Brand Expansions: Wrong or good?

http://www.signaturestrategies.com/
Brand Expansions: Wrong or good?
Brand name expansions are a well-liked means of introducing brand-new items to the industry They drop under the "One brand name all items" kind of brand name approaches. In a regular brand name expansion situation, a well established brand label is put on a brand-new item in a category either related or unrelated, in order to maximize the equity of the center brand label. Customer acquaintance with the alreadying existing center brand label aids brand-new item entry in to the industry, and helps the brand name expansion to catch brand-new market sections quickly.

One reason for brand name expansions is that umbrella branding gives economies of scale, as it saves money on the costs of making a brand-new brand name. Brand names have an intrinsic worth (status or otherwise) and are consequently like a "public good" in the feeling that the more items are offered under the same brand name the greater the total worth made.

A various standpoint on brand name expansions is that, in a globe where customers are unclear about item features (due to upright or straight distinction), brand names may play an informational part. This outcome extends the popular thought that brand name expansions and umbrella branding are just effective if there is a good fit in between the various items under the same umbrella.

There's one additional issue: cannibalzation of the mom brand name. In this situation, customers of the mom brand name change to the more recent expansion brand names so that there is no real development in the umbrella brand name. Reis and Trout clarify the weak points of brand name expansions in their lead-in book, Positioning: the Battle for Your Thoughts.