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Considerations for Brand Extension in New Product Categories

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You want to introduce a new product. You already have a successful brand in a different product category than the new product you plan to introduce. You are contemplating using the same brand name (brand extension) for the new product. What factors should you consider before making this decision?

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Solution Summary

This solution explains about the various factors which need to be considered by a company while going for a brand extension into a new product categories which include similarity with the product category, target market, brand reputation, cost efficiency etc.

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The following factors need to be considered before going for brand extension into a new product category:
1. Similarity of the Product Category - The company has to identify the product category in which the brand extension has to be done. The higher the similarity of new product category, the higher there will be chances of a successful brand extension. This is supported by a research conducted by Helm, Chernatony and Iversen (2001). For example, Starbucks is associated with coffee and therefore, the brand could be extended to tea and fruit juices but the same brand must not be extended to a shoe polish.

2. Brand Reputation - While extending to a new product category, the reputation of a brand should also be taken into consideration. If the reputation of the brand is good in the market then it could be extended to the new product category but if the brand has a poor reputation then it will not be viable to extend the brand to the new product category. This is also supported by a research conducted by ...

Solution provided by:
Himanshu Mahobia, MBA
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  • BCom, M.D.S University, Ajmer
  • MBA, M.D.S University, Ajmer
  • PhD, Suresh Gyan Vihar University, Jaipur
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