The brand extension, while a strategic decision already present in all the previous studies, continues to have its own space in the present study. The concept of brand extension was initially introduced by Aaker (1991). He proposed the concept to address how successful a product introduced under an extended brand could become in the market. Brand extension is a marketing strategy used to build on a successful brand name for a family of product categories or to launch a new product by using the same brand name. By leveraging the goodwill and notoriety in one product category, a company hopes to start or grow demand in a new category of which it wants to be a part.
Brand extensions can deliver value to companies, consumers, and society at large and contribute to the long term sustainability and growth of brands in the market. Brand extension is an effective technique of increasing the brand equity and creating brand awareness. It gives a company the flexibility to shape its portfolio of products, to change brand associations and to gain market share in competitive markets.
Brand extension is an effective strategy to capture a competitive edge in the market. It has been said that brand extension constitutes the risk of alienating certain consumers and markets if not done properly. To measure the success of a brand extension, marketers measure the associations that consumers form as result of the relationship between the extended brand and the original “parents” brand. They need to understand consumer behaviour and identify potential markets.
Brand extensions can take several forms, and these include product line extensions, brand stretching and brand licensing. Product line extension is the launching of related products under an existing brand name. An example of this would be Coca Cola bringing out Diet Coke in the 1980s. Brand stretching is the incorporation of a brand name into a product of a different category. An example of this type of extension would be Oreo cookies, which are now being used to launch Oreo flavored cakes. Brand licensing is the use of an existing brand name on products manufactured by another company. Disney, for example, uses its brand name to sell not only movies but also toys, clothes, watches and books.
While brand extensions can be effective, companies need to create compatibility between their original brand and the extended brand in terms of product reputation, usage and quality. For instance, if a brand of luxury cars is extended to cover the production of economical cars with the same brand name, it will come fraught with danger if the economical cars fail to match the quality of the long-held reputation of the luxurious cars. This can create an entry-level threat for customers and will even damage the brand.
To its proponents, brand extension offers many advantages that make it an attractive strategy. Not only do companies have the opportunity to increase their revenue, brand extensions also allow companies to increase their market share and enter new markets more quickly. Companies can also make a more efficient use of their resources and take advantage of the already existing brand awareness that have been built over the years.
To its opponents, brand extension carries many risks that can potentially dilute a company’s well-established brand. For example, if a company fails to create differentiation between the extended and the existing brand, consumers may begin to question the credibility and quality of the parent brand. Additionally, if the extended brand does not resonate with customers, it can become difficult for the firm to recover from the damage to its brand.
Overall, the success of a brand extension is determined by the connection of the original brand to the extended brand. When determining the appropriateness of an extension, companies need to take into account the target market’s expectations, motivations, preferences and culture. It is essential that the core values that are associated with the original brand are preserved in the process. In light of this, companies need to build and strengthen their brands rather than spreading their resources too thin.
While brand extension can be a beneficial strategy, it can also be risky if implemented improperly. Companies need to consider the implications of their decisions and make an effort to create consistency between their original brand and the extended brand to avoid potential reputational damage. By leveraging their existing brands, companies have the possibility of creating successful brand extensions that help to increase their market share and to access new markets.
