Brand Extension In Hotel Industry

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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). (Keller, Pg. 432-433, 2012)

The premise for considering an brand extension rests on the awareness and perceptions generated
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Strong companies like Virgin can branch out to make brand extension, however these have to make sense. The disadvantages of brand extension needs to be understood from the point of view that if a company does not have the leverage in the category it wishes to go then it will fail. (Keller, Pg. 469, 2012).
In 2004 The Guardian in an article spoke of how some of the big brands like Virgin and Harley failed when they tried a brand extension or piggy-back marketing, subsequently throws an interesting insight into how customers just don’t buy in to the new product unless they are convinced of the distinctiveness. Quoting Helen wing, the director of marketing science Centre at Research international “The bad news from our product and test databases is that extensions are actually more likely to fail than new products". However not all brand extensions from Virgin have failed, Virgin mobile is a strong brand similarly Harley’s clothing accessories line is doing fine though the perfume failed, hence it simply boils down to having good research and marketing before entering into a brand extension. (The Guardian,
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Thus, valuation methods that can include more than one metrics hold higher application value that ones that look at one performance indicator. Thus, the valuation method described in Keller (2012) by Interbrand allows to analyse three components from financial performance to role and strength of the brand. Firstly, they asses the financial performance of the company and the premium over their competitors. Secondly, assessing the role of the brand enables the brand to understand their relative performance in regards to customer’s willingness to purchase them, thus creating foundation for future forecast. Finally, the brand strength is a diagnostic measurement of key performance indicator for the brand against its competitors (Interbrand, 2016). Combined score across all the key indicators allows to rank the brand against other brand within and outside the industry. Interbrand is therefore a versatile valuation tool that allows to take into account perspective of customers, investors and employees. . (Interbrand, 2016, Keller,

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