Advantages of Brand Extension

Allow for Packaging and Labeling Efficiencies

Similar or virtually identical packages and labels for extension can result in lower production costs and, if coordinated properly, more prominence in the retail store by creating a “billboard” effect.

Enhance the Parent Brand Image

According to the customer-based brand equity model, one desirable outcome of a successful brand extension is that it may enhance the parent brand image by strengthening an existing brand association, improving the favorability of an existing brand association, adding a new brand association, or a combination of these.

Bring new customers into the Brand Franchise and Increase Market Coverage

Line extension can benefit the parent brand by expanding brand coverage, for example, by offering a product benefit whose lack may have heretofore prevented consumer from trying the brand.

Revitalize the Brand

Sometimes brand extension can be means to renew interest and liking for the brand.

Permit Subsequent Extensions

One benefit of a successful extension is that it may serve as the basis for subsequent extension.

Permit Consumer Variety-Seeking

By offering consumers a portfolio of brand variants within a product category, consumers who need a change – because of boredom, satiation, or whatever – can switch to a different product type if they so desire without having to leave the brand family.

Provide Feedback Benefits to the parent brand

Besides facilitating acceptance of new products, brand extension can also provide positive feedback to the parent brand in a number of ways, as described in the following subsection.

Clarify Brand Meaning

Extension can help to clarify the meaning of a brand to consumer and define the kids of markets in which it competes.

Facilitate New Product Acceptance

The high failure rate of new products is well documented. Marketing analysts estimate that perhaps only 2 of 10 new products will be successful, or maybe even as few as 1 of 10. As noted previously, new products can fail for a number of reasons.

1. The market was too small (insufficient demand for type of product).
2. The product was a poor match for the company.
3. The product was justified on inadequate or inaccurate marketing research, or the company ignored research results.
4. The company was too early or too late in researching the market (failure to capitalize on its marketing window).
5. The product provided insufficient return on investment (poor profit margins and high costs).
6. The product was not new or different (a poor idea that really offered nothing new).
7. The product did not go hand in hand with familiarity.
8. Credibility was not conformed on delivery.
9. Consumer could not recognize the product.

Brand extension can certainly suffer from some of the same shortcomings face by any new product. Nevertheless, a new product introduced as a brand extension may be more likely to succeed, at least to some degree, because it offers the advantages described in the following subsection.

Improve Brand Image

One of the advantages of a well-known and well-liked brand is that consumers form expectations over time concerning its performance. Similarly, with a brand extension, consumers can make inferences and form expectations as to the likely composition and performance of a new product based on what they already know about the brand itself and the extent to which they feel this information is relevant to the new product.

Reduce Risk Perceived by Customers

One research study examining factors affecting new product acceptance found that the most important factor for predicting initial trial of a new product was a extent to which a known family brand was involved.

Increase the Portability of Gaining Distribution and Trial

Because of the potentially increased consumer demand resulting from introducing a new product as an extension, it may be easier to convince retailers to stock and promote a brand extension.

Increase Efficiency of Promotional Expenditure

From a marketing communication perspective, one obvious advantage of introducing a new product as a brand extension is that the introductory campaign does not have to create awareness of both the brand and the new product but instead can concentrate on only the new product itself.

Reduce Costs of Introductory and Follow-up Marketing Program

Because of these push and pull consideration in distribution and promotion. Moreover, other efficiencies can result after the launch.

Avoid Cost of Developing a New Brand

Developing new brand elements is an art and science. To conduct the necessary consumer research and employ skilled person to design high-quality brand names, logos, symbols, packages, characters, and slogans can be quite expensive, and there is no assurance of success.