A brand extension can be defined as the use of an established brand to introduce a new product. The theory is that having an established brand will facilitate market entry for new products and reduce the costs associated with advertising related to brand recognition and the resulting value of that brand. This strategy can decrease the risk of failure of these ‘new’ products, because consumers will more easily accept new products launched under familiar symbols.
But there are a number of dangers associated with brand extension. Several areas have been examined where the introduction of a brand extension can damage the brand. The introduction of a new product may cannibalize existing products under the brand or damage the reputation/image of the brand. It is important to consider four specific areas directly related to the negative impacts of introducing a brand extension:
- The extension will tend to dilute the brand image
- The less fit there is between the mark and the extension, the more likely there is mark deterioration.
- If the extension is of lower quality, it is more likely to damage the brand image
- If the perceived manufacturing effort involved in producing the new product is less difficult than the original product, the extension will hurt the brand.
All of these dangers point to a very real potential for damage to the existing brand that can occur when introducing new products. But does that mean companies shouldn’t?
There is also much to be gained by extending and leveraging capital developed from an existing brand. Brand managers should be aware that building a brand extension strategy, when supported by high-quality, similarly perceived products, can enhance both the image of the existing brand and the new product and, as As a result, enhance the value of the brand. When the market environment becomes more competitive, especially in a hostile market, it may be necessary for the company to draw on existing brand recognition and favorable customer loyalty to survive. The successful introduction of a new product, associated with a well-perceived existing brand, can further cement that brand’s status as a leader.
There are many things to consider when introducing a new product. But if a company has an existing, positively accepted brand, and this product falls within its sphere of influence, there should be no reason not to associate the new product with the existing brand.