When launching a new product, it is better to pursue a brand extension strategy, than to develop a new brand
Brand extension is a brand strategy which using the existing brand name to develop a new product or enter into a different product category market or industry. The new brand can be called as a “sub-brand”, and the original brand is referred as a “parent brand”. There are basically two different types of brand extensions. The first one is “line extension”, which means to launch a new product which is under the same product category as the parent brand. It usually involves more flavours or different sizes. For example, Coca-cola and Coca-cherry-cola. The other type is “category extensions” which means to launch a product in a totally different market to the parent brand, such as Yamaha which extends its product from musical instruments to bikes. Brand extension has become more and more popular these days, and has used by many organisations. According to Aaker (1991) , there are almost 9 out of 10 of new product introductions are actually brand extension.
There are some obvious advantages of brand extension which are to reduce costs and increase the efficiency of promotional expenditures. To launch a product using an existing brand name can avoid employing professional designer to create brand names, logos, packages etc. Similar packages and labels can decrease the production costs as well. These costs used to be a large amount of money. Also similar packages help to create a “billboard” effect in retail shops which means stocking some identical or similar packaging products together can increase their visibility, like Campbell soup. Besides, there was a research on 98 consumer brands in 11 markets, it found that sub brand spent much less on advertising than other new brand name product. (Mary W. Sullivan, June 1992). It is because there are more products using the same brand name, which would easily attract more people attentions, and even one...
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