, hotels, etc. Mars extended its brand to ice cream, Caterpillar to shoes and watches, Michelin to a restaurant guide, Adidas and Puma to personal hygiene.There is a difference between brand extension and line extension. When Coca-Cola launched "Diet Coke" and "Cherry Coke" they stayed within the originating product category: non-alcoholic carbonated beverages. Procter & Gamble (P&G) did likewise extending its strong lines (such as Fairy Soap) into neighboring products (Fairy Liquid and Fairy Automatic) within the same category, dish washing detergents.
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Second Page :Instances where brand extension has been a
success are- Wipro which was originally into computers has extended into
shampoo, powder, and soap. Mars is no longer a famous bar only, but an ice-cream, chocolate
drink and a slab of chocolate.
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Advantages of Brand Extension
o It increases brand image. o The risk perceived by the customers reduces. o The likelihood of gaining distribution and trial increases. An
established brand name increases consumer interest and willingness to try new product having the established brand name.
o The efficiency of promotional expenditure increases. Advertising, selling and promotional costs are reduced. There are economies of scale as advertising for core brand and its extension reinforces each other.
o Cost of developing new brand is saved. o Consumers can now seek for a variety. o There are packaging and labeling efficiencies. o The expense of introductory and follow up marketing
programs is reduced.
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Disadvantages of Brand Extension
o Brand extension in unrelated markets may lead to loss of reliability if a brand name is extended too far. An organization must research the product categories in which the established brand name will work.
o There is a risk that the new product may generate implications that damage the image of the core/original brand.
o There are chances of less awareness and trial because the management may not provide enough investment for the introduction of new product assuming that the spin-off effects from the original brand name will compensate.
o If the brand extensions have no advantage over competitive brands in the new category, then it will fail.
