Brand Extension (A&BM 17 Dec 2020)

Brand Extension

Brand Extension is the use of an established brand name in new product categories. This new category to which the brand is extended can be related or unrelated to the existing product categories. A renowned/successful brand helps an organization to launch products in new categories more easily. For instance, Nike’s brand core product is shoes. But it is now extended to sunglasses, soccer balls, basketballs, and golf equipment. An existing brand that gives rise to a brand extension is referred to as parent brand.

Extending a brand outside its core product category can be beneficial in a sense that it helps evaluating product category opportunities, identifies resource requirements, lowers risk, and measures brand’s relevance and appeal.

 

Brand extension may be successful or unsuccessful.

Instances where brand extension has been a success are-

ITC - A company selling one of the unhealthiest things in the world- tobacco. But they have been successful at launching a whole ‘healthy’ food division including Aashirvaad atta and salt. They have also diversified into personal “care” with Vivel, Fiama and Engage. They have a Wills Lifestyle clothing division too. And a stationery business with Classmate. Totally unrelated with where they started from. Although these unrelated categories have been launched under different sub-brands, they are always seen as ITC companies, and hence I have included this brand here.

 

Emami - Primarily known for its personal care range including BoroPlus, Fair & Handsome and Navratna, the brand has successfully extended into edible oils and real estate.

 

Park Avenue from Raymond - Originally a clothing brand, now has successfully expanded into grooming solutions like deos, shower gels.

 

Eveready - Known for making pencil batteries, the brand extended to torch, small consumer durables like fans, toasters and LED bulbs. The brand is also getting into tea business.

 

L&T - Larsen and Toubro is primarily known for its engineering and construction. But the brand also has an IT division (L&T Infotech) and financial services.

 

Then there are the master brands like Tata, Birla, Reliance, Dabur, Bajaj, Mahindra, Godrej that have extended into many unrelated categories

 

1. Wipro which was originally into computers has extended into shampoo, powder, and soap.

 

2. Mars is no longer a famous bar only, but an ice-cream, chocolate drink and a slab of chocolate.

 

Instances where brand extension has been a failure are-

1. In case of new Coke, Coca Cola has forgotten what the core brand was meant to stand for. It thought that taste was the only factor that consumer cared about. It was wrong. The time and money spent on research on new Coca Cola could not evaluate the deep emotional attachment to the original Coca- Cola.

 

2. Rasna Ltd. - Is among the famous soft drink companies in India. But when it tried to move away from its niche, it hasn’t had much success. When it experimented with fizzy fruit drink “Oranjolt”, the brand bombed even before it could take off. Oranjolt was a fruit drink in which carbonates were used as preservative. It didn’t work out because it was out of synchronization with retail practices. Oranjolt need to be refrigerated and it also faced quality problems. It has a shelf life of three-four weeks, while other soft- drinks assured life of five months.

 

There are few examples in India.

Maggi : Its has noodle as well as Soup. Both are very different categories. Noodles in instant hunger buster while soup is an accompaniment with you dinner.

 

Patanjali : Its into Ghee, Atta, Toothpaste segment, hair oil segment. Patanjali Dantkanti, Patanjali Keshkanti, using the name of mother brand entered two different product categories. Now with the mother name Patanjali it has entered many product categories, some its products are doing really good.

 

Kingfisher : Kingfisher was operating in airlines, it was also into Beer category. Two very different categories. Although airline failed due to mismanagement, but both were doing very good at one point of time.

 

Philips : Philips has Air Frier, Air Purifier, which are tow different categories. It used to be in TV, its in to music system, lights. These are very different categories.

 

Brand Extension Examples

Good examples of brand extensions can put a company in a better strategic position. Bad brand extensions are just ugly.

A brand extension (sometimes called a category extension) is when a brand is known for one type of product starts selling a different type of product.

 

Some example of brand extension is:

Apple: from personal computers into MP3 players.

Dyson: from vacuum cleaners into desk lamps.

Starbucks: coffee-based beverages into energy drinks.

Mailchimp: email marketing to Facebook ads.

Coleman: from gas-powered lanterns to sleeping bags.

Ferrari: from exotic sports cars to theme parks.

Google: from search and extended into a hosted email service.

Cosmopolitan: from magazines into yogurt.

Pond's India Ltd. Extended Ponds brand from telecom power to shampoo and to bath soap.

Godrej is effectively and cautiously stretching its family brand name, from refrigerators to a highly crowed market of washing machine and office automation machines.

 

Advantages of Brand Extension

Brand Extension has following advantages:

1. It makes acceptance of new product easy.

a. It increases brand image.

b. The risk perceived by the customers reduces.

c. The likelihood of gaining distribution and trial increases. An established brand name increases consumer interest and willingness to try new product having the established brand name.

d. The efficiency of promotional expenditure increases. Advertising, selling and promotional costs are reduced. There are economies of scale as advertising for core brand and its extension reinforces each other.

e. Cost of developing new brand is saved.

f. Consumers can now seek for a variety.

g. There are packaging and labeling efficiencies.

h. The expense of introductory and follow up marketing programs is reduced.

 

2. There are feedback benefits to the parent brand and the organization.

a. The image of parent brand is enhanced.

b. It revives the brand.

c. It allows subsequent extension.

d. Brand meaning is clarified.

e. It increases market coverage as it brings new customers into brand franchise.

f. Customers associate original/core brand to new product, hence they also have quality associations.

 

Disadvantages of Brand Extension

1. Brand extension in unrelated markets may lead to loss of reliability if a brand name is extended too far. An organization must research the product categories in which the established brand name will work.

2. There is a risk that the new product may generate implications that damage the image of the core/original brand.

3. There are chances of less awareness and trial because the management may not provide enough investment for the introduction of new product assuming that the spin-off effects from the original brand name will compensate.

 

If the brand extensions have no advantage over competitive brands in the new category, then it will fail.