Brand Extensions: Finding the point of Saturation

Nowadays, the biggest lure for marketers lies in brand extension. It increases the brand equity, stimulates the company’s bottom line and lays a path for a longer sustainability in the market. Moreover, it creates strong bug in the customer’s mind that keeps him/her connected to the parent brand. This bug triggers when the customer sees a brand that’s merely an extension of parent brand. In today’s scenario, there is a large variety of brands available, for a particular product, in the market. Initially, customers are baffled and it’s difficult for them to choose from the wide variety of brands. They end up preferring the brand that had a spontaneous connection with their memory due to a strong frame of the brand image. And this image is mostly fixed and it changes if the company either do something really stupid or come up with something really creative. Sometimes, an overhauling process in a company‘s interface or product line might change their brand image. Videocon brought a similar change in organization lately. A changed logo, new punch line and whole new range of products. But the question is: To what extent a company can extend their brand?

It is always tempting to extend your product line under the parent brand. Launching a new brand hurts your financial bottom line. So most firms prefer extending their product line in the entourage of their parent brand as it is a safer option. But some of the most famous brands are extensions like Apple iPod, Microsoft Xbox, Tata Indocom, Virgin Airlines etc. Moreover, it’s easier to market brand names so the option to use them to create new products or services is always irresistible. But like everything else, there are hitches hidden inside this strategy. Is the parent brand strong enough to guide the growth of its extension? Will the extended brand be sustainable enough that it becomes a parent brand in itself? Is/Are the extended brand/brands really beneficial for the company without affecting its core values or core competency? Is it more profitable to be content with the current target niche or would it be better to generalize things more and diversify?  These questions seriously affect the feasibility of brand extension. It’s hard to build strong brands, harder to keep them healthy but easier to get carried away by the greed of stretching your brand and damaging it, in the process. It’s like stretching a rubber band, the more you stretch the longer it gets. But there’s a point of saturation after which exerting anymore will break the band.

Some of the worst brand extensions are:

Every organization wants to have the lion’s share by diversifying its businesses and maximize its hold on the market. And for that, brand extension is the apt tool. It allows an organization enter into a totally new product category and at the same time strengthen its parent brand. Though it is highly vulnerable and delicate strategy and requires a lot of control and responsibility. The famous line from the movie “Spiderman” epitomizes this argument; “With great power comes great responsibility” 

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About uns3108

I'm a thinker, philosopher, reader and a rebel. That's all what i can come up with.

Posted on October 30, 2010, in Management. Bookmark the permalink. Leave a comment.

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