Brand Extension

Brand extension is the transfer of brand values on the New Product. It shows that the Products may not related directly; but it has values that an transcend different products categories.

Why brand extension?

1. Increase and leverage brand equity

2. Increasing competition & global aspirations and ability to communicate globally
3. Saturation of markets
4. Reaction to declining markets
5. Nourish the brand's perceived vitality
6. Encash on the Consumers loyalty on Parent Brand

Advantages of brand extension

1. Increase awareness of the brand name

2. Reduced Cost to launch a new Product

3. Increased profitability from offerings in more than one product category
4. Exploiting existing brand's popularity
5. Credible & Sustainable Differentiator
6. Easier to get self-space compared to Using a new brand name

Types of brand extensions

1. Vertical Extension – More or less finished forms
2. Extending products for same product base
3. Designer image/status – Certain brands convey status and hence create an image for user

Principles of Brand Extensions

1. Brands should not be extended unless they are well known, have high awareness and good reputation
2. Must be a logical fit in consumer's view point of compatibility
3. Must have some element of leverage in the new category
4. Should not create confusion or negative image for the parent brand
5. Brands synonymous with some product categories should not be extended
6. Brand should not be stretched to many categories to avoid dilution

Brand Extension Risks
1. Distort/Dilute the values of the Brand -> It can cannabilize sales of the parent brand. It can
2. Lose the original consumers

Corporate brand

It is a creation of brand for parent or corporate and is much bigger than the brand extension. It may still requires creation of unique sub-brand for the product. An overarching corporate brand reduces the ability to position a brand with an individual identity, and may conceal different products' unique characteristics.

Various growth strategy:

1. increase volume of same set of products ->

2. add more products to same set of consumer -> Product expansion strategy

3. enter into new market to add more consumer -> Market expansion strategy

4. enter into new market and new technology/product -> Diversification strategy