by
Rajiv Yajnik , Vice Pesident Fmcg & Sugar , EID Parry India Ltd
Brand and line extensions have become important means of growth for companies that have strong brand names. There may be instances where brand managers have to choose between brand and line extension as the primary form of growth for the brand. In order to be able to choose the better alternative, brand managers need guidelines which relate consumers perceptions of the brands, in the form of brand associations, to decisions on line or brand extension.
Benefits-
A line extension can reinvigorate a product line, bringing it back into the public awareness by drawing new customers and higher profits. A brand extension can increase profits by allowing manufacturers to tap into new markets and offer increased diversity in their inventory. Line extensions and brand extensions both allow companies to promote new products with reduced promotional costs because the new lines or brands benefit from being part of an established name.
Risks-
ny time a company introduces a new brand or line, the company name could become tarnished if the product proves to be an immense failure. Consumers might feel less inclined to support the company's new products in the future. So each new extension, in some way, carries the reputation of the entire company, and that can backfire. Extensions can also cause intra-firm competition, wherein conflict arises among different divisions of a company.
