A brand extension is when a company uses a existing brand name to launch a new product. The new product can be related or unrelated to the company's existing product line. Brand extension can be a cost-effective way to enter a new market or product category because the company can leverage the equity of its existing brand name.
There are several risks associated with brand extension, such as diluting the brand equity, confusing consumers, and damaging the brand's reputation. Therefore, it is important for companies to carefully consider whether brand extension is the right strategy for them.
One way to mitigate the risks of brand extension is to use a sub-branding strategy, where the new product is launched under a different brand name that is still clearly associated with the parent brand. For example, when Coca-Cola launched its line of bottled water, it did so under the sub-brand name "Dasani."
Another way to mitigate the risks of brand extension is to use a co-branding strategy, where the new product is launched in partnership with another brand. This can help to reduce the risk of damaging the parent brand's reputation, as well as providing an opportunity to reach a new customer base.
What are the various elements of brand extension?
There are many elements to consider when developing a brand extension strategy. The first is to clearly define the core values and attributes of the brand. These should be communicated to all employees, so that they are aware of the brand's positioning and can help to uphold its reputation.
Once the core values are established, the next step is to select the right product or service to extend the brand into. This should be something that is complementary to the existing brand and that will appeal to the same target market. It is also important to ensure that the new product or service is able to be delivered with the same level of quality and service that customers have come to expect from the brand.
Once the product or service has been selected, the next step is to develop a marketing plan that will support the launch of the new offering. This should include elements such as advertising, public relations, and promotions. It is also important to consider how the existing customer base will be made aware of the new product or service, and what incentives may be offered to encourage them to try it out.
Finally, it is important to monitor the performance of the brand extension once it has been launched. This includes tracking sales, customer satisfaction levels, and brand awareness. Adjustments to the strategy may be necessary based on the results achieved.
What are the two classifications of brand extensions?
There are two types of brand extensions:
1. Horizontal Extensions
2. Vertical Extensions
1. Horizontal Extensions:
Horizontal extensions are when a company creates a new product that is similar to their existing products. For example, if a company that sells cars creates a new model of car, that would be a horizontal extension.
2. Vertical Extensions:
Vertical extensions are when a company creates a new product that is related to their existing products. For example, if a company that sells cars creates a new type of car, that would be a vertical extension.
What are the key terms related to brand and branding?
There are many key terms related to brand and branding. Here are some of the most important ones:
Brand identity: This is the overall look and feel of a brand, including its name, logo, tagline, and other visual elements.
Brand equity: This is the value of a brand, based on factors like customer loyalty, name recognition, and positive associations.
Brand awareness: This is how well customers recognize and remember a brand.
Brand loyalty: This is when customers consistently choose a particular brand over others.
Brand positioning: This is how a brand is positioned in the market, in terms of its target audience, pricing, and placement in relation to competitors.