A company has four choices when it comes to developing brands. It can introduce line extensions, brand extensions, multibrands or new brands.
Line extensions occur when a company extends existing brand names to new forms, colours, sizes, ingredients or flavours of an existing product category. Thus, after generations of keeping true to the original format of KitKat, Nestle’s top chocolate bar, it successfully extended the two and four finger range to KitKat Chunky in 1999. This success was soon followed by repeated extensions including KiKat Low-Carb, KitKat Minis and KitKat Ice Cream. Finding their number two bar brand Aero was losing sales, in 2006 the brand was boosted by Aero Bubbles, a new line extension designed to compete with Mars’s Maltesers.
A company introduces line extensions as a low-cost, low-risk way to introduce new products, or it might want to meet consumer desires for variety, to use excess capacity or simply to command more shelf-space from resellers. However, line extensions involve some risks. An overextended brand might lose its specific meaning, falling into the ‘line-extension trap’. Heavily extended brands can also cause consumer confusion or frustration. A consumer buying cereal at a supermarket might be confronted by more than 150 brands, including up to 30 different brand flavours and sizes of oatmeal. Quaker alone offers its original Quaker Oats, several flavours of Quaker instant oatmeal, and several dry cereals such as Oatmeal Squares, Toasted Oatmeal and Toasted Oatmeal-Honey Nut.
Another risk is that sales of an extension may come at the expense of other items in the line. A line extension works best when it takes sales away from competing brands, not when it ‘cannibalises’ the company’s other items.
A brand extension (or brand stretching) extends a current brand to new or modified products in a new category. For example, Victorinox extended its venerable...
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