What Is Brand Extension?

Brand Extensions refer to the practice of using existing brand names to enter new product categories and launch new products. Brand extension enables companies to launch new products at a lower cost, so it becomes the main means for companies to launch new products.

Brand extension is

Brand extension is a powerful method for companies to launch new products, quickly occupy and expand the market, and it is a company's full exploration and strategic use of brand intangible assets, which has become a realistic choice for many enterprises.

1. Brand extension can speed up the positioning of new products and ensure that companies' investment decisions on new products are quick and accurate. Especially when developing new products that are highly relevant and complementary to the original product of the brand, its consumption is completely consistent with the original product, and the demand for it increases or decreases in proportion to the original product, so it does not require a long-term market Demonstration and research, the annual sales growth rate of the original product is the most practical, accurate and scientific evidence. Due to the correlation and complementarity of the new product with the original product, its market demand is also clear at a glance. Therefore, its investment scale and annual output are very easy to predict, which can speed up decision-making.

2. Brand extension helps reduce the market risk of new products. When new products are brought to the market, they must first obtain consumer awareness, recognition, acceptance, and trust. This process is branding new products. The development and creation of a new product requires huge costs. Not only does new product design, testing, identification, registration, packaging design, etc. require a large investment, but the protection of new products and packaging also requires a large investment. In addition, there must be continuous advertising and a series of promotions. This kind of product branding activity is long-lasting and costly, and it often exceeds the direct production cost several times or dozens of times. For example, in the US consumer product market, it takes about 50 million to 100 million dollars to create a new product. This is obviously not a new product. It can only be strangled without huge financial support. Brand extension means that new products have been branded as soon as they come out, and even have the vitality given by well-known brands. This can greatly shorten the process of consumer recognition, recognition, acceptance, and trust, and effectively prevent the new product market. Risk, and can save thousands of huge expenses, effectively reducing the cost of new products.

3. Brand extension is beneficial to reduce the market introduction cost of new products. In today's highly developed market economy, consumers' choice of trademarks is reflected in "licensed shopping." This is because many products come with containers and packaging. The quality of the products is not visible to the naked eye. Brand extension makes consumers have a high degree of trust in the brand's original products, intentionally or unintentionally, to extend new products to promote consumers and extension The trust relationship between the new products has greatly shortened the market acceptance time and reduced advertising costs.

4. Brand extension helps strengthen

Proper use of brand extension strategies can naturally bring many conveniences and benefits to corporate marketing activities. If brand extension strategies are not properly grasped or used improperly, it will bring harm to enterprises in many aspects. Therefore, when applying the brand extension strategy, enterprises should be careful to prevent the following situations from adversely affecting the company's operating activities and avoid damage.

Successful brand extension often requires a good timing. In the following situations, brand extension can be considered:

1. When extension products are similar to alliance products;

2. When "multi-brand" is important, and when the consumption behavior of switching between different brands is unavoidable, it is suitable to provide several brands with different brand values;

3. When multiple types of brands are clearly needed by consumers, when consumers want to experience many different options, it is not suitable for a brand to have only one category.

When the above conditions are met, the company should consider how to carry out brand extension and develop this brand family series.

It is undeniable that successful brand extension can enlarge and increase the brand, and then make full use of brand assets and add value in the use. However, brand extension has many pitfalls and many potential risks. Therefore, companies must look at brand extension from a strategic perspective of long-term development, and must not blindly expand successful brands on new products based on immediate interests, regardless of timing, extension conditions and feasibility. When making brand extension decisions, we must weigh the pros and cons wisely, adopt scientific, reasonable and effective methods to avoid risks and ensure the success of brand extension.