martes, 13 de agosto de 2013

Brand Extensions: Excellent or Mistake?

http://www.signaturestrategies.com/brand-associations-classified/
Brand Extensions: Excellent or Mistake?
Brand extensions are a preferred ways of releasing new products to the marketplace They fall under the "One brand all products" sort of brand methods. In a normal brand extension scenario, a well-known brand is applied to a new product in a group either connected or unconnected, in order to profit from the equity of the core brand. Consumer familiarity with the existing core brand assistances new product entry into the marketplace, and aids the brand extension to capture new market segments swiftly.

One explanation for brand extensions is that umbrella branding supplies economic situations of scale, as it economizes on the prices of developing a new brand. Brands have an inherent value (standing or otherwise) and are as a result like a "public excellent" in the sense that the additional products are sold under the very same brand the better the complete value developed.

A different viewpoint on brand extensions is that, in a world where consumers are unsure concerning product attributes (as a result of horizontal or vertical differentiation), brands could play an educational duty. Umbrella branding could lower anxiety concerning a new product's qualities, a reality that rises value if consumers are threat averse. Taking into consideration these aspects it can be claimed that umbrella branding is a remarkable method when there is a substantial overlap between the set of customers of each of the firm's products. This result prolongs the famous idea that brand extensions and umbrella branding are only successful if there is an excellent fit between the different products under the very same umbrella.

Yet there's one added concern: cannibalzation of the mother brand. In this scenario, consumers of the mother brand switch to the newer extension brands to make sure that there is no actual growth in the umbrella brand. Reis and Trout describe the weaknesses of brand extensions in their pioneering manual, Positioning: the Struggle for Your Mind.

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