The brand extension (also called brand stretching) refers to a marketing strategy used by firms with strong existing brands to extend to other products, leveraging on the strong brand name to capture the market. When customers feel satisfied with the quality of a certain brand and have sufficient loyalty towards the brand name, marketing experts believe that the name can be spread to other products and lead to successful sales. Globally, many companies have used the strategy to find ways of implementing diversification of product range hence achieve business growth. Yamaha was a Japanese maker of motorbikes but was able to successfully extend the ‘Yamaha’ brand name into sports equipment, pianos, and hi-fis. Also, Lucozade was a renowned world maker of children’s energy drinks but was able to extend to manufacturing adult energy and sports drink in the same brand name (Brands – brand extension and stretching, 2010, Par2).
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According to analysts over 81percent of new products developed in the year 1991 depending on brand extensions. This means that the power of a known brand name can be utilized as an asset in terms of the established royalty among customers. The advantages are always great as compared to the brands being introduced.
First, the firm can introduce the new product with ease. Financially less spending is expected in positioning the brand rightfully in the market. The fact that the brand name is known reduces budgets on promotional campaigns and advertising on the new products. Most of the doubts about the quality of the products are cleared by the fact that the existing products have known quality levels. As such, trust levels are much higher. This increases the chances of customers being willing to try out the new products (Understanding Brand Extension, 2010, Par3).
Secondly, the entire distribution network already established feels more at ease with the new product carrying the familiar brand name. They have a perception that the new product’s chances of success are high thus it may be less risky as compared to introducing new products. This factor enhances the process of penetration in the market creating adequate channels of exposure of the product to the customer. This makes the process of entrenching the product into the market much easier (Understanding Brand Extension, 2010, Par5).
Combining all these factors, it is clear that marketing strategists are right in the application of brand extension strategies to drive growth. However, there are some strong sentiments from a different class of marketing experts who oppose the strategy of brand extension as a marketing strategy. They argue that brand extensions can result in the damage or dilution of the existing image of the brand. There are possibilities of causing damage to the existing brand equity due to poor brand extension. They argue that most marketers focus on evaluating how strong the existing brand is and using that information as the strength of the brand and its ability to overwhelm other factors. They argue that despite the strength of the existing brand, introducing a new product under the same brand dilutes it and depending on the communication strategies applied may even harm the entire brand family (Brand extensions, 2010, Par3).
Despite the negative views, statistics show that the highest success in introducing products in the market is mainly recorded in situations of brand extensions. All that is required is that the choices of brand extension are well made and other factors such as quality taken to full consideration before introducing the brand.
Brand extensions, 2010. Mud Valley. [Online] Web.
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Brands – brand extension and stretching, 2010. Tutor2u. [Online] Web.
Understanding Brand Extension, 2010. Brand Extension Research: The Innovator of Brand Extension. [Online]. Web.