Brand extension on the enterprise Strategy

[Abstract] With the increasingly competitive market, the brand has become an important means of competition. The brand is not just assets, is an inexhaustible treasure. Therefore, successful companies are looking to brand extension to tap the potential advantages of the brand, that is the existing brand name to promote new products. but brand extension is a complex dual nature, in helping businesses to success, but also contains a huge risk. Therefore, the enterprises in the brand extension strategy implementation, you must have a comprehensive understanding of its correct understanding of the advantages of brand extension strategies and traps, then will it be possible to make the right decisions, so companies in an invincible position in the development and growth.

[Keywords:] advantage of the risk of brand extension proposals

• Philip Kotler believes that brand extension is "the company decided to use the existing brand name to launch a new product projects." Brand Management International Herald • Ryan • Kevin Keller of the brand extension is defined as: "a company Using an established brand to launch a new product. "brand extension can be broadly divided into two categories: First, the product line extension, namely the use of the parent brand in the same product line of new products under the project, with different ingredients, different tastes, different forms and sizes, different use. Second is the extension of product range, namely the use of different types belonging to the parent brand launch of new products.

First, the advantages of brand extension strategies
Has a good reputation for a higher level of service and strong technical strength, allowing consumers to trust the enterprise, timely and appropriate use of brand extension strategies, new products can make the consumer awareness as soon as possible to reduce the cost of business expansion, diversify risk, consolidate and expand the advantages of the original brand, enhance their core competitiveness. Specifically, the brand extension has the following advantages.

1. Is conducive to market new products quickly recognized
New products have been dubbed the consumers are already familiar with the old brand, with the prestige of the original brand to enter the market, can induce consumers to transfer the goodwill of the old products to new products, likely to create "Aiwujiwu" mentality, that is, Consumer learning theory called "stimulus generalization" effect. it can significantly reduce time to market of new products "emotional barrier", so that awareness of new products quickly and more easily be accepted, thus facilitating the entry of new products as soon as possible market. new products to enable enterprises do not have to start from scratch to build brand awareness and easier to market competition.

2. To reduce the cost of campaign, help to reduce the cost of new products, promotions
A a new product into the market in the short term in order to occupy a certain market share must be carried out large-scale advertising and brand extension, because the original brand to have a high awareness and reputation, so companies can save advertising costs, reduce customer search costs. use of brand extension that Marketing costs can be significantly reduced: on the one hand, the original accumulation of advertising effects on brand extension products subsequent ripple effect exists; the other hand, under the umbrella brand, the core means to advertise the brand to all products with the brand companies have carried out propaganda.

3. Is conducive to a rich brand image, increase market share, distributed enterprise risk, so that the healthy development of enterprises
With the intensification of market competition and increasing Marketing costs, market introduction of new products have been faced with increasing risk. Effective way to solve such problems is one of the original value of the strong brand equity, through the brand extension to the new products, reduce barriers to market new products and risks, and in the process of brand extension business different types of commodities, but also enable enterprises to spread the risk. the same brand new products for existing brands bring a sense of freshness and growth, so that the meaning inherent in the brand more standardized, rich, and consumers become more complete selection of products, and expand market share.

4. Helps to strengthen the brand and increase brand value of the intangible economy
Use of brand extension success of new products to provide customers with more choice and meet the diverse needs of customers, so that the majority of customers recognize the brand during the passage of time has been constant innovation, and strengthen the customer a good brand awareness innovative content of the formation of brand image, improve customer loyalty, which in turn further enhance brand awareness and reputation, and enhance the overall competitiveness of the brand, continue to add value to the brand value of the assets to form a strong image of corporate strength, enhance brand influence.

Second, the risk of brand extension
Marketing experts Ai • Reese once said: "branding is the root rubber band, if you're stretching a species, it more of a weakness." Brand extension is an integrated management process is a delicate and complex work step by step, blind brand extension will have the risk can not be ignored, so the process of brand extension, you must pay attention to its risks. the risks of brand extension is mainly reflected in the following areas.

1. Weaken the original brand image, brand positioning dilution
The establishment of a brand requires a long, hard work, in order to accurately positioning the brand image is rooted in the minds of consumers. When people have the brand's "definition", the will be on this scale to evaluate the All products brand. Once an extension of product quality problems or fail to meet consumer expectations of the brand, it will directly affect the minds of consumers the original brand image and status. This disadvantage is mainly reflected in the original brand to the high a market or markets with low-level extension and the formation of errors.

2. Dilute the original brand identity
Would dilute the original brand extension improper personal brand. Consumers often remember the original brand clear, explicit understanding that once the improper extension of the brand, they'll destroy the concept of consumer awareness of core brands, consumers loss of sense of loyalty, so that the competitors take advantage of. blind extension of the brand, ignoring the original brand extension brand and the close relationship between personality orientation is bound to have a negative effect of brand extension. Pierre Cardin • have all contented to imagine "to do with the Pierre Cardin brand • Everything belongs to me, I can sleep • Pierre Cardin bed, sitting Pierre Cardin • chair dining at Pierre Cardin • dine with my lighting, to the theater to the Exhibition will visit, you can not see my brand empire. "So Pierre Cardin • brand extension to be able to access all areas, from men's, women's, shoes, socks, leather goods, shirts, until the chocolate, carpets, furniture, restaurants, etc. . resulting in inconsistent brand image, brand personality had lost 70 .20 century, dim stars, it is difficult to enter the high-end brands.

Links to Research Papers Download http://www.hi138.com 3. Produce seesaw effect
In the brand extension strategy, after a brand in a dominant position to extend that advantage to another area of products, such as the rise of another brand, the original brand's strengths to be consolidated and protected if not, it is possible loss. This is because once the brand extension, the original brand's unique expertise began with the multiple meanings meaningful, the concept of brand blurred, thus resulting in reduced influence, combined with the role of competitors, consumers become loyal to the original free consumers, a brand extension of the depreciation of the phenomenon.

4. Lead to consumer psychology of conflict
If the brand extension to the market with incompatible or nothing to do with the original product, brand recognition will be weakened, and even the consumers of psychological conflict. American Scott produced Kleenex brand toilet paper, toilet paper was originally on the market the number one brand, but with the emergence of Kleenex napkins, consumer psychology a subtle change. In this regard, an expert in American advertising humor Ai • Rees commented: "Kleenex Kleenex napkins and toilet paper, find out which brand was planning for the nose? "Kleenex toilet paper the results of the first card location soon toilet paper P & G's Charmin brand replaced.

5. Implicate effect
Concentration in several products under the same brand may be due to the failure of a product business reputation spread to other products, which led to the public a total negation of the entire brand, is the so-called "gate of fire, adverse impacts to fish", which is brand extension of the "implicate effect."
Third, the enterprises to implement the recommendations of the brand extension strategy
1. Enhance the brand connotations, from brand to brand value
If the brand is equal to a specific product category, although you can bring the brand a competitive advantage, but to brand extension to other products will be very difficult. For example, Tsingtao Brewery Xi'an in the first merger of two beer companies and Yangzhou After the two companies have produced this beer called "Qingdao Beer", but poor sales because consumers believe that only the production of beer with Laoshan mineral water is the "Qingdao Beer." And if a brand represents is a business philosophy, or the interests of consumers, a commitment to, its ability to extend relatively strong. such as Haier Group, through the "Haier in China", "Haier sincere forever", etc., so that the "Haier" from the refrigerator into the representative as a business philosophy to improve the "Haier" brand extension capabilities.

2. Maintain the extension products consistent with the original core values of the brand
Core values are the essence of the brand, only to keep the brand extension product and the core values of the original agreement, extending the original brand product in order to maximize the impact of the use will not adversely affect the original brand.

3. Using sub-brand
Sub-brand enterprises in the production of multiple products is the case, a unified name for all products labeled the same time, according to the different characteristics of each product to take on an appropriately to its name, this benefit is "a borrowed boat," either to the main brand equity loan, have the parent brand's image and influence, but also by the sub-brand to highlight the characteristics of a single product differentiation, while a certain extent, reduce or avoid the "implicate effect" of risk. the sub-brands limited to, consumer products, brand awareness is not the type of over-reliance on the primary meaning, it can be avoided because of poor sub-brand image brand image of the main causes of erosion phenomenon.

4. According to the actual needs of companies to decide whether the brand extension
(1) take the time limits, to guard against premature extension. The purpose of brand extension is to help the brand's reputation and influence have been introducing new products, so the premise is the brand extension of the brand must be a strong brand, a high brand loyalty. If the business blindly instant success, "East West did not want bright light" - the brand image has not been fully established an extension of time to indulge in, the result of brand equity must be the thin market for new products can not resist the tremendous risk, an extension of no effect of production, leading products reputation.

(2) expressly limits the scope of, and guard against over-extension. Brand extension on the one hand to maintain the positioning of new products and original product line, so the target market, consumer groups, quality grades, and service system so that the same strain, maintain and strengthen the original brand positioning ; the other hand, new products and to maintain the brand's core value of the original agreement, or enrich, and deepen the core brand image, or highlighting, publicity brand personality, to avoid blindly follow, strayed into the extension of the trap. brand extension is not easily involved with leading products unrelated product areas or industry span a large diversity of non-related industries under.

In short, the brand extension as a double-edged sword, used properly, can take the old and new products lift the reputation of the brand and expand market coverage and market demand for different Marketing strategies to implement differentiated, decentralized business risk, improve corporate image, a prosperity; used properly, is easy to fall into the trap of extension, undermine the brand's image, causing direct Economic losses to the enterprise, so that the whole brand strategy a loss for both. Therefore, we should weigh, size up the situation, the extension of the brand many aspects to consider when, and to develop feasible options, careful and reasonable extension of boundaries to grasp in order to avoid risks, to defeat the enemy.


References:
[1] Philip Kotler •. Marketing Management [M]. Renmin University of China Press, 2007.

[2] Xia Jiansheng, Qin Hui. A number of brand extension strategies [J]. Economic Issues, 2006, (03).

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