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.