A brand is probably the most important business asset; it may be valued at 5-50% of the total value of the company or even above in some cases.
Brand management has become quite a complex issue today and as brands get bigger and more important, there is a tendency to milk more out of the star performing brands.
However brand extensions do have their pitfalls and may jeopardize a company’s competitive position, it can lead to clutter, confuse a consumer thereby affecting his choice.
Some Examples:
Colgate recently tried experimenting with ready to eat meal products!!!
But brand extensions do have a positive side to them, It is cheaper to extend a brand rather than create a new brand , it is less risk and more cost effective.
DAVID TAYLOR states in brandstretch that 'brand extensions are typically 23% more successful, 34% cheaper and 61% better at driving a repeat purchase' .
When considering brand extensions the following questions must be considered:
Where to extend
What to extend
How to extend
Some Examples Of companies that have embraced brand extension rather successfully are:
BMW: A brand well known for its premium priced saloon cars immediately saw an opportunity in the high growth Sports Utility Vehicle segment and launched the X series SUV.
In the fast changing markets today extensions are simply the moving centre of gravity of business as both the market and the customers advance.
NIKHIL SHARMA (E BIZ)
2 comments:
'Therefore clarity of thought, consistency, thorough risk analysis, benefits offered and value created all need to ensure that the extension fits the business objectives'.
I guess Colgate and Levis would have done all the above before they extended their brands to various segments. but what they really may not have done is a thorough 'brand perception survey' where in they should have tried to find if consumers actually would accept the brand in that particular category. i guess like BMW even Levis did not really move away from their core product, namely clothing(vehicles for BMW), then why did they fail?? i guess in certain categories brand perception is more ingrained in the product, what say?!
Rejoy PG-1 06-08
Just imagine travelling in car called pepsi or drinking cola named maruti..... or riding a bike called lakme... smoking a cigar named sprite......
makes me crazy atleast... thats the problem with brand extension... extionsion should be based on the finding out where does capabilities of a brand lies... is it in resources(people,cash flow)... or is it in process or in the values... and then think about the extension.... but all the negative talk about brand is kicked in dust by one brand... HEARD of VIRGIN....
Because capabilities of brand lies in one name called Richard branson... And the capabilities lies in the value of brand virgin which is... LETS SCREW IT... LETS DO IT
Bhartendra Singh(MMS06-08)
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