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A brand extension is when a company uses one of its established brand names for a new product or a new product category. The strategy behind the brand extension is to use the company's already established brand equity to help launch its newest product, which may or may not be related to an existing product category. Doing so shows that the company relies on the brand loyalty of its existing customers and that the new product can benefit from the brand's large consumer base and its specific association with the company - an attempt to introduce a new product or category and turn it into a hit by leveraging an established brand name and identity in the target market. At the same time, it is almost irresistible to 'extend' the brand name to a new product as the use of an established brand name significantly reduces the risk of a new product launch. This is an effective growth strategy for a range of companies looking to leverage their brand name and identity in the marketplace. A company's true marketable asset is its brand name, which can be used to extend new products or categories while maintaining existing product categories. Brand extensions allow a company to expand its product range to meet growing consumer demand and accelerate growth.
Of course, this can be hugely profitable, but it can also be dangerous: in the worst-case scenario, a poorly conceived brand extension can seriously damage the original product or company, leaving it vulnerable to adverse market reactions and preventing the establishment of another brand with unique associations and growth potential.

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There have five different extension strategies.
-Line extensions
A product line extension is when a parent brand introduces a new product line in a category that its customers are already familiar with. With product line extensions, the brand does not have to create a new category.
A good example of a product line extension is a soft drink company introducing new flavors into its existing range of drinks. Other examples might include introducing new scents, sizes, and colors to a product line.
-Complementary product extensions
Another way in which established brands can extend themselves is by creating complementary products to their primary products.
For example, the sports brand Nike has created a variety of equipment, apparel, and other sports-related products that complement each other. We have also seen toothpaste companies use this type of expansion for their original brands by adding toothbrushes and other oral care products as new categories.
-Customer segment extensions
Companies can create brand extensions for themselves by introducing different product categories for a single demographic.
For example, Procter & Gamble (P&G) has done this well with its Pampers brand. While P&G specializes in a wide range of products, the Pampers range focuses on making products such as baby nappies and wipes.
-Expansion of the company's authority
Companies with a high level of authority in their industry can use this authority to create new products.
For example, Samsung has huge brand recognition in the technology sector, which has enabled them to launch different products in related categories with a degree of success. And because of their brand image, most consumers will not mind using a new product, whether it is an air conditioner or a mobile phone.
-Brand lifestyle extensions
Who would have thought that Energy's tequila would sell out in a matter of hours? Well, Tesla did. This is largely due to the personality and lifestyle of its CEO, Elon Musk.
However, Elon and Tesla are not the only companies using celebrity lifestyles to extend existing brands. Other examples include Adidas/Kanye West's Yeezy lineup and Fenty's (LVMH-owned brand) collaboration with Rihanna.

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1. Brand extensions in unrelated markets may result in a loss of reliability if the brand name is extended too far. The organisation must look at the product categories to which the established brand name applies.
2. The new product may have the effect of damaging the core/original brand image. If the new product is not very good, it may cause problems for the image of the core brand.
3. Awareness and trial opportunities may be reduced as management may not be able to provide sufficient investment for the introduction of the new product, assuming that the derivative effects of the original brand name will be compensated for.
4. If the brand extension has no advantage over competing brands in the new category, then it will fail.
5. Over-extending a brand name may lead to a loss of reliability, especially if the brand extension occurs in an irrelevant market. It is therefore important that companies know which product categories are valid and where they can use the brand name.
6. Just because a core brand gives its brand recognition to a new product does not mean that companies need not invest in it at all. If they don't, all their efforts may even have the opposite effect.
7. If the competition in the new category is only as good or advantageous as the brand extension, then the extension is unlikely to succeed.

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So can brand extensions jeopardise brands?

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So can brand extensions jeopardise brands?

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Martinez Salinas and Pina Perez (2009) conducted a study on how brand extensions affect "brand image" and found that the new product may be well associated with the parent product, where recall and memory increase despite the risk of diluting the brand, which may lead to confusion. Martinez Salinas and Pina Perez (2009) further discuss how consumers weigh the information attached to a brand depending on accessibility, high accessibility or low accessibility. Dilution is stronger when the consumer experience is inconsistent. To avoid diluting or damaging the brand, companies should only promote extensions under what is called "fit" conditions. The association is consistent. Extensions with inconsistent associations are likely to fail and dilute the 'parent brand equity. Yes, brand extensions can be dangerous when fit and experience are inconsistent. In the case of Coca-Cola, for example, if it is the new Coca-Cola, Coca-Cola has forgotten what the core brand means. It believes that taste is the only factor that consumers care about. That's wrong. The time and money spent on researching the new Coca-Cola cannot assess the deep emotional attachment to the original Coca-Cola.

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1. it increases the brand image.
2. The risk of customer perception is reduced.
3. The likelihood of obtaining distribution and trials increases. An established brand name increases consumer interest and willingness to try new products with an established brand name.
4. Increased efficiency of promotional spending. Advertising, sales, and promotion costs are reduced. Advertising of the core brand complements its extension and has economies of scale.
5. There are cost savings in developing new brands.
6. There are packaging and labeling efficiencies.
7. There are reduced costs for introductory and follow-up marketing plans.
8. they can help the product to be easily accepted.
9. The perceived risk to consumers decreases with brand extension.

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Is brand extension an important strategy?

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Is brand extension an important strategy?

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Yes, it is an important growth strategy for the brand, it makes the acceptance of new products easy and the brand needs to analyse the market properly to make the product successful. Building this strategy on the back of a quality product that is seen equally by consumers can be beneficial for both the parent brand and the new product. Extending a brand beyond its core product category can be beneficial as it helps to assess product category opportunities, identify resource needs, mitigate risk and measure the relevance and appeal of the brand. Brand extensions have been central to the growth of some of the best-known products in the market over the past few years. For example, Virgin Brands has extended its brand into many different lines and categories, from travel to lifestyle to media and mobile to money to music. In total, there are "over 300 branded companies worldwide". Another successful example is Apple, which, although originally a technology company that only made computers (Macs), quickly expanded its product line to include music players (iPods), mobile devices (iPhones), and technology accessories (Apple Watches and Earpods). Although all of these new products were different, the expansion worked because Apple didn't stray too far from its parent product category. Instead, it used its brand name to successfully penetrate the market.

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The brand name is what makes a product stand out. When marketers consider using a brand extension strategy, a strong brand name brings recall and positive feedback to consumers. Brand extensions extend the product line or category. A good fit and experience with the parent brand can make a brand extension successful. Over the past few decades, products have been sprouting that are simply brand extensions of the parent brand as consumers patronise the brand they have fallen in love with and believe that is why companies build on consumer trust and confidence to enhance and innovate their old branded products and package them with extra flair to attract their loyal consumers to support the new product, just as they support the parent brand the same way.

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UKEssays. (November 2018). Brand Extensions: Good or Bad?. Retrieved from https://www.ukessays.com/essays/marketing/are-brandextensions-good-or-bad-marketing-essay.php?vref=1
MSG Management Study Guide. Brand Extension - Meaning, Advantages and Disadvantages. (n.d.). Retrieved September 26, 2022,from https://www.managementstudyguide.com/brandextension.htm