Advantages Of Brand Extension

Brand competitors and the diversity of choice that is available to consumers, puts brands under pressure to offer high quality products and service, excellent value and a wide availability (Clifton et al., 2009). Brands must differentiate themselves from the competition and create an unforgettable impression.

Brand extensions afford many companies the ability to introduce new products backed by a brands affluence, quality, or popularity. This greatly reduces launch costs, as new brand launches can reach astronomical costs. Ultimately, once a strong customer loyalty is established with one particular brand, consumers tend to purchase these new products as well (Kotler & Keller, 2016, pg. 325).

But for new customers, the new brand extensions will be essential to be able to offer a competitive product offering that will attract them to the brand. Therefore, we can avoid conflict between both segments by letting them choose the products they want depending in their needs.

First of all, a strong brand can be seen as the condition for organisations to expand products, offer more service, and introduce new products (Chernatony and McDonald, 2003). Secondly, a strong brand can lead to growth marketing communication effectiveness (Keller, 2009). ‘To build a strong brand, the right knowledge structures must exist in the minds of actual or prospective customers so that they respond positively to marketing activities and programs in these different ways.’(Keller, 2003, p. 140) Furthermore, Kay (2005) asserted that the strong brand can be seen as a resource of management, which make brand extension easier and useful to build distribution network. Companies are not treated by the intermediaries (Chernatony and McDonald, 2003). Moreover, companies are comparatively easier to change price if they have strong brands. As Henderson, et al (2003) said, a strong brand can allow for premium pricing even still remain loyalty customers, which help companies to survive in the intensive competitive market.

In the third year, the company will launch its brand extensions. Increased marketing and advertising will be given to these products to increase sales. Based on the success of the brand extensions, the company will have the funding to expand into the global market.

Brand extension can be either when a brand is extended into the same product category or into a new product category. Aaker and Keller (1990) describe this co-branding strategy as when a new product or service uses an existing brand name that had been associated with it before the extension. The strategy is that the brand equity and brand image of the brands used to create what is called the extension, transfers to the extension (Hadjicharailambous, 2013). This brand image quality of the existing or parent brands, and the perceived brand fit that are the main factors that influence the success of the extension (Meyvis, Goldsmith, & Dhar,

* Extensibility: It needs to review product diversification Example With an aim to become a lifestyle brand Lego diversified into clothes, video games and watches. Care needs to be taken not to dilute the brand equity while increasing product offerings

One of the most controversial areas of product concepts is the brand extension. A new product gets to share the name of an older, established brand. Early theorizing suggested that brand extensions would sap market clout from the established product, but these fears proved groundless. Today brand extensions occur not only within the company, but companies are licensing their brandnames to all kinds of products in the hope of increasing brand awareness. Department stores have whole sections devoted to Coca-Cola clothing. There are Strawberry Shortcake breakfast cereal, clothing, books, and tricycles. In July 1987, Sears began marketing McKids children's wear in a licensing agreement with McDonald's.

Brand extension entails the introduction of a new product with the same brand name as a strong existing brand, “Coca-Cola” for example, customers recognize the brand globally and products such as; Fanta, Sprite, Vitamin Water, and Powerade would be an example of sub-branding. This products were introduced by Coca-Cola, essentially creating a secondary product within a main brand which can help the consumer differentiate among the product lines.

(Why is it better, how it is different, the solution to the buyer’s problem, its unique selling proposition)

Profits arise due to an increase in output and possibly better prices. At this stage, it is cheaper for businesses to invest in increasing their market share as well as enjoying the overall growth of the market. Accordingly, significant promotional resources are traditionally invested in products that are firmly in the Growth Stage (Anderson & Zeithaml, 1984). The growth phase offers the satisfaction of seeing the product take-off in the marketplace. This is the appropriate timing to focus on increasing the market share. If the product has been introduced first into the market then it is in a position to gain market share relatively easily. A new growing market alerts the competition’s attention. The company must show all the products offerings and try to differentiate them from the competitors. A frequent modification process of the product is an effective policy to discourage competitors from gaining market share by copying or offering similar products. Other barriers are licenses and copyrights, product complexity and low availability of product components (Product Life Cycle, 2011). Promotion and advertising continues, but not in the extent that was in the introductory phase and it is oriented to the task of market leadership and not in raising product awareness. This period is the time to develop efficiencies and improve product availability and service. Cost efficiency, time-to-market, pricing and discount policy are major

In a dynamic and increasingly competitive market, most businesses, from coffee shops to international automobile manufacturers , are constantly engaged in a battle to win new customers and keep old customers. To prevail against the opposition, companies aim to stand out by developing quality products or services, offering irresistible value proposition and building a unique business identity. At the core of the companies that thrive, there is always a successful brand.

“A successful brand is an identifiable product, service, person or place, augmented in such a way that the buyer or user perceives relevant, unique added values which match their needs more closely. Furthermore, its success results from being able to sustain those added values in the face of competition.” (DeChernatony, L. McDonald, M. 1998)

There is no doubt that strong brands attract more customers and by time these customers become more and more loyal to these brands. This loyalty to brands increases the customers’ willingness to pay a higher price 20% - 25% more than competing brands 3. But to reach up to this point, companies should be always innovative, making their products and services better and offering new added values to their customers.

Success of a brand name that is potent enough to convey the quality of the product to the customers is widely depended on the brand positioning strategy. This majorly deals with the appeals the brand name offer to capture equally the mind and heart share of the market in a way that the world may have never seen. The conditions that may prove favorable to successful branding are a brand name should be comprehendible, memorable, easily pronounceable, associations affiliated to a brand, the strength of competitors' brand name, and the legal registration of a brand