Brand Extension

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Brand Extensions are an important brand growth strategy

The popularity of ‘Brand extensions’ rose since 1990s, with the increase in competition and the high costs of developing new brands (Chernatony & McDonald, 2002). This concept has been derived by marketers to optimize sales and profits by launching new or modified products under the parent brand name. In definition ‘Brand extension’ is using the leverage of a well-known brand name in one category to launch a new product in a different category ( Is this a quotation? If so, you should have quotation marks) (Walsh, 2008) . For e.g. Giant retailers such as Sainsbury and Tesco is (are) now operating in the financial service sector. Another successful example is the Diet Coke. One of its strongest rivals, Pepsi had a diet drink since 1964. It was then Coke’s decision to risk brand equity under the Coca-Cola trademark and introduce the Diet Coke, which has been immensely successful.

Most businesses would define their primary capital as their brand (Jones and Morgan, 1994). A company such as Virgin is an example. Starting with an audio recoding mail order business to launching the airlines in 1980s (now with a revenue of 2.740bn), it is one of the boldest brand extensions in history. There were numerous speculations whether the Virgin brand risks diluting its brand value with so many products under its umbrella. However, its brand extension strategy proved to be a successful growth strategy. Another example of the growth strategy is, The Oprah Magazine. Launched in 2000, the magazine is now one of the best sellers in the US. It had extended the ‘O’ brand from TV to print. The success of the magazine was due to the mass popularity of the talk show host, Oprah Winfrey herself (which is the parent brand). The examples clearly show successfully extending brands helps building the corporate image and reducing the cost of brand building (Kumar, 2005). (Good examples)

Other advantages (Is this a heading?) are...
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