A brand is a name that is given to a product or service so that it will have an identity to itself. Brands are usually different from products. Brands are basically related to what the customers buy whereas products are related to what the companies make. A brand is considered as an accumulation of functional and emotional associations.
Brand gives an assurance that the product will execute as per the expectations of the customers. The perception of the customers about the product is formed. Brands will have a trademark that will protect them from others to use it. It also gives information about the organization, goods or services highlighting it in the marketplace.
Branding is a set of marketing and communication methods that will help a company to distinguish it from their competitors. Its main aim is to create a lasting impression on the customers.
A brand has a different view with respect to customer and seller.
To a customer, a brand will denote the source of the product, the lower risk involved to purchase the product, giving the ownership to the manufacturer of the product, quality etc. It simplifies the purchase decision.
To a seller, a brand will denote competitive advantage, the way of identification, quality to customers etc.
What is Brand Extension?
Brand extension is a strategy used in marketing. A company which is already branded in the market with a pre-defined image will make use of the same brand name to market a different product category. By using the new product category linked with the existing brand name, the market reach of the new product can be made easy. Since the market is already aware of the existing products that are associated with the brand, the new product will reach out faster to the customers.
When a new brand is combined with an existing brand, the brand extension is called as sub-brand.
An existing brand which gives rise to a brand extension is called a parent brand. In a scenario, when the parent brand is already linked with many products through many brand extensions, then it is called as a family brand.
When the customers of the existing product have greater values of the product, it is likely that the customers will accept the new business.
Brand extension strategy
Let us discuss few of the methods of creating a brand extension:
- A similar product can be formed into a different form from the original parent product. For example, snickers created into snickers ice cream bars.
- Having a different flavor, component or ingredient to the existing product to create a new product. For example Hershey’s chocolate milk.
- Adding a new feature or benefit to the existing product. For example, Febreeze is a brand that caters to household odor. It extended the product to car air freshener which made the good impact on the business.
Types of brand extension
Brand extension can be categorized into the following:
1) Companion product extension
Companion products are a form of an extension which is very popular in the market with the customers. the ultimate aim behind company product extension is to materialize or capitalize the complementary products, customers view both of them as together or jointly and therefore it offers a scope of brand extension. For example, getting a Google cloud drive free with Gmail.
2) Product form extension
Line extension is when the brand is launched in a different form from the present form. If the different product formed is an entirely new product category, it will be termed as a brand extension rather than a product from the extension. For example, Google is extended now to mobile phones industry and called as Google Pixel.
3) Extension of company expertise
The extension can take a different form of product category since the expertise remains the same the new product category also is equally good terms of quality. the expertise of a particular company in extended to a new product category or a brand category is called an extension of company expertise. For example, Sony which started out as a player in Walkman is now serving mobile phones, Smartwatches, speakers, headphones and other extended product categories.
4) Customer franchise extension
When a specific customer group has specific needs for the product the range which is extended is called customer franchise product range. Customer franchise focuses on the needs of the customer and ensures that customer satisfaction is obtained from the group. For example, Johnson and Johnson have offerings for all ranges of customers like baby products, baby shampoo etc.
5) Extension of brand prestige
When new products are introduced into unrelated and entirely new product categories, under the brand extension, it is termed an extension of brand image or brand prestige. The same popular name is used for a range of unrelated products. usually, the names have been associated with the different product for a long-time recharge now been extended with a new product category but using the same old name. Allen Solly has a range of garments for men and women but when it extends into footwear it would be termed an extension of brand prestige or brand image.
6) Extension of brand distinction
Brands have been unique in terms of an attribute or in terms of the benefit that they offer. And it is this uniqueness that attracts the customer to the brand. The company that works backwards to launch a different product and obviates this distinction.
Example Apple has always promoted security and they have achieved this distinction by launching a variety of products with amplified security. Apple tries to leverage new products on the same brand distinction. Some might argue that innovation has been the brand extension of Apple but that was true until 2017.
7) Component brand extension
A brand develops a close association with taste. since it is been in the market for a long time it enjoys the proprietary association of the brand with the unique and distinctive taste. and this is the property that the brand could leverage on in other products as well. example head and shoulders shampoo which now comes in different flavours.
8) Customer base extension
The customer base is something that brands acquire over a long period of time and it is easier to extend that bass to new product categories. This is effective when the customer base is huge and captive to some extent. Example launch of Prepaid ForEx cards by Thomas Cook for its travellers. The customer base, in this case, is extended to the new product.
Brand extension need not always be a success. It can lead to some failure brand extension. Let us consider some examples.
Example where brand extension is success
- Consider the brand Dove. It was mainly known for soaps. But now it is extended to many products like shampoo, deodorant and body wash. The brand extension of the dove for the new products has been a great success.
- Consider Adidas.The company started its brand of shoes. Later they launched many products related to footwear, clothing, accessories, and sports.
- Consider Titan. The company started its brand for watches, later positioned itself into the Titan house of jewelry, watches, eyewear and leather products.
Example where brands extensions is failure
- Colgate Kitchen items – This brand extension was a failure as it was not accepted to associate Colgate with meal as it was associated with oral and personal care.
- Consider new Coke. Coco-cola could not become successful in case of Coke.
- Rasna Ltd is one of the famous soft drinks. When it tried to change it product to its fizzy drink Oranjolt, it could not succeed.
Advantages of Brands Extensions
Brand extension has the following advantages:
- Easy acceptance of the customers for new products
- The customers will already be aware of the existing products that are linked to the particular brand. Hence the risk perceived by the customers regarding the brand will reduce.
- It can increase the brand image. Brand image is the customer’s current view about the brand.
- When the brand name is good, it can increase customer interest and readiness to buy new products.
- The cost involved in advertising, selling and promotions will be less as the brand is already well known in the market.
- Cost involved in developing the new brand is avoided.
- Enhancement of brand visibility
- When new products are launched to the parent brand, the parent brand gets recognized more and its visibility in the market is enhanced.
- It also gives more energy to the brand. There arises clarity in the brand when many new products are launched under the parent brand.
- The market coverage is extended as new customers will enter to buy new products.
- Provide a source of energy for the brand
- The new product can increase the frequency with which the brand is linked with good quality.
- Moreover, the customer can also see the brand name quite often and the perception of the brand can be strengthened.
- Defensive strategy
- The brand extension can help the brand fight against its competitors.
Disadvantages of brand extension
1) High risk
venturing into the unknown always has higher risk and it is no different for brand extension. While going into a new product may help to grow the revenue of the organization it may also backfire and causes the organization higher losses. Hence before extending any brand, the organization should ensure that the market is prepared to receive such an extension and should thoroughly know the market of the extended product.
Failure of a brand extension will prove very costly to the company. This usually happens in the case of the product extension which is not related to the company. Recent examples of brand extension officer would be the acquisition of a medical device company Alcon by another multinational pharmaceutical company Novartis. Novartis had the intention of extending the product line into medical device markets but since they had no expertise of managing a medical device industry turned out to be a failure. Alcon will be spun off in 2019.
3) Parent brand failure
If the brand extension does not work out well, there are very high chances that the parent brand may take the hit. The brand equity in the market goes down and both the child and parent product fail. For example, in 2018, when Facebook CEO Mark Zuckerberg was accused of data scam, and the selling of customer data to various companies, it took a hit for other brand extensions of Facebook like WhatsApp and Instagram.
To summarize, brand extension denotes the process involved when a company uses its influence to launch the new product in a different category. The main logic behind the brand extension is to transfer a network of associations which will drive customers to purchase the new product.