Pros And Cons Of Brand Extension

brands. Brand portrays a picture or an idea of certain services or products that people may get familiar with associating the name, slogan or logo of the organization who holds that idea or a particular name. Branding on the other hand is referred to as the activities that are associated with making the product or a service of a certain product identifiable among masses and which ultimately caters to differentiate their products with that of their competitors. In order to maintain standards and build good brand reputation and differentiated recognition creative heads and advertising managers are striving hard to surpass their competition in terms of more customer base and new users. International business expansion and more lucrative profit

Branding experts are often concerned with the enormous positive and negative outcomes of branding and are constantly working to avoid the asymmetry resulting from it. Brand extension may improve the company’s brand image and enhances the parent brand image, makes consumer perceive its less risky to use the product if that company since it may be having international presence making people believe it a safer choice, as a result its brand equity and the market share can also be enhanced with more efficient labelling and packaging solutions, It also paves the way for further brand extension activities and side lines the cost incurring from creating a new brand and moreover it saves the cost associated with launching a new product because then it uses the name of the brand that’s already renown among the masses which make the fruitful existence of the new product launched under the brand name. Coming at the disadvantages of brand extension it can be a source of diminishing brand image and cannibalizing the sales of the parent brand’s product. It can also deteriorate identification of a parent’s company product which may have similar appearance to that which has been a result of brand extension. It may also affect the company’s capability to design a new brand if required and most importantly if the brand extension does not end up matching the requirement of its respective strategy the company may

Managing resources is the main concern for the brand managers to look out for. And similarly many companies believe that sticking to one game plan as a sole international strategy can possess great amount of risk for them as diversification is what they are dealing with, targeting different mind-sets different lifestyles and different cultures on the whole so a specific strategy may endanger their existence in international market. Hence firms do not usually integrate their production and instead they opt for chunk strategy (Designing strategy based on specificity of a certain product catering to a specific market). For example Walkers crisps being a market leader in UK was acquired by PepsiCo and even after Lays being their benchmark snack product across the world, PepsiCo still kept walkers crisp on the rise in UK, Which was also the market leader in UK at the time before their acquisition by PepsiCo. Brand extension in international market may also help enhance sales volume if the company is facing lack of opportunities in gaining better market share and profitability in the country of origin. For example TCL a Chinese consumer electronics brand decided to move into a larger overseas market of American continent and European Union by acquiring assets and other factor of productions in the respective countries and in addition they also made some new category of electronic items