Corporate Eye

The Argument FOR Brand Extensions

Brand extensions are a simple way to leverage the success and popularity of an existing brand to support the launch of a new product. By rolling out a new product with a well-known and well-liked brand name on it, companies can enjoy two main benefits – reduced risks and reduced costs. Let’s look at both benefits in more detail.

Brand Extensions Reduce Risks

  • Brand extensions lower the risk of going unnoticed: Launching a new product with an established brand name on it is a simple way to ensure the new product will be noticed and recognized in a crowded marketplace thereby mitigating the risk of the new product getting lost on the store shelf or in between the myriad of advertising messages consumers hear everyday.
  • Brand extensions lower the risk of relying on one product to represent a brand: Launching a new product with an established brand name on it is a simple way to cover your bases. In other words, if one product under the brand umbrella fails, there are others to fall back on. In fact, if the new product launched under the brand umbrella is very successful, that new success will have a positive effect on existing products.

Brand Extensions Reduce Costs

  • Brand extensions lower advertising costs: Products launched under an existing, popular brand name don’t have to invest advertising dollars into gaining awareness and recognition of the brand name, because consumers will already have an understanding of the brand’s promise. Instead, advertising investments can be made to communicate messages related directly to consumers’ needs.
  • Brand extensions lower sales investments: Products launched under an existing, popular brand name come with a ready-made “foot in the door”. In other words, sales representatives who try to reserve shelf or retail space for the new product will have an easier time getting positive results to their requests than those who try to do the same for an unknown brand.

If you’ve already spent the time and money to develop a well-known and popular brand, then developing brand extensions for future product launches might be a strategy you should research. However, brand extensions don’t come without inherent problems. Stop back by Corporate Eye later this week to read my follow up post, “The Argument AGAINST Brand Extensions”, or subscribe to the Corporate Eye feed so you don’t miss anything!

Photo: Flickr

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Susan Gunelius is the author of 10 marketing, social media, branding, copywriting, and technology books, and she is President & CEO of KeySplash Creative, Inc., a marketing communications company. She also owns Women on Business, an award-wining blog for business women. She is a featured columnist for Entrepreneur.com and Forbes.com, and her marketing-related articles have appeared on websites such as MSNBC.com, BusinessWeek.com, TodayShow.com, and more. She has over 20 years of experience in the marketing field having spent the first decade of her career directing marketing programs for some of the largest companies in the world, including divisions of AT&T and HSBC. Today, her clients include large and small companies around the world and household brands like Citigroup, Cox Communications, Intuit, and more. Susan is frequently interviewed about marketing and branding by television, radio, print, and online media organizations, and she speaks about these topics at events around the world. You can connect with her on Twitter, Facebook, LinkedIn, or Google+.
 
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