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Brand Extension Essay

1312 words - 6 pages


SUBMITTED TO- Mr. Sai Ganesh


“Brand extension is using the leverage of a well known brand name in one category to launch a ...view middle of the document...

 Extending the brand to related categories (Liril to Liril talcum powder)
4. Extending the brand to more related categories (Wipro in computers, finance, edible oil, medical equipments, soaps and baby powder)

Advantages of brand extension strategy are:-

1) It makes acceptance of new product easy.
a. It increases brand image.
b. The risk perceived by the customers reduces.
c. 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.
d. Cost of developing new brand is saved.
e. Consumers can now seek for a variety.
f. The expense of introductory and follow up marketing programs is reduced.
2) Consumer knowledge: The remaining strong brand used to “promote a new product” makes it less critical to create “awareness and imagery”.

3) Consumer trust: The existing well-known-strong brands represent a promise –of quality, useful features etc. - for the consumer. A satisfied customer by an extension will be more willing to repurchase the same brand.

4) Defensive strategy: An extension can prevent competitors from gaining or exploiting a foothold in the market and can be “worthwhile even though it might struggle”. For e.g. – Microsoft for instance has decided to operate in different areas with the aim
of limiting the “ability of competitors to encroach on core business areas”.

Disadvantages of brand extension strategy are:-
1. 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.
2. There is a risk that the new product may generate implications that damage the image of the core/original brand.
3. 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.
4. If the brand extensions have no advantage over competitive brands in the new category, then it will fail.
5. Cannibalization: Aaker states that the extensions can cannibalize the existing products of the brand when there are positioned in a close market. It means the extensions sales are increasing while those of the existing brand’s products are following the Opposite
curved. Aaker underlines that these good sales figures for the extensions can not compensate the damage produced to the original brand’s equity.

Brand extension may be successful or unsuccessful.

Successful brand extensions are not entirely new products in new categories; rather they are “children” of the same brand family—nuts that have fallen very close to the family tree.

Successful brand extensions have few characteristics like:
1. Perceptual Fit: the consumer must perceive the...

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