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Brand extension is a common method used when launching a new product usually by utilizing the advantage of an existing brand name on the new product, in another category. A company making use of brand extension (also known as line extension) as a marketing strategy hopes to increase its profits from the new product offering by leveraging on its existing customer base as well as brand loyalty. For this method of launching new products to be successful, there usually should be some logical connection between the primary product and the new one. In most cases, a weak or non-existent connection results in brand dilution. Furthermore, if the brand extension proves to be unsuccessful, it can damage the previously popular parent brand (Dall’Olmo Riley, Hand, & Guido, 2014).
To show how one would create a successful brand extension on, for example, a breakfast cereal product, a few steps would have to be observed. The first step would include research on both the parent and the brand extension (Dall’Olmo Riley, Hand, & Guido, 2014). For instance, a company owns a cereal product by the brand name, Unique Q. This product, Unique Q cereal, has been a very successful product in the market, giving the company a greater command of the cereals market base due to the customers’ loyalty to the brand. As a result, the company may want to introduce some new products using brand extension as a marketing strategy. The products include Unique Q Waffles, Unique Q Snack Bites, Unique Q Protein Bars, and Unique Q cereal makers. Judging from the extension products, it would be sensible to argue that the Unique Q brand is a diet in addition to being a nutrition product.
According to Dall’Olmo Riley, Hand and Guido (2014), the key to successfully launching brand extensions is to first determine if the line extension is consistent with the core brand. Unfortunately, more often than not, company managers use their own views of the parent brand as the point of reference to determine whether a brand extension shows consistency with the core brand. Such perceptions of the brand frequently contrast those of the consumers. Furthermore, managers do not completely understand the consumers’ judgments of the brand extension fit and hence it is rather difficult for them to look at all the aspects that consumers use in order to determine if a particular brand extension fits with a brand.
In creating a brand extension of the Unique Q cereal product, one would start by considering what is important to the consumers. When consumers take brand extension fit into consideration, there are four underlying concepts which they evaluate individually in order to formulate a general opinion as to if the brand extension and the original brand are consistent (Dall’Olmo Riley, Hand, & Guido, 2014). These four underlying constructs include relevance, recognition, credibility and transfer. Relevance refers to the degree at which the original brand attributes are important to the category of brand extension. For instance, the attributes of the parent brand Unique Q cereals would be clearly appropriate for the sale of cereal making machines but not appropriate for the sale of other equipments such as dishwashers or refrigerators.
Recognition refers to the degree at which consumers are able to familiarize themselves with the logic behind why the brand extension is being conducted in addition to the logic of the extension itself (Spiggle, Nguyen, & Caravella, 2012). For example, the original brand attributes of Unique Q cereals would make it easy to comprehend or it would be logical to the consumers for Unique Q to expand its brand into the sale of another nutrition product such as protein bars; however, it would not be logical to the consumers for Unique Q to start selling cleaning and sanitizing chemicals.
According to Spiggle, Nguyen and Caravella (2012), credibility refers to the degree at which the original brand has qualities which are credible as well as acceptable to conduct in addition to selling the brand extension. For instance, the original brand qualities of Unique Q cereals make it credible as well as acceptable for Unique Q to extend the Unique Q brand into wafers or snack bites; however, it wouldn’t be credible and acceptable to expand the Unique Q brand into the wines and spirits. Transfer refers to the perceived ability that a brand possesses to transfer their skills together with experience to the new brand extension. For instance, the skills combined with the experience of Unique Q would be transferable to other areas within the diet and nutrition sector such as to the Unique Q snack bites; however, Unique Q skills and experience would not be transferable into car selling.
After conducting the above research, the next step would be to select the brand extension indicated by the research to be having the highest fit level with the parent brand as it is the most expected to be successful. Spiggle, Nguyen and Caravella (2012) state that if one desires to carry out a brand extension with a lesser extent of fit with the parent brand, they should identify the lacking fit construct and then try to alter the consumer’s evaluations regarding the brand through advertising so as to increase the extent of fit. Then the final step would be to conduct the brand extension. Here, one would make sure that the brand is precisely compared to the brand extension so as to identify if there is any alteration in the values of the parent brand due to the brand extension.
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