so, what is brand extension? Brand Extensions refers to the process that an enterprise extends a famous brand or a successful brand with market influence to a product that is not nearly the same as the famous product or the original product, so as to launch a new product by virtue of the existing successful brand. Brand extension strategy is a strategy to apply existing successful brands to new products or revised products; In addition, the brand extension strategy also includes Line Extension, that is, the existing brand names are applied to new products of the same category, so as to introduce new styles, new tastes, new colors, new formulas and new packaging products. Brand extension is not simply borrowing the brand name that already exists on the surface, but the strategic use of the whole brand assets. Brand extension strategy can make new products enter the market smoothly with the help of the market reputation of successful brands and save promotion expenses.
when an enterprise's brand is successful in the market, the brand has market influence and will create super-value profits for the enterprise. With the development of enterprises, it is natural for enterprises to take advantage of the market influence of the brand when launching new products, and brand extension becomes a natural choice. In this way, we can not only save the cost and investment of launching many new brands, but also extend people's understanding and evaluation of brands to new products covered by brands through the market influence of existing brands.
On the surface, brand extension expands new products or product combinations. In fact, from the perspective of brand connotation, brand extension also includes the expansion of brand emotional appeal. If the new product does not help to enrich the content of brand emotional appeal, but reduces or weakens the content of emotional appeal, the brand extension will have a crisis. We should not only see the market influence of the brand to promote the listing of new products, but also analyze whether the market and social positioning of the product contribute to the stability of the brand market and social status, and whether they are compatible.
1. Strategies for brand extension
1. Extension in industry. From the analysis of industrial correlation, it can extend upward, downward or both; Adopting this extension mode provides a good extension mode for material sources and product sales.
the other is the parallel extension of industries, which generally adapts to the product fields with the same (or similar) target market and sales channels, the same storage and transportation methods and similar image characteristics; On the one hand, it is beneficial to the marketing of new products, on the other hand, it is beneficial to the consolidation of brand image.
2. extend the product quality grade. Including the following three extension methods:
(1) upward extension, that is, adding a high-grade product production line to the product line to make the goods enter the high-grade market.
(2) downward extension, that is, adding lower-grade products to the product line. Take advantage of the reputation of high-grade brand-name products to attract customers with low purchasing power to buy low-grade and cheap products in this brand. If the original brand is a well-known brand, this extension will easily damage the reputation of the brand, which is very risky.
(3) Two-way extension, that is, after the enterprise originally located in the mid-range product market has mastered the market advantage, it decides to extend to the upper and lower directions of the product line, on the one hand, adding high-grade products, on the other hand, adding low-grade products to expand the market lineup.
3. Other related extensions are also called diffusion extension. This is very meaningful to the brand that has just grown up. It has four meanings: first, a single brand can spread to a variety of products and become a series of brands; Second, the brand of one country and one place can spread to the world and become an international brand; Third, another brand is derived from the re-diffusion of one brand; Fourth, brand-name products can spread to enterprises, making enterprises famous.
second, the advantages of brand extension
brand extension is a powerful means for enterprises to launch new products, quickly occupy and expand the market, and it is also a full exploration and strategic use of brand intangible assets by enterprises, so it has become a realistic choice for many enterprises.
1. Brand extension can speed up the positioning of new products and ensure the rapid and accurate investment decision of enterprises in new products. Especially when developing a new product with strong correlation and complementarity with the original product of this brand, its consumption is completely consistent with the original product, and its demand increases or decreases in proportion to the original product, so it does not need long-term market argumentation and research, and the annual sales growth rate of the original product is the most practical, accurate and scientific proof. Because of the correlation and complementarity between the new product and the original product, its market demand is also obvious. Therefore, its investment scale and annual output are very easy to predict, which can speed up decision-making.
2. Brand extension helps to reduce the market risk of new products. When a new product is introduced to the market, it must first gain the understanding, recognition, acceptance and trust of consumers. This process is the branding of new products. Developing and creating a new product requires huge expenses, not only the design, testing, identification, registration and packaging design of new products, but also the protection of new products and packaging. In addition, there must be continuous advertising and a series of promotional activities. This kind of product branding activity is protracted and costly, which often exceeds the direct production cost by several times or dozens of times. For example, in the consumer goods market in the United States, it takes about $5 million to $1 million to create a new product, which is obviously unbearable for a new product and can only be stifled without huge financial support. Brand extension means that new products have been branded as soon as they come out, and even gained vitality from well-known brands, which can greatly shorten the process of being recognized, recognized, accepted and trusted by consumers, effectively prevent the market risks of new products, and save thousands of huge expenses and effectively reduce the cost of new products.
3. Brand extension is beneficial to reduce the market introduction cost of new products. In today's highly developed market economy, consumers' choice of trademarks is reflected in "brand recognition shopping". This is because many goods have containers and packaging, and the quality of goods can't be seen through by naked eyes. Brand extension makes consumers' high trust in the original brand products pass on to the extended new products intentionally or unintentionally, which promotes the establishment of trust relationship between consumers and the extended new products, greatly shortens the market acceptance time and reduces the advertising expenses.
4. Brand extension is helpful to strengthen brand effect and increase the economic value of brand as an intangible asset. The original products of the brand are all single products at first, and the brand extension effect can make the brand radiate from a single product to many fields, which will make some consumers know, accept and trust the brand effect and strengthen the reputation and popularity of the brand itself, so that the intangible asset of the brand will continue to increase in value.
5. Brand extension can enhance the image of the core brand and improve the investment benefit of the overall brand portfolio, that is, when the overall marketing investment reaches the ideal economic scale, the main brands of the core brand will benefit from it.
3. Accurately grasp and apply brand extension strategy to avoid brand extension risk
Proper application of brand extension strategy can naturally bring many conveniences and benefits to enterprise marketing activities. If the brand extension strategy is not grasped correctly or applied improperly, it will bring many hazards to enterprises. Therefore, when using brand extension strategy, enterprises should guard against the adverse effects of the following situations on their business activities and avoid the risk of brand application that harms the interests of enterprises.
l, damage the original brand image. When a certain kind of product takes the leading position in the market, this brand becomes a strong brand, and it has a special image positioning in the minds of consumers, and even becomes synonymous with this kind of product. After the extension of this powerful brand, due to the existence of recency effect (that is, the recent impression has a profound effect on people's cognition), it is possible to consolidate or weaken the image of the powerful brand. If improper brand extension is used, the image information represented by the original strong brand will be weakened. For example, Xerox America acquired a computer company and renamed it "Xerox Information System". However, "Xerox" means copier in customers' minds, and they don't accept Xerox computers that can't be copied. As a result, Xerox America lost $84 million.
2, there is a consumer psychology. The process of a brand's success is the process of consumers' specific psychological positioning of the brand's specific functions, quality and other characteristics shaped by enterprises. When enterprises extend their strong brands to products that are incompatible or irrelevant to the original market, there will be a psychological orientation of consumers. This kind of improper brand extension, not only has no effect, but also affects the specific psychological positioning of the original strong brand in the minds of consumers.
3. It is easy to form a seesaw phenomenon. When a name represents two or more different products, it will inevitably lead to consumers' fuzzy cognition of the products. When the products with extended brands are in an absolute advantage in the market competition, consumers will shift the psychological orientation of the original strong brands to the extended brands. In this way, the advantages of the original strong brand are invisibly weakened. This change in the competitive situation between the original strong brand and the extended brand is the "seesaw" phenomenon.
4. Zhu Lian effect. If the strong brand name is crowned on other products, if different products differ greatly in quality and grade, it will impact the original strong brand products and extended brand products, which will not only damage the extended products, but also implicate the original strong brands. When high-grade product brands are used in low-grade products, it may have disastrous consequences. American "Parker" pen is famous all over the world for its high quality and high price, and is known as the "king of pens". However, in order to expand sales, the general manager of the company decided to enter the low-grade pen market and use the "Parker" brand in the low-grade pen with a price of only $3. As a result, its image and reputation were greatly affected. Not only did it not stand in the low-grade pen market, but the high-grade market was also taken away by competitors.
5, dilute the brand characteristics. When a brand is successful in the market, it has a special image positioning in the minds of consumers, and consumers' attention is also focused on the functions, quality and other characteristics of the product. If enterprises use the same brand to launch similar products with similar functions and quality, consumers will be confused and the brand characteristics will be diluted.
6. Differentiation between product positioning and brand positioning. In brand extension, if the consistency of core values in brand positioning is destroyed, the market influence of the brand will be reduced. If the brand extension is not consistent with the brand positioning, it will shake people's thinking and emotional stereotypes about the brand. As this situation continues, it will naturally convey chaotic information that is not conducive to the brand to the public, and accordingly the market influence of the brand will be reduced, which will endanger the market position of the brand in serious cases.
7. Inconsistency of brand extension. Brand extension should be avoided as far as possible between products with large category differences; When extending between similar products, we should also pay attention to the market and social positioning of the brand. If the brand has strong market influence and the brand and the product have been equated, we should carefully consider extending the brand to other similar products.
8. When the brand is extended, it is not allowed to grasp the appropriateness of product types and quantities. Although the extended product may maintain the consistency with the brand core value, if we don't pay attention to the limitation of quantity, it may also affect the market influence of the brand, because the products covered by the brand are too wide, which will cause inconvenience in management, and any product problem will lead to damage to the brand image; Moreover, different products still have certain differences in positioning, so it will more or less dilute or affect people's thinking and emotional stereotypes about the brand. The establishment of a brand stereotype is still related to the original product, and too many kinds of products often dilute this stereotype. Therefore, brand extension should pay attention to the control of product types and quantities; The width of brand expansion must be within our capabilities.
Fourth, we should pay attention to the timing of brand extension.
Successful brand extension often depends on the timing of extension. In the following cases, brand extension can be considered:
1. When the extended product is similar to the alliance product;
2. When "multi-brand" is very important, when the consumption behavior of switching between different brands is inevitable, it is suitable to provide several brands with different brand values;
3. When multiple brands are obviously needed by consumers, when consumers want to feel a variety of different choices, it is not suitable for a brand to produce only one category.
when the above conditions are met, enterprises should consider how to extend their brands and develop this brand family series.
it is undeniable that successful brand extension can enlarge and increase the brand, and then make full use of brand assets, and add value in the use, but after all, brand extension has many traps and potential risks. Therefore, enterprises must examine brand extension from the strategic height of long-term development, and must not blindly expand successful brands on new products just for immediate interests, regardless of the opportunity, extension conditions and feasibility. When making brand extension decisions, we should rationally weigh the pros and cons, adopt scientific, reasonable and effective methods to avoid risks and ensure the success of brand extension.