Are Brand Extensions Good Or Bad?

A brand extension might be defined as using an established brand to introduce a new product. The theory is that having an established brand will ease entry into the market for new products and can reduce the costs related to advertising do to brand recognition and the equity ensuing from that brand. This strategy can decrease the danger of failure of these ‘new’ products, because consumers will more readily accept new products launched under known symbols.

But there are quite a few dangers related to brand extension. Several areas have been examined where introducing a brand extension can actually hurt the brand. Introducing a new product can cannibalize the existing products under the brand or, the reputation/image, of the brand will be harmed. Four specific areas directly relate to negative impacts of introducing a brand extension are important to consider:

The extension will are likely to dilute the brand image

The less fit there is between the brand and the extension the more likely there may be to be brand deterioration

If the extension is of a lesser quality it’s more prone to harm the brand image

If the perceived manufacturing effort involved in producing the brand new product is more easy the original product the extension will harm the brand
These dangers all point to a really real potential for harm, to the existing brand, that can occur when introducing new products. But does that mean companies should not do it?

There is also much to be gained from extending, and taking advantage, of the equity developed from an existing brand. Brand managers should remember that building a brand extension strategy, when supported by prime quality products, that are similarly perceived, can enhance both the existing brand’s image in addition to that of the new product, and because of this, enhance brand equity. When the market environment becomes more competitive, especially in a hostile market, it may be necessary for the company to call upon existing brand recognition and favorable customer loyalties to survive. A successful new product introduction, related to an existing well perceived brand, can further cement that brand’s status as a leader.

There are a lot of things to be wary of when introducing a brand new product. But, if a company has an existing, positively accepted, brand, and this product fits within its scope of influence, there needs to be no reason to not associate the brand new product with the prevailing brand.

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Author Box James Stephenson has 1 articles online
James Stephenson is an IT and Business Consultant with over 25 years of experience.

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