Brand Extension – A Success or Failure ?

Brand management has become quite a challenge for brand managers as well as the Organizations today. Intense competition and the decreasing product life of a brand add further dimensions to the brand management problem. Brand managers by and large opt for brand extensions now days. You can check any shelf in the super market and you will see variants of the same brand occupying the shelf space. This is true in all cases be it with a soft drink brand leader like Coke to a cream, shampoo or toiletry.

Brand managers are always under pressure to grow the market share and increase revenue. Under constant pressure and intense competition, they find it easier to bring out brand extensions in order to provide continual change and an increased value perception to the consumers.

Brand extensions also help them to capture the niche segments in the market that have not be covered by the parent brand. On the part of the management, brand extensions prove to help in maximizing capacity utilization and stretching resources to the maximum.

However, the question that bothers every brand manager is whether such brand extension is good for the parent brand or whether it is a mistake that one is committing in the long run. There is no straight answer to this question. In some cases, brands like GE, Proctor & Gamble, Spencer’s etc have been hugely successful in making foray into new businesses using the parent brand and stretching the brand. Brand extensions too have worked well for brands like Nivea, Dove and Loreal etc. In many cases, the brand extensions and stretching exercises have failed too.

There is definitely a case for brand extensions in the market for various reasons. There is nothing wrong in a firm exploiting the brand image or brand value when they have strived to build the parent brand over a period of time.

Economically too it makes sense for the company to resort to brand extension which is far cheaper than introducing and promoting a new brand. If successful, brand extensions can help strengthen the parent brand as well as capture the niche market segments no doubt.

However, the thinking behind the brand extension and the strategy is what makes the brand extension a failure or a success. In cases where the brand extension is planned to auger short term revenue, it may not withstand the test of times.

The danger of brand extension is something that should be accounted for before jumping into brand extensions. The failure of a brand extension can affect the perception of the consumers with regard to the parent brand and damage the brand value. In Some cases, the brand extension products may not generate new revenue but eat into the parent brand’s market share itself.

What works for brand extension is difficult to say. Depending upon the product, one can perhaps map the market and arrive at a good judgment. Categories like biscuits, soft drinks, chewing gum, sauces and jams etc generally do well with brand extensions. The same does not hold good in terms of all products.

Branding experts opine that though there is no guaranteed formulae for success in brand extensions, when the same is carried out as a part of a well identified and planned strategy, it can be successful.

A well identified and planned strategy involves identifying the core brand value and perception and building brand extension by retaining the same values but delivering increased value through brand extension.