Brand Extensions Explained

Brand extension is when a company introduces a new product under an existing brand name. Examples include Apple TV Plus and Mr Beast Gaming, which are sub-brands of the parent brands Apple and Mr Beast.

Brand extensions can be categorized into two types: line extensions and category extensions. Line extension involves creating new products for different market segments that the parent brand already serves, such as Coke Zero and Cherry Coke. Category extension is when a new product is introduced to an entirely new market, like Fender introducing headphones after being known for guitars.

Brand extensions offer several advantages for the company, sub-brands, and customers. They lead to improved overall brand image and lower marketing costs due to an established brand identity. Additionally, production and distribution costs are significantly reduced.

Brand extensions can lead to confusion and dilution of brand image if not done correctly. Overextending the product line may overwhelm customers, leading to decreased sales for the parent brand. Retailers may resist ordering from a company with too many sub-brands due to limited shelf space.

When a company introduces a new product with something different, it's called horizontal extension. An example is green tea flavored chocolate. On the other hand, vertical extension occurs when the company releases an improved version of the same product and positions it as better than the previous one.

Before extending a brand, the company needs to assess customer perception of the existing brand image and determine potential directions for brand extension. It's important to consider that when extending a brand, you are leveraging the parent brand's image and should align marketing campaigns accordingly. After introducing the sub-brand, it's crucial to monitor market reactions and evaluate future extension strategies.

For a successful brand extension, consumers should perceive a connection between the parent brand and sub-brand. The new product doesn't have to be similar to the parent brand; non-product related attributes also matter. Brands with broader and vague attribute associations are easier to stretch than those with specific associations like luxury or sports cars.

In 1906, Henri Moissan won the Nobel Prize in Chemistry for extracting fluorine from other elements. Before this discovery, chemists were unaware of the existence of fluorine and only observed its similarity to chlorine and iodine.

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