Brand extension is a marketing strategy where new products are launched into the market using an already existing, well-recognized brand name. In other words, it enables products to gain easy brand recognition because of the pre-established brand awareness. Even though the new commodity will be unknown to the potential customers, in most cases, they recognize the brand that produced the item, and this facilitates the success of penetrating the new market. Even though it can seem easy to use the brand extension, it is often tricky, especially when a brand differs from the original category. Despite the challenges, brand extension is good because it saves the business from incurring costs of developing new products, enhances the brand’s image, and improves the latest developments’ acceptability rate.
Producing a new item in the market requires intensive financial resources, which are never limited to promotion and marketing. However, using a brand extension can save the business from incurring such costs. It also reduces the costs of marketing and advertising since it can use pre-existing communication channels to promote the new product (Jaulent et al., 2017). For instance, the Harley Davidson T-Shirts are famous for their luxury motorcycles corner. Putting their logo on merchandise made their followers buy the products of Harley for all the days they were engaged in riding activities,
Second, brand extension enhances the image of the brand, thus creating customer loyalty. If a new product gets launched portraying the same promise and message of the brand, the brand’s image improves (Miniard et al., 2018). Therefore, customers tend to believe in the new product, thus increasing the customer base; for example, the George Foreman Grill is attached to the celebrity brand. The business highly depends on celebrity status to extend its brand.
Third, brand extension enhances the acceptability rate of the new products. When a product increases its association with an already established brand, the potential customers also increase their willingness to accept the latest product, especially when the commodity being launched belongs to the same industrial niche (Liu et al., 2018). For instance, in the case of Reese’s Puffs Cereal, brand extension enabled Reese to bring back candy products to the cereal market without changing the tastes of the consumers.
In conclusion, although some individuals can claim that brand extension can cause business failure, it can be successful when implemented correctly. It improves the brand’s image, and this creates customer loyalty, thus enabling the business to make more sales. It also saves the business from incurring costs of developing new products and enhances the acceptability rate of the new products. Therefore, it enables brands to create and dominate new subcategories.
The conjoint analysis was done for mobile appliances made by different companies. The phones used for sturdy include Samsung Galaxy, Huawei, and iPhone. Among the people surveyed, it was found that many people preferred Apple’s brand compared to Samsung’s and Huawei’s. However, among the other factors, prices of the commodities prevailed over the brand and the screen’s size. For instance, people could buy cheap phones without looking into the costs of the items and the brand. However, the screen size came second, which implies that many people could purchase phones with bigger screens. The brand came last; however, people preferred Apple over other brands.
Jaulent, S., Luxin, K., & Sacko, Y. (2017). Advantages and disadvantages of brand extensions strategy for companies. [C-level dissertation, Högskolan i Halmstad]. Web.
Liu, Y., Foscht, T., Eisingerich, A. B., & Tsai, H. T. (2018). Strategic management of product and brand extensions: Extending corporate brands in B2B vs. B2C markets. Industrial Marketing Management, 71, 147-159. Web.
Miniard, P. W., Jayanti, R. K., Alvarez, C. M., & Dickson, P. R. (2018). What brand extensions need to fully benefit from their parental heritage. Journal of the Academy of Marketing Science, 46(5), 948-963. Web.