Brand Extensions Good or Bad?

¶ … Brand Extensions Good or Bad?

Almost all marketing books today point out that brands are an extremely important tool in the struggle to claim the attention of consumers in an increasingly competitive market place. Branding products is very important to express the message and values of a business to its customers. The company that keys into the exact values of the consumer and provides a product or service responding exactly to the customer's needs will be successful. People tend to select certain brands because of the brand values they can identify with. "As consumers, we pick out those differences which appeal to us personally. The brands that we associate with are expressions of us and that will always be so..." (Clifton & Maughan, 2000).

Branding is the process of creating a unique mark or identity that will distinguish a product or service from similar competing products or services. The brand will encompass a set of values and those consumers who identify these values will purchase the product or service. Branding is important because the trend in markets is towards fiercer competition, meaning that companies with strong brands will be successful at the expense of weak brands with unclear messages and values (Becker & Murphy, 1993).

Launching a product under a new brand is an expensive business. If a company already has a successful brand, there is a temptation to use it on a new product, reducing costs and bringing extra benefits. However there are also dangers in extending the brand. Becker and Murphy (1993) provide definitions, distinguishing between extending a brand by adding product variants or new products in essentially the same field, and stretching a brand into new product fields. Kapferer (1997) uses different terms, describing associated extensions and discontinuous extensions. These are alternative terms used to describe the same theories. The distinction between extension and stretching is very important since the two terms are sometimes misleadingly used interchangeably.

Extensions are usually less risky, as they stem from new product variants in the same field. They can help the parent brand, and this is different from range expansion, which can be different forms of presentation, different sizes, different tastes or flavors. The main benefits of extension using the already established successful brand of the parent are: reduced costs, the fact that it may prevent competitors from filling a niche, reduced shelf space available to competitors, and the filling of a gap in the product line that customers want to see filled. However, there are risks such as weakening the parent brand or cannibalisation of the market share of the original product. Extensions may damage consumer faith of the parent; the managerial time and budget will be split and the lack of focus could undermine the brand message; retailers have only limited space, and additional lines demand more space. Retailers may just allocate the extension some space from the brand's existing allowance, maintaining the same total allocation but now split between more products.