Brand Extension Essay Example

  • Category:
    Marketing
  • Document type:
    Assignment
  • Level:
    High School
  • Page:
    2
  • Words:
    849

BRAND EXTENSION 4

Brand Extension

Brand Extension

Brand development is one of the strategies that companies adopt in order remain competitive in the modern day business environment. As new technologies keep emerging and computer tests and preferences keep changing, coupled with growing competition, most companies are forced to be innovative in order to remain relevant. Brand development has become a common strategy that most companies use in positioning themselves in a market (Kavaratzis et al., 2014). There are different brand development strategies that a company can adopt in positioning in a market. These include product line extension, brand extension, multibrand and through the development of new brands.

Line extension is a brand development strategy where a company extends an existing brand name to new styles, colors and forms of an existing product category. Brand extension, on the other, is a brand development strategy where a company extends an existing brand name to new product category. Multibrands, however, is where a firm introduces additional brands in the same category. Lastly, new brands are a brand development approach where a company creates a new brand for the new market (Hardie et al., 1994).

Coke’s move in recent years to introduce various flavors of Coke, such as Vanilla and Cherry falls under product line extension considering that the company has only extended the existing brand name to its new items. However, Coca-Cola’s move to enter the snack food market under a new brand name ‘Titanic’ and using the slogan ‘really big on taste,’ is a multibrand (Kavaratzis et al., 2014). This is because Coca-Cola has introduced new brands in the same category. Milo’s move to introduce ice cream, cereals and breakfast bar constitutes a product line extension as the company has introduced new product lines that sell under its established brand name. However, Burger Galore’s intention to open up a chain of toy stores under the name of ‘Toys n More’ is an example of a new brand. Lastly,

When a successful brand opts to start marketing its shoes and other fashion accessories under its own brand, this is considered a brand extension as the company extends its existing brand name to a new product category.

Reasons for the Popularity of product Line Extension

Although there are quite a number of brand development strategies, product line extension happens to be the most popular and is adopted by most firms across the industries. Product line extension is where a company uses an established product brand name in new products that falls within the same product category. In other words, a line extension occurs where an organization introduces a new item under the same brand name. Such includes the introduction of a new product with different flavors, colors, packaging size, forms or ingredients using the established products brand name. In the examples given above, the move by Coke to introduce various flavors of Coke, such as Vanilla and Cherry, constituted a product line extension.

The increased popularity of line extension across industries is linked to a variety of reasons. First, most companies adopt line extension as product expansion strategy because of low-cost associated with this form of branding (Hardie et al., 1994). Because the new products introduced continue to use the established brand name in the market, this implies there is no need of giving the new items, new brand names, thus low cost. Secondly, most companies favor line extension because it allows the new items, such as new flavors or ingredients to continue using the established brand name which results in ease of recognition and low advertising cost because the products continue to use the brand name of the established brand (Hardie et al., 1994). Firms also adopt line extension in large numbers because this strategy has been found to satisfy the diverse desires and needs of consumers in different market segments as it ensures that customers have a variety of products under the same product line and same brand name but with varying flavors, colors and ingredients. Additionally, line extension has become a popular product expansion strategy for companies as most companies use it as a short-term competitive arsenal to increase the brand control in retail space. This is attributed to the fact that a brand with extensive products gets access to a large shelf space, which gives them a competitive edge over rivals in the market (Hardie et al., 1994). Additionally, companies adopt line extension because it allows firms to launch products at relatively higher prices, which in turn results in high profits. Besides, line extension ensures that customers who cannot afford higher prices have lower-price options under the same brand that they can buy. Accordingly, this strategy allows firms to satisfy the diverse needs of different customers in different market segments.

References

Hardie, B. G.S., Lodish, L. M., Kilmer, J. V., Beatty, D. R., Farris, P., Biel, A. L., Wicke, L. S., Balson, J. B., & Aaker, D. (1994). The logic of product-line extensions. Harvard Business Review. Retrieved from https://hbr.org/1994/11/the-logic-of-product-line-extensions

Kavaratzis, M., Warnaby, G., & Ashworth, G. (2014). Rethinking place branding: comprehensive brand development for cities and regions. London: Springer.