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Consumers’ perceived risk can go down with brand extensions. Brand extension refers to the use of a successful brand name to launch a new or modified product in the same broad market. Advertising, selling and promotional costs are reduced. A successful brand helps a company enter new product categories more easily. An established brand name increases consumers’ interest and willingness to try new products having the established brand name. Advantages and disadvantages of brand extension Advantages: They can help the product be easily accepted. In short it is similar to brand stretching. Email This BlogThis! It increases market coverage as it brings new customers into brand franchise. . Contact | The Lucozade brand has undergone a very successful brand extension from children’s health drink to an energy drink and sports drink. While line extension is the less risky one, more companies are using the strategy of brand extension as offering more opportunities for the business. Feedback benefits, both for the parent brand and the company itself. 4:01 AM Ebook Arcade 1 comment. Disadvantages of Brand Extension: 1. PSI | Those who love Nike shoes will be much more inclined to try their sunglasses or basketballs as well. Wipro – the brand was originally geared towards computers, but has since extended into soaps, powders, and shampoos. Artwork Tips | EPPA | Packaging and labelling are more efficient, as the machines can print out the same labels and packages. However, they’ve since extended and now also offer basketballs and sunglasses, just to name a few. Ask questions, share your knowledge and connect with the Commerce Community! Launching new products is one of the most used strategies for companies to grow. Extending the brand name too far may lead to a loss of reliability, especially if the brand extension happens in an unrelated market. Just because the core brand will lend its brand awareness to the new product, it doesn’t mean companies don’t have to invest at all. 2. For example, Fairy (owned by Unilever) was extended from a washing-up liquid brand to become a washing powder brand too. Prices and specifications are subject to change without prior notice. By extending a brand, businesses can evaluate product category opportunities. Customers associate original/core brand to new product, hence they also have quality associations. They can help the product be easily accepted. Learn more on Advantages and Disadvantages of Brand Extension Plagiarism Prevention 4. Brand meaning is clarified. There are economies of scale as advertising for core brand and its extension reinforces each other. Prohibited Content 3. Advantages of brand extension strategy According to David Taylor (2004, p1), this strategy of brand extension is popular because it is less risky and cheaper compared to the creation of a new brand. The extensions clarify what the brand stands for. These are just some of the cases when they were successful: Nevertheless, the ones that have failed are still some of the most famous brands in the world: The thing about Coca-Cola is that they’ve made a mistake when trying to create a brand extension. Terms | f. Customers associate the original/core brand to new products; hence, they also have quality associations. The same goes if they are promoting the extension – the core brand will gain recognition as well. He takes great pride in the company and the 5* service we provide our customers. Downloadable! With an entrepreneurial mind, Gareth has his finger on the pulse of our UK operations. About | One brand extension allows for more extensions in the future. People like to interact and do business with other people, rather than a faceless organisation. Nike’s core products are shoes, and they’ve gathered a mighty following by selling all kinds of shoes. They attract new customers, as the brand expands on the market. They can also improve the overall brand image. Brand Extension is the use of an established brand name in new product. Before publishing your articles on this site, please read the following pages: 1. Report a Violation, Brand Building: Short Speech on Brand Building, Factors Affecting Pricing Product: Internal Factors and External Factors. h. The expense of introductory and follow-up marketing programmes is reduced. The core brand is an association for the new product. There are feedback benefits to the parent brand and the organization: a. In fact, if they don’t, all their effort may even have the opposite effect. They thought that the consumers only cared about the taste, but that proved to be incorrect.

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