The Effects of Brand Extension toward the Brand Image Loh Jia Cong. Student Multimedia University Introduction Aaker and Keller (1990) define it as, “brand extension occurs when a firm uses an established brand name to introduce a new product into a new product category”. The existing brand name is also called parent brand. Brand extension also representative a company utilizes their brand name to a new product and leverage equity for expansion. Every company hopes to utilize brand extension leverage with its competitors and increase the sales or profits with the new product they offer.
They recognized the relevance as it is an opportunity to benefit from the parent brand via their brand image and brand recognition to enter new markets in a new product category (Aaker & Keller, 1990). While there are few contradictory studies (Trout and Ries, 1981, 2000), many studies reveal some major benefits of brand extension strategies. Entering a new product category with a product which is served by the parent brand require lower introduction costs, for instance price promotions, advertising and trade agreements (Collins-Dodd and Louviere, 1991; Tauber, 1981, 1988). Besides, its benefits are minimizing the entry barrier, reducing the risks and maximizing the advantage of brand equity (Van Riel, Lemmink & Ouwersloot, 2001). With those major benefits in regard, we can state that brand extension is a relevant topic of
Brand extension could be explained as a new addition to an existing product or service which is different or enhanced to appeal to a new set of clientele. An example in hotel industry would be the introduction of Holiday Inn Express as an option for those looking for a no-frills room with basic amenities. Successful brands in the Product life cycle would like to grow and would try to diversify by creating newer upgrades to the current line of by capitalizing on existing brand image. Keller (2012) articulates the need for such strategy as way of growing the business as shown in Ansoff’s Growth Matrix (refer Fig. 2).
Talking about rare pieces of works, what entering right into our minds is to preserve it. In a business world, we also decide to preserve our position to strengthen our images. For some entrepreneurs, the word ‘Brand Extension’ might mean ‘devalue’ because this action brings about some consequences that lead to change the brand positioning according to several cases that have been failed with brand extension. For instance, in 1999, the famous women magazine named Cosmopolitan has launched the new product that really contrast with what they actually do, The Cosmopolitan yogurt. Sounds awkward?
Introduction: A brand extension is understood to be using the current brand name for another product to enter in a market, brand extension can be described as new product development strategies that can reduce financial risk by using the name of the brand which already existing to enhance the confidence of the consumer. Example connected with brand extensions are Coca Cola, Pepsi, Nestle, P& G, Uniliver, Fine and etc. Successful brand extensions count on consumers perceived fit, Innovation, concept and Consistency, perceived quality, brand familiarity. For many years researchers tried to find the major factor that affects the brand extension of the firms and how it does affect the business. It is studied that brand extensions can result in
“Brand extension is the use of an established brand name on a new brand within the same broad market” (Jobber, 2010). In apples case the extension of apple iPod from the Classic to the Nano to the Shuffle to the iPod Touch, the extension gives the brand the opportunity to meet diverse needs of consumer. “Brand stretching is when an established brand name is used for brands in unrelated markets” (Jobber, 2010). In apples case they have stretched the brand from originally being just computers to smartphones and music players etc. There are 2 types of co-branding, product based co-branding and communications co-branding.
A brand has additionally been outlined as “a product provide from a known source” (Kotler, 2000). keller (2003) defines a brand as a product that adds different dimensions that differentiate it from different products and services designed to satisfy a similar would like. Kapferer (1997) says that a brand exists once there's sure perceived risk. Without it, a brand would merely be the name of a product. Therefore, a brand makes life easier and fewer risky (Barwise et al., 1990) and may be sources of value for the buyer (Kapferer, 1997).
Chapter 3 3.1 Brand The brand is and has been defined in many different ways over the years Depending on the perspective from which the brand is perceived. The brand is linked to the identification of a product and the differentiation from its competitors, through the use of a certain name, logo, design or other visual signs and symbols. The American Marketing Association has defined the brand has name, term, sign, symbol or design. Or a combination of them which is intended to identify the goods or services of one seller for a group of sellers and to differentiate them from those of competitors. 3.2 ASPECTS OF BRAND 3.2.1 Brand architecture Brand architecture is the structure that organizes the brand portfolio.
The customer’s satisfaction or dissatisfaction with the product will influence subsequent behavior, if the consumer is satisfied, then he/she will exhibit a higher probability of purchasing the product on the next occasions. If the consumer is dissatisfied, then they switch to another brand. Brand Promotion Brand Promotion is to raising customer awareness of a product or brand, generating sales and creating brand loyalty. Brand Trust Brand Trust is expressed as the belief of consumers that the brand will fulfill certain functions. Brand tryst is an important mediator factor on the customer behavior before and after purchase of the product.