Advantages and Cautions of Brand Extensions

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Genevieve Northup
Editor, Germany

Advantages and Cautions of Brand Extensions

A brand extension is a branding technique that relies on an established umbrella brand to bring a new product to market (Kotler & Keller, 2009, p. 139).
These are the main advantages of brand extensions:
  1. INCREASE THE LIKELIHOOD OF NEW PRODUCT SUCCESS. Target markets and retailers are likely already familiar with the company and its benefits.
  2. REDUCE COSTS OF PRODUCT INTRODUCTION. Less time and money is needed to bring a product to market because slogans, artwork, packaging and other branding elements have already been established
  3. CAN INCREASE MARKET SHARE. Brand extensions may clarify benefits of brands to consumers, reach previously untapped target markets, and “renew interest” in the brand’s offerings
The main disadvantage of brand extensions:
The greatest concern when using a brand extension is that the umbrella brand is tarnished through “brand dissolution”, which occurs when the public no longer identifies a brand with key products (Kotler & Keller, 2009, p. 139). This occurs when a company overuses an umbrella brand for a product that is not sufficiently similar to other offerings or is not unique from the competition. As an example, the Porsche brand’s value of luxury, high-quality automobile would be confused and possibly negated if Porsche introduced a no-frills car under the same brand.
Sources: Kotler, P. & Keller, K.L. (2009). A Framework for Marketing Management. Boston, MA: Pearson Learning Solutions.

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