What Is Brand Extension?

It is when a corporation uses one of its well-known brand names for a new product or category. It is sometimes referred to as brand stretching. The strategy behind the brand extension is to use the company’s already established brand equity to help them launch its newest product. Additionally, the company relies on the brand loyalty of its existing customers, which it hopes will make them more receptive to new offerings from the same brand. When successful, brand extension can help a company reach new demographics, expand its customer base, increase sales, and increase overall profit margins.

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KEY TAKEAWAYS Brand Extension

  • Brand extension is introducing a new creation that relies on the name and reputation of a recognized product.
  • And it works once the original and new products part a typical quality or type that the consumer can nearly identify.
  • Brand extension flops when the new product is unconnected to the original, is seen as a mismatch, or creates a negative association.

How Brand Extension Works Brand Extension

A brand extension uses a favorite product’s reputation, popularity, and brand loyalty to launch a novel product. Here must be a good connection between the original product and the new item to be successful. A weak or non-existent association can have the opposite effect of diluting the brand. It can even injure the parent brand.

Successful brand extensions allow businesses to diversify their offerings and increase their market share. They can give the company a competitive benefit over competitors that do not offer similar products. Existing branding is an effective and cost-effective marketing tool for new developments.

Apple (AAPL) is an instance of a company with a history of successfully using a brand extension strategy to drive growth. Beginning with its popular Mac computers, the company has used its brand name to sell products in new categories, as seen with the iPod, iPad, and iPhone.

Real-World Examples of Brand Extension

It can be as apparent as presenting the original creation in an original form. For example, the Boston Market restaurant cable launched a line of cold dinners under its name, contributing similar fare.

Another form of brand delay combines two well-known crops. For example. Breyers ice cream with Oreo cookie chunks is a matchup that relies on consumers’ loyalty to both original brands.

The brand extension also may be applied to a different product category. Google’s core business is a search engine. Still, it has various other non-advertising related products and services, including the Play Store, Chromebooks, Google Apps, and the Google Cloud Platform.

In the best examples. It is natural and arises from a recognized positive quality of the original product. Creating complementary products is a form of it . The many varieties and flavors of Coca-Cola are an example.

Criticism of Brand Extension

The cost of launching a product through it is lower than launching a new product without a brand identity. It is because the original brand communicates the message.

However, brand extensions fail when product lines don’t match. The brand name can even cast an uncomfortable light on the new product. Therefore. Before launching a new product, brand managers need to consider their target audience and which products will go well with their company’s brand.

An example of an unsuccessful brand extension was in the early 1980s when the famous jeans manufacturer Levi Strauss & Co. decided to launch a line of men’s three-piece suits under the Levi’s Tailored Classics sub-brand. After years of unfortunate sales. The company withdrew the line. The company was unable to overcome consumer perceptions of the brand as one associated with rugged casual wear rather than business attire. However. Levi’s has learned from its mistake. In 1986, Levi’s Dockers introduced a line of casual khaki pants and other men’s apparel that has since been a consistent top seller.

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