Brand Extension Strategy Essay

By upgrading their brand, it will help to identify the qualities of the products that set it apart from the competition. They have to make the

The company has recently decided to expand its product line to include a product that is a deviation from our traditional offerings. The expansion presents two potential outcomes. Outcome one has a potential for profit, incremental growth, and additional market share for the company. Outcome two has a potential for financial loss, reputation or brand damage and reduced market share.

A brand is utilized by a company to differentiate its products from others in the market. Some techniques for accomplishing this are through the use of distinguishing

It is interesting to see how branding, advertising, and marketing, that are in place to achieve specific commercial goals, completely rely upon the complex elements of human psychology, as well as on how cultural norms and values influence the individual. This has in fact been an integral concern of marketing historically; the mere presenting of a product or service is ineffective unless some reflection of its deeper value or meaning to the potential consumer is reinforced. In the mid-20th century, for example, advertisers placed a large emphasize on the post-war norms within American society, and stressed how products provided ideal supports for the idealized suburban household. This in turn affirmed existing ideas of gender roles so then, as now, marketing simultaneously employs and shapes cultural norms. This being the case, the ways in which socio-psychological principles are employed in branding, advertising, and marketing are intrinsically multifaceted and evolving as the cultures evolve. In a very real sense, marketing is perpetually “keeping pace” with social changes, just as it impacts on those changes through creating ideas exposed so widely to the society. As the following review of literature supports that, social and psychological concepts and principles are essential to successful marketing and branding, just as commercial agendas seek to instill or reinforce traditional norms going to product appeal.

However, this strategy also has some disadvantages that may hurt the company’s development: The first is the fierce competition between these brands. And it is important to note that using this strategy means facing higher risks. Cost control is another big problem. Obviously, the more brands there are to manage, the higher the costs. For this reason, many prudent companies prefer brand extension over multi-brand management.

6. Following trends of marketing: - Innovative, differentiated brands, however, can offer potent advantages. Not only can they offer the consumer real benefits and thus give the consumer a reason to change, they can also serve to outmode existing brands (Murphy, 1988).

The chances of the company’s initiative in regaining its initial image could only be successful if it gives the existing marketing strategy a face-lift. For the company to regenerate the consumers’ interest in the new brands of products, it has to establish a link between the traditional product brand and the current brands.

Some companies choose to adopt a brand strategy and Riezebos (2003) explains that this consists of differentiating the brand and adding value to the brand. By aiming for differentiation in a strategy, it gives a brand competitive advantage.

As marketing for varying brands within an overarching brand can be difficult, enhancing the Best Buy brand itself will invigorate market support and consumer loyalty. Although Best Buy is the repository for various brands, it should also serve as the comparable as well. This mechanism is implemented in grocery stores often, by the way of a ‘store brand’. However, due to the nature of technology, the timeliness and the efforts that go into product development, this approach should be a long term though rather than a short term

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).

For sales and market share to be increased further, it will be necessary to achieve this through innovation with completely new product development and introduction, or more likely, as developing new products has become increasingly difficult to develop new brand/product extensions such as mixes and delivery systems,, and performance could be enhanced and margins protected by achieving world class marketing, innovation and production standards. At the same time costs will continue to be squeezed. Resources should be focussed on creating value that the customer is willing to pay for.

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.

According to the American Marketing Association (AMA), a brand is a “name, term, sign, symbol, or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition”. However, as Keller highlights, a brand is also “something that has actually created a certain amount of awareness, reputation, prominence, and so on in the marketplace”. Therefore, a brand is an identity created to differentiate itself from the competitors and to be remembered in consumer’s mind.

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.

As markets and customer needs evolve; brands can lose customers to new competitors. In addition, brands can become diluted as product or service offerings become commodities. When a brand loses meaning and relevance to target customer, a new brand promise should be defined so the brand can be repositioned.