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QUIZ # 03
Submit To:

Sir M. Sohaib Anwar

Submitted By:

Abdul Rehman

Reg#: 19-arid-3635

BBA (hons) 3rd semester

Subject:

Intro to Marketing Management

TOPIC
Qs No.1

What is BRAND EXTENSION and write down The 3 choices firms have while
devising a branding strategy.

A brand extension is when a company uses one of its established brand

names on a new product or new product category. It's sometimes known as brand
stretching. The strategy behind a brand extension is to use the company's already
established brand equity to help it launch its newest product. The company relies on the
brand loyalty of its current customers, which it hopes will make them more receptive to new
offerings from the same brand. If successful, a brand extension can help a company reach
new demographics, expand its customer base, increase sales, and boost overall profit
margins.
  Brand extension is the introduction of a new product that relies on the name and
reputation of an established product.
 Brand extension works when the original and new products share a common quality
or characteristic that the consumer can immediately identify.
 Brand extension fails when the new product is unrelated to the original, is seen as a
mismatch, or even creates a negative associate

The firm has 3 choices while devising a branding strategy:

1. Develop new brand elements for new product

2. Apply some of its existing brand elements
3. Use a combination for existing and new brand elements

1) Devising a Branding Strategy # 1: Creating a Sub-Brand

While devising a branding strategy, marketers might choose to

create altogether a new brand for the product. At the same time, marketers may combine
the new brand with an already established brand. This helps build a quick association of the
new brand and also helps the new brand to en-cash the equity built by an already
established existing brand. The existing brand which gives birth to the Sub-Brand is the
Parent Brand.

E.g. Hershey’s Kisses Candy. Here Kisses Candy in itself is as good as a new brand but has
associations with an already established existing brand in Hershey’s.

2) Devising a Branding Strategy # 2: Brand Extension

When the firm uses an established brand to introduce a new product,

the strategy is referred to as Brand Extension. Brand Extension falls into two categories –
Line extension OR Category extension. The existing brand which gives birth to the Line OR
Category Extension is the Parent Brand.

a) Line Extension
 Line extension refers to the parent brand covering a new product within the
same product category. The new product in this can be a new flavor, a new color or even a
new size packet. Importantly, the new product should be in the same product category.

E.g. Nestle Maggi original product has seen many line extensions. The new products added
to the line fall into the same product category and fulfil the same need of the customer with
some variations. Below is how the different variants look like in India as on date.

Nestle Maggi - Example of Line Extension

b) Category Extension

When the parent brand is used to enter a new product category altogether, it is
referred to as a Category Extension.

Example:

Similarly, brands like Honda, BMW are in both 4 and 2 wheeler mobility business
and carry the same brand in both the categories. A Brand Line refers to a range of the
original and all variants of the product.

A set of all Brand Lines is referred to as the Brand Mix (or Brand Assortment) offered by the
company. The brand mix/brand assortment comes into picture primarily because of catering
to needs to various channel partners. e.g. PepsiCo makes an entire range for the B2B
channel priced at a premium.

3) Devising a Branding Strategy # 3 A Licensed Product

A product whose brand name has been licensed to other
manufacturers to make the product. In this case, the owner of the brand gets paid a
license fee for using the brand. In turn, the brand owner
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