A company that is known for a specific skill can integrate itself into many related categories. Take Sony, for example, the brand has made its mark in the multimedia industry and is able to find success in almost every related category. Think music, video games, electronics, cameras, movies, and more. Some brands have built up a reputation for being an expert in a specific category that can likely benefit many other related products.
In fact, roughly 85 percent of brand extensions flounder within one year of launching. When it comes to brand extensions, we would not recommend following the lead of these next couple examples.
I am unsure why Cosmo thought yogurt of all products could be the next big money maker for them. Confusion and absolutely nothing else comes to mind here. I just need to know: why? Sure, it may seem like a tasty candy would do well as a soda flavor, but it turns out that people did not like the idea of drinking a liquid form of candy.
Source: Time. Here is another example of a bad taste association your brain makes automatically. When you think of Frito-Lay, you probably think of salty potato chips, and when you think of lemonade, you imagine a sugary sweet beverage. Although we know Frito-Lay Lemonade is not actually salty, that flavor mix in my mind never leaves. Source: Consumer Reports. Finally, something Colgate did right! Successfully creating an obvious mate to its well-loved toothpaste.
This is also an example of a companion product extension. Aunt Jemima is now one of the most popular syrups on the market. This is an incredible example of a brand extension done right. Although soap is not gender specific, Dove is mainly marketed towards women, especially since one of the most popular products is the Dove Beauty Bar.
Creating a line for men was a perfect addition to one of the most popular personal care brands. Dove knew what its customers were lacking and ran with it! Clorox struggled to find a product extension that would resonate well with its consumers. They were only known for sterilizing extreme germs and brightening white laundry.
It was a tough product for consumers to accept because it is such an extreme product. Incorporating Clorox bleach into household cleaners was a great success, especially when bathroom messes were involved. Consumers loved the extreme clean for bathrooms. Failed brand extensions into the food industry from non-food brands seem to be some of the largest failures due to the immediate reaction of repulsion that can ensue. Popular Courses. Business Marketing Essentials.
What Is Brand Extension? Key Takeaways Brand extension is the introduction of a new product that relies on the name and reputation of an established product. Brand extension works when the original and new products share a common quality or characteristic that the consumer can immediately identify. Brand extension fails when the new product is unrelated to the original, is seen as a mismatch, or even creates a negative association. Article Sources. Investopedia requires writers to use primary sources to support their work.
These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.
The new products rely on customer loyalty and satisfaction created by the original product. Halo Effect The halo effect is defined as a consumer's bias toward a maker's products because of a favorable experience with that company's other products. Brand Loyalty: What You Need to Know Brand loyalty is the positive association consumers attach to a particular product, demonstrated by their repeat purchases of it.
Understanding Market Cannibalization Market cannibalization is a loss in sales caused by a company's introduction of a new product that displaces one or more of its own older products. Understanding How Companies Use Product Lines A product line in business is a group of related products under the same brand name manufactured by a company.
Read how product lines help a business grow. What Is a Brand? A brand is an identifying symbol, mark, logo, name, word, or sentence companies use to distinguish their product from others. Learn why brands are important. Partner Links. Related Articles. Company Profiles Costco vs. Sam's Club: What's the Difference? Company Profiles Who Killed Sears? Fifty Years on the Road to Ruin. The Brand extension strategy found at the TopRight corner of the matrix , leverages the parent brand to enter a new product category.
When compared to the launch of a new brand, this approach adds incremental value and reduces risk and costs. For one, you already have most of the necessary resources as a business. Also, the fact that you already have an existing customer base that already believes in your products makes it easier to convince people to test your new item.
This strategy is more common for firms whose current brand equity is strong enough to influence existing customer base and brand loyalty to increase profits with the new product category offering. For example, an established brand like WPEngine can reduce risk by rolling out an affiliate program for their partners like Leadsurance to promote for them to their existing customer base.
The likes of Forum Group , for instance, take up the basic tasks that improve the product delivery process, allowing you to focus on improving your new products and services. Recently, we came to find that Equinox a luxury fitness gym operator , West Elm and Restoration Hardware home good retailers are planning to enter the hospitality industry.
These brands are venturing into the risky world of brand extensions, planning to launch boutique hotels in different locations in the U. Well, there are many variables involved in having a successful brand extension. The general consensus is that when brand equity is high, the chances of a successful brand extension increase. Based on this fact, there are higher chances of a positive launch for these renowned brands. On the other hand, there are a number of examples in the market of how even the most well-known and positioned brand might fail in this adventure.
Brand extensions in the hospitality industry provide a good example of these statistics. A four-star hotel located in Zurich that closed two and a half years later? Well, we can attribute one of the reasons of the failure to a low brand association between the parent brand and a four-star type of hotel. Perhaps one thing that should be considered is the specific niches of your current product and whichever service you want to add to your portfolio.
What about luxury brands like Armani, Versace, Bulgari and Ferragamo?
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