Brand Extensions

Once you have successfully developed a brand, you need to continue to grow and develop your brand.

In this lesson, we will learn about:

• brand extensions
• advantages and disadvantages of brand extensions

When a company introduces a new product, it can take three different forms: 

1. It can develop a new brand, individually chosen for the new product (Keller, 2013). 

2. It can apply one of its existing brands (Keller, 2013). 

3. It can use a combination of a new brand and an existing brand (Keller, 2013).

Brand expansion is when a firm uses an established brand name to introduce a new product (Keller, 2013). When a new brand is combined with an existing one, a brand extension can also be a sub-brand (Keller, 2013). An existing brand that creates a brand extension is the parent brand. If the parent brand is already associated with more than one product brand extension, then it can also be called a family brand (Keller, 2013).

Advantages of extensions

For companies it is not a question of whether to expand the brand, but when, where, and how to expand it. Well-planned and well-implemented extensions offer a number of advantages that can be broadly categorized as those that facilitate the acceptance of new products and those that provide feedback to the parent brand or the company as a whole (Keller, 2013).

Source: Pixabay

Facilitate New Product Acceptance

• Improve brand image 
• Reduce risk perceived by customers 
• Increase the probability of gaining distribution and trial 
• Increase efficiency of promotional expenditures 
• Reduce costs of introductory and follow-up marketing programs 
• Avoid the cost of developing a new brand 
• Allow for packaging and labeling efficiencies 
• Permit consumer variety-seeking (Keller, 2013)

Provide Feedback Benefits  to the Parent Brand and Company

• Provide Feedback Benefits to the Parent Brand and Company
• Clarify brand meaning 
• Enhance the parent brand image 
• Bring new customers into the brand franchise and increase market coverage 
• Revitalize the brand 
• Permit subsequent extensions (Keller, 2013)

Disadvantages of Brand Extension

• Can confuse or frustrate consumers 
• Can encounter retailer resistance 
• Can fail and hurt parent brand image 
• Can succeed but cannibalize sales of the parent brand 
• Can succeed but diminish identification with any one category 
• Can succeed but hurt the image of the parent brand 
• Can dilute the brand meaning 
• Can cause the company to forgo the chance to develop a new brand (Keller, 2013)

Conclusions

Based on these few items you can understand the essence of brand extension.

Here you have the contents of the lesson in PDF: