Brand extensions, which are a popular means of introducing new products to the marketplace, fall under the ‘One brand all products’ type of brand strategies. In a typical brand extension situation, an established brand name is applied to a new product in a category either related or unrelated, in order to capitalize on the equity of the core brand name. Consumer familiarity with the existing core brand name aids new product entry into the marketplace, and helps the brand extension to capture new market segments quickly.
Brand extensions come in two primary forms: horizontal and vertical. In a horizontal brand extension situation, an existing brand name is applied to a new product introduction in either a related product class, or in a product category completely new to the firm.
A vertical brand extension, on the other hand, involves introducing a brand extension. In a vertical brand extension situation, a second brand name or descriptor is usually introduced alongside the core brand name, in order to demonstrate the link between the brand extension and the core brand name (e.g. Marriott Hotels, Courtyard Inn by Marriott). Although a brand extension aids in generating consumer acceptance for a new product by linking the new product with a known brand or company name, it also risks diluting the core brand image by depleting or harming the equity, which has been built up within the core brand name. An inappropriate brand extension could create damaging associations, which may be very difficult for a company to overcome.
There are two types -
Product form extension: Product launched in a different form usually means line extension rather than brand extension. But if different product form constitutes entirely a different product category from customer behavior perspective, it would be called brand extension. For e.g. liquid milk and dried milk may not be perceived as the product category. Similarly chocolate bars and chocolate powder belong to different product categories.
Amul Milk à Amul Condensed Milk
Companion product: Brand extension is in the form of companion products is perhaps the most common. The idea perhaps is to capitalize on product complementarily. The consumer may view both products jointly and hence, provide scope for launching brand extension.
Colgate Dental Cream à Colgate Tooth Brush