Nowadays, brand management is a difficult process. It has proven to be quite a challenge for both companies and brand managers. After all, the competition is getting stronger by the minute. Furthermore, brands are working with a ticking clock that’s showing how much time they have left to conquer the market. Thus, companies most often opt for brand extensions to beat their competitors to the punch and stay relevant. In fact, if you go to a store and look at any shelf at all, you’ll see multiple products by the same brand.
Pressure and brand managers
There’s a ton of pressure in the air and brand managers can certainly feel it. They are always trying to increase revenue and the brand’s market share since the competition is fierce. Hence, brand extensions are a good idea, as they allow the brands to provide their consumers with continual change and boost value perception. What’s more, with these extensions, brands can also cover some aspects of their niche market that used to be unattainable. Thus, they are actually stretching their resources and maximising capacity utilisation.
Nevertheless, one question persists: is creating a brand extension a good idea or a path to failure? There are certainly some brands that have successfully created a brand extension. For example, Procter & Gamble, as well as GE. The beauty industry and brands like Nivea and Dove have also used brand extensions to reach new customers and increase revenue. However, some have failed at this endeavour.
Why would a company opt for a brand extension?
There are plenty of good reasons why brand extensions are great for most companies. They are, in essence, a way for the companies to exploit their own brand value or image, which they’ve built from scratch.
Also, in terms of finances, it makes sense to introduce a brand extension. It costs less than building and promoting a new brand. What’s more, if the extension is a success, it will lead to the strengthening of the parent brand. Moreover, it will capture niche market segments that the parent brand couldn’t.
What happens when a brand extension is a failure?
The only right way to make sure the brand extension is a success is to strategise in advance and carefully consider all factors. Otherwise, the parent brand is the one that will suffer the most. If the extension doesn’t satisfy the consumers or it proves unreliable with only a short-term revenue goal, the consumers’ value perception could decrease. In fact, some brand extensions have actually eaten up the market share the parent brand had and damaged its value.
Strategy is key
Deciding on a brand extension will usually depend on the product itself. Some product categories do well when supplemented with brand extensions. For example, chewing gums, jams, sauces, soft drinks, and biscuits. However, we cannot say the same is valid for all types of products.
Nevertheless, branding experts believe that a well-planned, clear strategy is the best way to go. This sort of strategy will identify the core brand’s perception, as well as its value, and use that as the basis for the brand extensions. Thus, the extensions will not only retain the same values that the parent brand has but also increase its overall value.
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