Brand extension strategies

BY ARA Retail Institute
26 February 2019

As the online presence of any retail brand matures attention shifts to methods of expanding and deepening customer connections and strengthening communications that reflect the core brand.

If not growing, brands begin to die so retailers need to let the idea of resting on their laurels once they achieve some level of success go, and consider ways in which to foster growth.

To learn how to steer your success as a team leader, the ARA Retail Institute runs multiple workshops and courses on leadership and team culture. Join the ARA Retail Institute and complete the Diploma of Retail Merchandise Management.

Extending brand value

Extending brand value or brand extensions is an umbrella term for strategies that focus upon maximising the brand reach in a given context.

Extensions to brands may be planned as proactive strategic activity or triggered by customer behaviours. Customer needs and preferences may change, and brands need to move their value propositions to reflect these changes. Alternatively, customers may be exiting brand relationships and this necessitates major changes to channels or market position of products and companies.

Methods of brand extension include:

  • Re-positioning same product in a different form
  • Re-positioning different product in the same form
  • New distributor, franchise or relationships
  • Brand name or design change
  • Price changes
  • Renewed features such as distinctive change like taste, ingredients, components
  • Associations such as changing product companions, brand family or multi-branded relationships

Extending brands or revising their features requires a formal decision-making process. Some standard considerations prior to extending a brand would include the following:

  • Market testing- some brand enhancements are suitable for market testing and this will reduce the costs involved and also the risk.
  • Identify who the key people are with regard to implementing the improvements- find out who needs to be involved and whose support is required.
  • Decide what resources you need to implement the extension or revision.
  • Work out how much time you need to practically implement and test the brand or the extension
  • Work out how you will deal with failure and how you will prepare others for failure
  • ARA-brand-extension-strategyPotential immediate advantages or extending a brand over developing a new one can include:
    • Instant recognition
    • Lower marketing costs
    • Reduction in negative customer attitudes based on concerns over matters such as: confusion over proposition, risk, reliability
    • Proven order fulfilment, associations with other products
    • Enhancement of brand equity with the core brand
    • Reinforcement of core image and meaning behind brand
    • Alignment of promotions and advertising

Increasing brand visibility

To help increase brand visibility online, companies market their products and services and manage their online standing through social networks. Social network service marketing is a growing trend and a powerful medium, which can be successfully used as an online marketing tool.

A sound planned profile in a social network service has the ability to persuade readers that in turn helps in promotion. An undeniable profile on a popular social network service also has the ability to act as a hub of information about different items such as reputation, testimonials and reviews of your products or of your company. Hence brand visibility is helpful in growing sales for online or multichannel retail business.

Brand visibility must make sure that:

  • Is it unique/distinctive vs. competitors
  • Is it significant and encouraging to the niche market
  • Is it appropriate to all major geographic markets and businesses
  • Is the proposition validated with unique, appropriate and original products
  • Is it sustainable- can it be delivered constantly across all points of contact with the consumer
  • Is it helpful for organisation to achieve its financial goals

Understanding the way in which consumers evaluate whether or not a brand extension fits or is consistent with the core brand is central to the success of the brand extension. But the method by which customers perceive how well brand extensions fit is open poorly understood.

When considering brand extension fit, there are four underlying considerations that customers evaluate individually, to formulate an overall judgement as to whether or not the brand extension fits with or authentically reflects the core brand.

  • Relevance

The extent to which the core brand attributes are relevant or important to the brand extension category. For example: (1) the core brand attributes of Starbucks are clearly relevant to the sale of coffee grinders, but not relevant to the sale of other kitchen equipment such as microwaves or fridges, (2) the core brand attributes of Coca Cola are relevant to the sale of other soft drinks and sodas but not the sale of fruit juice such as orange juice.

  • Recognition

The extent to which consumers understand the reasoning behind why the brand is conducting the brand extension as well as the logic of the brand extension. For example: the core brand attributes of McDonalds make it easy to understand/logical in the eyes of consumers for McDonalds to open a chain of grocery stores.

  • Credibility

The extent to which the core brand has attributes credible and acceptable to conduct and sell the brand extension. For example: the core brand attributes of Sony make it credible and acceptable for Sony to extend the Sony brand into laptops and digital cameras however they are not credible and acceptable to extend the Sony brand into sports clothing.

  • Transfer

The perceived ability of a brand to transfer their skills and experience to the brand extension. For example: the skills and experience of British Airways are transferable into other areas of air transportation such as domestic flights and low cost flights, however British Airways’ skills and experience is not transferable into coach transportation

The most crucial component of consumer’s brand extension fit judgements is the relevance construct. However, all the constructs are important and consumers must perceive all constructs to some degree to perceive a brand extension to fit.

About ARA Retail Institute

ARA Retail Institute is Australia’s leading retail training provider for both accredited and non-accredited learning programs. For more information, please visit: www.retailinstitute.org.au

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ABOUT THE AUTHOR

ARA Retail Institute

ARA Retail Institute is Australia’s leading retail training provider for both accredited and non-accredited learning programs. The ARA Retail Institute is a Government Registered Training Organisation (RTO) making it fully qualified to offer retail education programs to ARA members and broader retail industry.

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