A brand extension is probably the easiest and the most costeffective way of launching a new product. Though the advantages are many, the risks to the parent brand are also equally high. Marketers have to ensure that the returns outweigh the risks before taking a brand extension decision.
Imagine
a new entrant in the Indian CTV (Color Television) category,
wanting to carve out a significant market presence.
With a plethora of international, national and local
brands already well established, it would take sustained
marketing efforts by the latecomer to get entrenched.
Gaining acceptance in a competitive market such as CTVs
would be tough. The process of establishing a new brand
is smoothened, if the brand being offered is new to
the categorybut not to a wider consumer base. Piggybacking
on a familiar brand (say in refrigerator category) would
be immensely helpful in cutting short dramatically the
market acceptance time.
Even
in categories with low competitive intensity, extending
a successful brand from a related category by a marketer
helps. Brand familiarity among consumers quickens trial,
helped largely by high brand recall value. What about
low-interest categories where operating brands are not
strong? Even here, extending a brand from a brand heavy
product category generates shift away from commoditization
of the category.
Once
a brand sustains itself in the market, it's obvious
that it satisfies a value proposition that is in demand.
The equity that the brand enjoys depends on how the
value proposition is fulfilled. This equity building
takes some time. For example, if Tatas were to launch
a newspaper, their equity built over a century of operations
in diverse industries such as steel, chemicals, IT,
retail, hotels, FMCGs, telecom, automobile, financial
services and, engineering would help them immensely.
The reason: The brand evokes TRUST, not withstanding
the occasional internal management controversies (Tata
Finance).
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