Two main advantages of brand extensions are that they can facilitate new-product acceptance, as well as provide positive feedback to the parent brand and company.
New-Product Success: Brand extensions improve the odds of new-product success in a number of ways. With a brand extension, consumers can make inferences and form expectations as to the likely composition and performance of a new product based on what they already know about the parent brand itself and the extent to which they feel this information is relevant to the new product. For example, when Sony introduced a new personal computer tailored for multimedia applications, consumers may have been more likely to feel comfortable with its anticipated performance because of their experience with and knowledge of other Sony products.
By setting up positive expectations, extensions reduce risk. Because of the potentially increased consumer demand resulting from introducing a new product as an extension it also may be easier to convince retailers to stock and promote a brand extension. From a marketing communications perspective, an introductory campaign for an extension does not have to create awareness of both the brand and the new product but instead can concentrate on the new product itself.
Extensions can thus result in reduced costs of the introductory launch campaign, important given that establishing a new brand name in the US marketplace for a mass consumer packaged goods can cost $100 million! They also can avoid the difficulty and expense of coming up with a new name. Extension allows for packaging and labeling efficiencies. Similar or virtually identical packages and labels for extensions can result in lower production costs and, if coordinated properly, more prominence in the retail store by creating a â€œbillboardâ€? effect. For example, Stouffers offers a variety of frozen entrees with identical orange packaging that increases their visibility when they are stocked together in the freezer. By offering consumers a portfolio of brand variants within a product category, consumers who need a change — because of boredom, satiation, or whatever — can switch to a different product type without having to leave the brand family.
Line extensions can renew interest and liking for the brand and benefit the parent brand by expanding market coverage. Kimberly-Clarkâ€™s Kleenex unit has a goal of having facial tissue in every room of the home. This philosophy has led to a wide variety of Kleenex facial tissues and packaging, including scented, Ultra-soft and lotion-impregnated tissues; boxes with drawings of dinosaurs and dogs for childrenâ€™s rooms, or colorful, stylish designs to match room dÃ©cor; and a â€˜man-sizedâ€™ box with tissues 50% larger than regular Kleenex. One benefit of a successful extension is that it may also serve as the basis for subsequent extensions. During the 1970s and 1980s Billabong established its brand credibility with the young surfing community as a designer and producer of quality surf apparel. This success permitted it to extend into other youth oriented areas, such as snowboarding and skateboarding.