Concept of BRAND and Brand Extensions

A brand is defined as “a name,term,sign,symbol or special design or some combination of these elements that is intended to identify the good or services of one seller or group sellers. A brand differentiate these products from those of competitors._ American Marketing Association.

A brand is short is an identifier of the seller or the maker. A brand name consists of words,letters, and numbers that can be vocalized. A brand mark is the visual representation of the brand like a symbol,design,distinctive coloring or lettering.

Brand extension

Characteristics of Brand name

  • Short,simple and easy to pronounce
  • Easy to recognize and remember
  • It should be suggestive
  • It should be appropriate
  • It should be adaptable to new products advertisements
  • It should be registrable.

Brand Extensions

Brand extension is the use of an established brand name in new product categories. This new product category to which the brand is extended can be related or unrelated to the existing product categories. A renowned/successful brand helps an organisation to launch products in new categories more easily.

Characteristics of brand extension

According to peter Farquhar, successful brand extensions have three characteristics:

1. Perceptual Fit: The consumer must perceive the new item to be constant with the parent brand.

2. Benefit Transfer: A benefit offered by the parent brand must be desired by consumers of products in the new category.

3. Competitive Leverage: The new items must stake up favorably to established items in the new category.

Advantages of brand extension

  1. It makes acceptance of new product easy.
    1. It increases brand image.
    2. The risk perceived by the customers reduces.
    3. 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.
    4. 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.
    5. Cost of developing new brand is saved.
    6. Consumers can now seek for a variety.
    7. There are packaging and labeling efficiencies.
    8. The expense of introductory and follow up marketing programs is reduced.
  2. There are feedback benefits to the parent brand and the organization.
    1. The image of parent brand is enhanced.
    2. It revives the brand.
    3. It allows subsequent extension.
    4. Brand meaning is clarified.
    5. It increases market coverage as it brings new customers into brand franchise.
    6. 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.
  4. If the brand extensions have no advantage over competitive brands in the new category, then it will fail.