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The concept of brand extension, which involves using existing brand names for new product variants or entirely new products. The benefits of brand extension, including cost savings and increased market share, and differentiates between line extension and brand diversification. Real-life examples are provided to illustrate the concepts.
Typology: Exercises
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Lesson 21 BRAND EXTENSION Introduction With an understanding developed on positioning, this lecture takes us into the area of brand extension. Although loosely used, the term brand extension comprises of two sub areas – line extension and brand extension. The latter is generally used in all situations of extensions, diversifications, or stretch. We have to draw a distinction between the two for a clear understanding of the concepts. Concept of positioning clarifies that not one position can satisfy all the varying needs within the category. Different needs have to be identified toward their fulfillment. To keep up with the evolution you have to evolve new points of difference. Different needs refer to different segments and every product has its variants to address to those segmental needs. This holds true for consumer consumables as well as consumer durables. Regular and mild cigarettes, regular and fruit yogurt, regular and high fiber cereals, regular and low cholesterol margarine, and economy and executive models in cars are all examples of product variants in different segments and categories. To let the market know that you have something different to offer, you must differentiate between the existing offering and the new entry. For the new entry meant to address a different need, you must create a different image reflecting the new promise and must have an evolved contract in place. You do that in either of the two ways: A. Staying within the value framework of the original brand, meaning under the same brand name. You do not go too far away from the core identity. B. Create a different identity altogether, meaning a new stand-alone brand. Brand extension Brand extension is all about the existing brands. As the terminology suggests, we do something with the existing names for the new offerings. Brand extension, therefore, is the study and practice of deciding
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A 3 A 2 A 1 Line Extension Within Category Category A
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A 3 A 2 A 1 S a u c e s a n d J a m s L in e
B 3 B 2 B 1 Brand Extension Across Category Category A Category B Figure 25 Figure 24
Positive side of line extension As said earlier, each brand starts as a single product and with the passage of time becomes sub- divided into variants that respond to differentiated expectations.