Brand Extensions: Pros & Cons

Respond to the following:

Brand extension can endanger brands because their lack of expertise in one product or service. A company can be good at some things or focus on one thing and be great and build a large loyal customer base. For example ,Nike is known for its great shoes but if Nike would expand to say something like a sports drink and athletes found it to be not tasty, then that can affect their brand name and even transfer to lose customers that also purchased shoes. Brand knowledge dictates the future direction for a brand to expand (Kotler & Keller, 2012). Brands develop a promise to customers through deliverance of a great product or service and adding another product will confuse consumers.

The BRANDZ model discusses presence as being a key factor for consumers. Presence is the active familiarity based on past trial, saliency, or knowledge of a product (Kotler & Keller, 2012). Top brands have established to consumers that they are the best at what they do, so if a brand was to tap into a new market that another brand loyal customers, there is a high risk of lost within the first couple of years just in marketing alone. The risk of extending a brand into a new market must be a detailed strategic plan and can cost a company millions of dollars before the product even hits the shelves (Kotler & Keller, 2012). Brand extension can endanger your brand; stick to what you know and improve on that.