Steps in successful brand extensions

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Steps in successful brand extensions - Brand Extensions Beware

Brand extensions, or line extensions, describe the common business practice of using your brand name on a new product or service or new varieties or sizes—usually within the same category.

More than half of all new brands brought to market each year are brand extensions.

So, for instance, when Pepsi wants to market a diet cola, it “extends” its brand equity—everything that has gone into building the brand that is the Pepsi generation—into the product called Diet Pepsi.

So why the “beware” in the title? Because brand extensions are not always logical or smart.

Sometimes they can be just plain confusing—even if the brand name is extended into the same category.

Recently, PepsiCo introduced a new no-calorie soda and called it Pepsi One.

But what is Pepsi One? Does it have just one calorie? No it has none.

How is it different from Diet Pepsi? It’s sweetened with Splenda, but most consumers don’t know that.

It’s no surprise then, that Diet Pepsi outsells Pepsi One by a 10-to-1 margin.

Number one-selling Coca-Cola made a similar market move, presumably to stay in parity with its rival, and released Coke Zero.

It’s not difficult to predict similarly disappointing sales for Coke Zero.

Conversely, both Coke and Pepsi entered the lucrative and high profit-margin bottled water business with smart brand extensions: Cokes’ Dasani brand and Pepsi’s Aquafina.

Can you imagine the disastrous results if they had called their products Coke Water or Pepsi Water? Yuck.

In some cases, extending your brand into other products will help reduce the risk of a new product launch.

Promotional costs, for instance can be combined into the marketing of the single brand name rather than multiple promotions.

But there are some “bewares” here, too. Consider the fact that if the new product—with the borrowed brand name—doesn’t resonate in the marketplace, the core or parent brand could be irreparably damaged.

Next, consider brand cannibalization.

Bud Light, for instance, has been eroding sales from the parent brand, Budweiser, and has recently overtaken it.


Amul- the taste of India brand is a number one brand in milk and milk products,but its entry into pizza segment didn’t really worked out.

Most companies only measure the growth of the extended brand and don’t consider the lost market share of the core brand.

According to a study by AC Nielsen, not all line extensions succeed at their mission of creating incremental sales.

Those line extensions that do succeed tend to:

• Be supported by incremental rather than “borrowed” marketing support

• Be well differentiated from the parent brand in order to attract new buyers

• Encourage consumers to ‘upsize’
 
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