Brand Extensions: Good or Bad?

Published Date: 23 Mar 2015 Last Modified: 16 May 2017

A distinct brand name is a very valuable asset to the business. A brand which may come in different forms such as a symbol, a sign, a design, or a combination of any of the mentioned forms, is what identifies a product from another and from its competitors and it is created to build a relationship between the business and the consumers.

A brand extension or brand stretching is a strategy wherein a fresh or new product is established under an existing brand name. According to Martinez, Montaner & Pina (2009) it is a firm's way of how a new product is introduced and make new offerings attractive for the customers and the distributors which involves "leveraging the brand equity" established in old-fashioned markets. The transfer of equity from the parent or established brand to the extension sidesteps the great outlays of evolving and "communicating a fresh brand name". Brand extension is significant to increase the economic benefit of the market and also for the maintainability of the brand. Batra, Lenk and Wedel (2010) said that consumers are likely to try out the products of brand extensions. Brand extension can either be a line extension or a category extension. An example of a line extension is Pringles, it comes in different flavours - cheese, original, ranch, sour cream; or Coke as the parent brand and Diet Coke and Cherry Coke as line extensions. Line extension is the type of extension where the new product belongs to the same category as the parent brand and typically this comes as a variation in size or flavour. Category extension on the other hand is where the extension is in a different category or market from the parent brand. For example, the Yamaha brand, originally it manufactured motorbikes then they produced pianos, hi-fi equipment and sports equipment.

Brand extensions can endanger brands?

Martinez Salinas and Pina Perez (2009) conducted a study about how brand extensions can have an effect on the "brand image" and found out that the association of a new product to a parent product can be good wherein an increase in recall and memory is associated with it though there is a danger in diluting the brand which can result to confusion. Martinez Salinas and Pina Perez (2009) further discussed that how a consumer weighs the information attached to the brand depends on the accessibility situation, high accessibility or low accessibility. The dilution is stronger when the consumers have an inconsistent experience. To avoid dilution or harming the brand the firm should only promote an extension on the condition that the supposed "fit" is extraordinary. Kapoor and Heslop's (2009) article discussed about the "fit" of brand extensions wherein the association between the parent brand and the extension is consistent. Extensions with inconsistent associations are likely to fail and dilute the "parent-brand equity." Yes, brand extensions can mean danger when the fit and the experience are inconsistent. No, when the fit is perfect and consistent the brand extension will be a success. Olavarrieta, et.al (2009) suggested that derived brand name extensions are better compared to full name brand extensions because it protects the parent brand from "extension failures" and a safe way to spread the brand, which allows the extension to bask in the glory of the association with the parent brand and at the exact time bestow the success back to the parent brand.

Brand extension is an important brand-growth strategy?

Yes, it is an important growth strategy for the brand which needs the correct analysis of the market for a product to be successful. Building this strategy with the support of a good quality product which is seen equally by consumers can be good for both the parent brand and the new product. Brand extension has been the centre of growth for some known products in the market for the past few years. For example, the Virgin brand has extended its brand to a lot of different lines and categories, from travel to lifestyle to media and mobile to money to music to caring about our planet and the people who live on our planet (Virgin, 2011) which totals to "more than 300 branded companies worldwide."

Conclusion

A brand name is what makes a product stand out from the rest. A strong brand name gives the consumers recall and positive feedback which is good when marketers consider using the brand extension strategy. Brand extension stretches the line or the category of the product. A good fit and experience with the parent brand can make the brand extension a success. For the past decades products have been sprouting up and these products are mere brand extensions of the parent brand because consumers patronize brands they have grown to love and believe that is why firms build on that trust and confidence from the consumers to enhance and innovate their old products and package it into something with an added twist that will attract its loyal consumers to support the new products the same way the parent brand has been supported.