BRAND EXTENSION –MEANING AND RELEVANCE
Some of the commonly used definitions of brand extensions are as follows:
Using an established name of one product class for entering another product class.
Brand Extension Strategy refers to the strategy in which a company uses the same Brand Name in order to promote products of different category.
Many reputed companies of the world adopt Brand Extension Strategy with the aim of increasing Brand Equity.
Brand extensions are frequently undertaken by the companies when they launch any new product.
The companies try to reap benefit out of their established Brand Name and Brand Equity.
Although the Brand Extension Strategy can generate a positive impact, it also involves significant risks.
Using a successful brand name for launching a new or modified product or line is known as brand extension strategy .
An expansion strategy in which firms use already established and successful brand name for introducing a new or modified product.
Using an established brand name for introducing a new product into different product category which is new to the company is known as franchise strategy.
So, it is very clear that there are certain benefits of Brand Extension Strategy.
If a company launches a new product with a new Brand Name then, the gaining significant market presence becomes a time consuming affair as the firm is required to establish the new brand in the market through a completely new way of Brand Positioning.
Establishment of a new brand in the market not only requires time but also involves great expense.
The Brand Extension Strategy can help the companies in saving both time and money.
Moreover, this strategy lowers the financial risk of launching a new product as the new product is marketed using the established Brand Equity of the parent brand.
The customers' already existing perception about the brand helps the company in marketing the new product.
But it should be mentioned here that along with the benefits there are certain risks associated with Brand Extension Strategy.
A wrong Brand Extension Strategy can negatively affect the Image of the parent Brand.
Poor communication programs undertaken for promoting the new product can devaluate the Brand Equity.
It is surprising but true that, the failure rates of Brand Extension Strategies are higher than the success rates.
Example: Barbie, who has been smiling for decades at our haven side and shaping the dreams of the little girls, has become ubiquitous now.
Today, the market is flooded not only with those fair-haired beauties but also with Barbie stationeries, T-shirts and other small things for which the little ones can go crazy.
Brand extension is thus the order of the day.
In recent years, companies have been using brand extensions as a strategy for launching new products since this decreases the risk of failure of new products, because consumers are more willing to accept products marketed under known brands.
The estimates vary, but in general, eight out of every ten new products are introduced as an extension of an existing brand.
Some of the commonly used definitions of brand extensions are as follows:
Using an established name of one product class for entering another product class.
Brand Extension Strategy refers to the strategy in which a company uses the same Brand Name in order to promote products of different category.
Many reputed companies of the world adopt Brand Extension Strategy with the aim of increasing Brand Equity.
Brand extensions are frequently undertaken by the companies when they launch any new product.
The companies try to reap benefit out of their established Brand Name and Brand Equity.
Although the Brand Extension Strategy can generate a positive impact, it also involves significant risks.
Using a successful brand name for launching a new or modified product or line is known as brand extension strategy .
An expansion strategy in which firms use already established and successful brand name for introducing a new or modified product.
Using an established brand name for introducing a new product into different product category which is new to the company is known as franchise strategy.
So, it is very clear that there are certain benefits of Brand Extension Strategy.
If a company launches a new product with a new Brand Name then, the gaining significant market presence becomes a time consuming affair as the firm is required to establish the new brand in the market through a completely new way of Brand Positioning.
Establishment of a new brand in the market not only requires time but also involves great expense.
The Brand Extension Strategy can help the companies in saving both time and money.
Moreover, this strategy lowers the financial risk of launching a new product as the new product is marketed using the established Brand Equity of the parent brand.
The customers' already existing perception about the brand helps the company in marketing the new product.
But it should be mentioned here that along with the benefits there are certain risks associated with Brand Extension Strategy.
A wrong Brand Extension Strategy can negatively affect the Image of the parent Brand.
Poor communication programs undertaken for promoting the new product can devaluate the Brand Equity.
It is surprising but true that, the failure rates of Brand Extension Strategies are higher than the success rates.
Example: Barbie, who has been smiling for decades at our haven side and shaping the dreams of the little girls, has become ubiquitous now.
Today, the market is flooded not only with those fair-haired beauties but also with Barbie stationeries, T-shirts and other small things for which the little ones can go crazy.
Brand extension is thus the order of the day.
In recent years, companies have been using brand extensions as a strategy for launching new products since this decreases the risk of failure of new products, because consumers are more willing to accept products marketed under known brands.
The estimates vary, but in general, eight out of every ten new products are introduced as an extension of an existing brand.