Brand Extension Strategy

Brand extension is strategy used by firms to expand their established brand name to launch to new or modified product (or service). This launch to which the brand is extended can be related or unrelated to the existing ones or can be an entry into new product category itself. By extending the brand the firm tries to extend the inherent core values to new launch. It can be beneficial in a sense that it can save firms effort and monetary cost required otherwise to recreate another new brand for the new launch. Additionally, firms can increase and leverage the brand equity and encash on the consumers’ loyalty on the parent brand.

Pitfalls of Brand Extension

Not all brand extensions succeed, brand extension as a strategy has its limitations. The name IBM is associated with computers industry for so long. It might not be very appealing to consumers if tomorrow IBM start selling toilet soaps. The 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. Following are few failure stories of the brand extension:

Failure Story 1: Coca cola

In case of new Coke, Coca Cola has forgotten what the core brand was meant to stand for. It thought that taste was the only factor that consumer cared about. It was wrong. The time and money spent on research on new Coca Cola could not evaluate the deep emotional attachment to the original Coca Cola.

Failure Story 2: Rasna

Rasna is among the famous soft drink companies in India. But when it tried to move away from its niche, it hasn’t had much success. When it experimented with fizzy fruit drink Oranjolt, the brand bombed even before it could take off. Oranjolt was a fruit drink in which carbonates were used as preservative. It didn’t work out because it was out of fit from the retailers’ practice as it need to be refrigerated and it also faced quality problems. It has a shelf life of three-four weeks, while other soft- drinks assured life of five months.

Failure Story 3: Dettol

Pond’s body talc could be easily transferred the end benefits of freshness and fragrance to a toilet soap as the extension of their brand and it was well accept by the consumer. However, in comparison, Dettol is still struggling to get away from the image of its antiseptic lotion, to promote its bath soap.

Disadvantages of Brand Extension

There is a risk that the new product may generate implications that damage the image of the core/original brand. 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. If the brand extensions have no advantage over competitive brands in the new category, then it will fail.

Brand Extension Risks

1. Can succeed but diminish identification with any one category
2. Can succeed but hurt the image of the parent brand
3. Can fail and hurt parent brand image
4. Can succeed but cannibalize sales of parent brand
5. Can cause the company forgo the chance to develop a new brand
6. Can dilute brand meaning
7. Can confused or frustrate consumer

Beating Competition by Successful Brand Extension:

1. Brand should not be extended unless they are well known, have high awareness and good reputation
2. Brand should be a logical fit in consumer's view point of compatibility with the parent brand
3. Brand must have some element of leverage in the new category. The parent brand should give an edge in the new category.
4. Brand 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
7. Brand extension should have the potential to generate significant sales

Following few success stories of brand extension:

Success Story 1: Google

Google is another good example of successful brand extension. Google created a search engine that offers key features like fast, reliable, user friendly, cool and exclusive to the consume. With these core brand values, Google extended the brand value to several new product categories include photos sharing (picasa), video sharing (youtube), file sharing (google docs), blogger, image search and so on. All of these product categories inherit the user friendliness, fast, coolness etc. brand values from the parent. This make the Google far apart from its competitors like yahoo or Microsoft in search, virtually, Google has eaten away their market share in online search and other online product. Google has become such a huge brand name that internet user like to remain associated with Google in some way or other – the good example of this could that internet user started using the term as a slang “googling” or “google it out” instead for “searching” or “search it out”.

Success Story 2: Nike

A renowned brand helps a firm to launch products in new categories more easily, for example, Nike’s brand core product is shoes. But it is extended the brand to sunglasses, soccer balls, basketballs, golf equipment and other sports items. An existing brand that gives rise to a brand extension is referred to as parent brand. If the customers of the new business have values and aspirations matching those of the core business, and if these values and aspirations are embodied in the brand, it is likely to be accepted by customers in the new business.

Success Story 3: Dove

Dove has extended their over 15 years brand of moisturizing soap to the body wash and body cream product categories. Dove has leveraged their brand equity and launched set of product with the view that Indian consumers have evolved and are ready to experience superior bathing experience using liquids. Dove has extended the brand in variety of products such as body wash, deodorants, body lotion, shampoos and conditioners with a view of providing comprehensive range of solutions to bring out true inner beauty of women.

Advantage of Brand Extension

It is evident from the above examples that brand extension to new product categories help firms in following:

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

Brand Extension has following advantages:

1. It makes acceptance of new product easy. There is a likelihood of higher consumer interest and willingness to try new product having the established brand name. The risk perceived by the customers reduces.
2. 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.
3. Cost of developing new brand is saved. The expense of introductory and follow up marketing programs is reduced.
4. There are feedback benefits to the parent brand and the organization viz. the image of parent brand is enhanced. The parent brand meaning is clarified.
5. It increases market coverage as it brings new customers into brand franchise.
6. Customers associate original/core brand to new product, hence they also have quality associations.

Conclusion

To summarize, firm likes to extend their established brand to increase/leverage their brand equity, to effectively deal with the increasing competition, and to encash on the consumers’ loyalty on parent brand. Brand extension may be successful or unsuccessful. The brand extensions should not stretched too far in totally unrelated product categories. The fit, value and relevance of extension with the parent brand is important to determine the success of the brand extension

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