Brand Extension

There are two ways of launching a new product into the market. One is known as Line Extension i.e. use of an established brand name for a new product in the same category.  New product differs from actual parent product in size, colour or packages. So when Sun Silk introduced Sachets in the market that is known as Line extension.

On the other hand, brand extension refers to when the established brand is used to launch a new product in a brand new category e.g Kingfisher used brand extension to launch Kingfisher airlines.  Other most successful brand extension is of ITC, the most reputed brand in the tobacco industry has extended itself into almost any other product category like cosmetics, Match box, Staples, hotels etc. Dettol is another successful example of brand extension. Originally an antiseptic company, Dettol now sells shaving creams, soaps etc.

However, normally new product development is not so easy task. According to Booz-Allen and Hamilton, more than 30-35% new products fail. Therefore, marketers take care of everything while introducing new products into the market.  

 

Successful brand extensions have positive effect on the parent brand. There are six different types of brand extension.

1.      The Next Step, an evolutionary brand extension

2.      The Sequel, more than that of evolutionary. In this product is re worked, re designed, re manufactured and re marketed.

3.      The Spin off, These are the extensions that take some small elements of the original and try to make a full blown brand out of it.

4.      The partnership, Co-branded extensions can confuse and confound customers

5.      The Anti- Brand, this is not really an extension, these are brands that leverage the brand awareness of another product to their benefit by claiming to Not be them.

6.      The non-sequitur, these are brand extensions that generate a “HUH?” reaction out of consumers.

Source: www.brandxpress.net

However on the other hand, Ernst and Young’ study shows that 84% of brand extensions are failures. Some of the brand extension failures are Amul’s entry into Pizzas, Kellogg biscuits, Tropicana ice creams.  

 

Four factors influence the successful brand extensions i.e. Relevance, Recognition, Transfer and credibility.

Relevance means the new product belongs to same category of that parent product in a broader sense. Airtel introducing mobile devices is an example of relevance.

Recognition means associating the characteristics of new product or brand with that of the parent. PEPSI introducing juices is an apt example of recognition.

Credibility is about the trust people have in the parent company. The core values of TATA group helped the company when t launched TATA services in software.

Transfer means ability to transfer the skills and characteristics into new product.

So in short, it means that what is perceived by the marketing managers does not sell, it is what is perceived by the customers is ought to sell. So brand extensions is not a sure short victory for established brands.