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Line Extension

The document discusses the pros and cons of different product line strategies: 1. Product line extension allows companies to attract existing customers looking for variety, enhance customer satisfaction, gain more shelf space, and save on marketing costs for established brands. However, poorly researched extensions can backfire and cannibalize original product sales. 2. Brand extension makes new products easier to accept, increases brand image, and reduces costs. But extensions in unrelated categories risk damaging the original brand image if not carefully researched. 3. Maintaining multiple brands allows companies to target different customer segments but increases complexity and costs of management.

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29 views

Line Extension

The document discusses the pros and cons of different product line strategies: 1. Product line extension allows companies to attract existing customers looking for variety, enhance customer satisfaction, gain more shelf space, and save on marketing costs for established brands. However, poorly researched extensions can backfire and cannibalize original product sales. 2. Brand extension makes new products easier to accept, increases brand image, and reduces costs. But extensions in unrelated categories risk damaging the original brand image if not carefully researched. 3. Maintaining multiple brands allows companies to target different customer segments but increases complexity and costs of management.

Uploaded by

Quỳnh'ss Đắc'ss
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Line extension

Pros:

When the firm comes up with the business strategy of Product Line Extension, it attracts the same line
of the target audience who are looking out for a variety in the product category. The strategy elevates
the excellent levels of customer service and overall satisfaction.
With more number of products in a similar line and type, the brand gets more shelf space in the retail
stores. This enhances its market reach and market share, along with the benefit of brand
enhancement.
With the product brand already established in the market and the minds of the consumers, the firm
can save its marketing and promotional expenditure on the Product Line Extension of the same
category.
The firm earns a competitive advantage in the market against its contemporary brands as is able to
serve the consumers with a wide array of options. The options can range from flavors, shapes, sizes,
price, packaging, and much more.
With the strategy of Product Line Extension, the firm is able to cater to the different segments of the
customers that prefer the product in other variants such as shape, color, flavor, and more.

Cons:

Many a time if the firm is not well researched about the market dynamics and the evolving tastes of
the customers, the Product Line Extension can backfire and affect the sales and brand value of the
original product.
Quite a number of times the marketers go overboard on the front of marketing and promotional
expenditure with the Product Line Extension that adds to the overheads of the firm.
If the Product Line Extension if not very well received by the target audience, it affects the brand
loyalty and value of the original product.
Many a time, the unique and exclusive appeal and attributes of the original product are killed owing
to the number of options and alternatives available.
The competitors of the brand also pull up their socks and come up with the strategy of their Product
Line Extension in order to stay relevant in the market. And if the competitor’s products range better in
terms of features and attributes, it can affect the sales and profits of the firm.

Brand extension:

Pros

It makes acceptance of new product easy.


It increases brand image.
The risk perceived by the customers reduces.
The likelihood of gaining distribution and trial increases. An established brand name increases
consumer interest and willingness to try new product having the established brand name.
The efficiency of promotional expenditure increases. Advertising, selling and promotional costs are
reduced. There are economies of scale as advertising for core brand and its extension reinforces each
other.
Cost of developing new brand is saved.
Consumers can now seek for a variety.
There are packaging and labeling efficiencies.
The expense of introductory and follow up marketing programs is reduced.
There are feedback benefits to the parent brand and the organization.
The image of parent brand is enhanced.
It revives the brand.
It allows subsequent extension.
Brand meaning is clarified.
It increases market coverage as it brings new customers into brand franchise.
Customers associate original/core brand to new product, hence they also have quality associations.

Cons

Brand extension in unrelated markets may lead to loss of reliability if a brand name is extended too
far. An organization must research the product categories in which the established brand name will
work.
There is a risk that the new product may generate implications that damage the image of the
core/original brand.
There are chances of less awareness and trial because the management may not provide enough
investment for the introduction of new product assuming that the spin-off effects from the original
brand name will compensate.
If the brand extensions have no advantage over competitive brands in the new category, then it will
fail.

Multibrands

Pros:

Cons:

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