Summary of Week 3 and 4 (Lecture 5 + 6) for Companies, Brands, and Consumers (EBM215A05)

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Week 3 (Lecture 5)
Lecture 5 – Leveraging Brand Extensions & Customization

Brand Extension
When a firm uses an established brand name to introduce a new
product.
➔ Line extension: introducing a different variety, a different
form size, or a different application for the parent/original
brand in the same category (e.g., Lipton ice tea flavors)
➔ Category extension: leveraging the parent brand to enter a
different product category from the one the parent brand
currently serves (e.g., Mars bars – Mars ice-cream)

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Advantages of Brand Extensions
➔ New-product Benefits
o Improve brand image
o Reduce perceived risk by customers
o Increase profitability of gaining distribution
o Increase efficiency of promotional expenditures
o Reduce cost of marketing programs
o Avoid cost of developing a new brand
o Allow for packaging and labeling efficiencies
o Permit consumer variety-seeking
➔ Parent-product/brand Benefits
o Clarify brand meaning
o Enhance parent brand image
o Bring new customers into franchise
o Increase market coverage
o Revitalize brand
o Permit subsequent extensions


Disadvantages of Brand Extensions
o Confuse & frustrate customers
o Encounter retailer resistan ce
o Fail and hurt image of parent brand
o Succeed and cannibalize sales of parent brand
o Dilute brand meaning
o Cause the company to forgo to develop new brands