New Product Launch: Brand Extension vs. New Brand Development - Essay Example

INTRODUCTION This report provides an insightful study of the two strategies for launching a product successfully into the market that are known to be as new brand development and brand extension strategies. The risks and factors that are associated with a new product introduction lead to the significance of the branding strategies. The study has been designed to illuminate and emphasise the importance of brand extension strategy in launching new products as well as for the further advancement of the company’s operations. In other words, this report supports the fact that the brand extension strategy is the most feasible for a company with an existing brand name to launch a new product in the market. NEW PRODUCT LAUNCH— BRAND EXTENSION VERSUS NEW BRAND DEVELOPMENT Launching of new products is undoubtedly one of the most important events for a company. Bayus, Erickson, and Jacobson (2003) say that the launch of a fresh product drives crucial marketing activities and some giant companies like Gillette, P&G and Microsoft regard new product launch as a key to the expansion of the company’s operations. Therefore, it reflects how important it is for a company to develop and adopt suitable marketing strategies in the pursuit of a new product launch. As a point of fact, introducing an unknown product in the market is a complete risk for a company, thus it becomes imperative for marketers to calculate their risks before actually taking them. There happen to be two most significant approaches taken up by any company to make its new product a market success, one is developing an entirely new brand and the other is opting a brand extension strategy. When a new and unknown product is launched into the market, consumers look at it as a stranger and do no tend to trust it at first when they come across it in the market. Furthermore, in the presence of existing competitive brands for the same product make it pretty difficult for the marketers to drive consumer attention on a new product. Fox et al. (2001) and Aaker (1990) illustrate that brand extension refers to introduction of a new product into the market with the name of an existing brand name. They further state that it is the preferable way for a company to introduce a new product in the market with the same name that is popular among the consumers. Therefore, in order to opt a brand extension strategy, a company needs to have an already established ‘brand name’ associated with an existing product doing a successful business in the market. This implies that a company that has already been doing business with an existing product has to choose between the two marketing strategies when the time of new product launch comes its way. Keller & Sood (2003) reflect that if a company already has a strong brand name, it can efficaciously save the costs on promotion and consumer awareness in launching a new product. This implies that if a company adopts brand extension strategy i.e., launch its new product under the name of an existing stronger brand, it can save a lot of pennies that are supposed to be spent on the development of a new brand name. For instance, if a company opts for the development of a new brand name and introduces its product under an entirely unfamiliar name in the market, consumers are likely to be unacquainted with the brand name at first. Therefore, it would call for subsequent brand awareness and promotional campaigns on the part of the company in order to become known in the market. Moreover there is a kind of brand loyal consumers who would be indeed reluctant to go for a new product in the presence of their beloved brands. On the contrary, a company that prefers a brand extension strategy over developing a unique brand name for the new product’s success, it is likely to face less resistance on the part of the consumers due to unfamiliarity of the name. The consumers that have been using an old brand by the same company are likely to be more convenient in using another product with the same brand name. Furthermore, the consumers that satisfied with the existing brand and the brand is popular among them, using the same name for another product will actually act as a catalyst in the success of that new product. Aaker (1990) suggest that brand extensions are regarded as feasible due to their ability to drive the popularity and acceptability of the existing brand to the newer one. Hartley (1998) explains the importance of extension in a brand’s existence that it bears a positive impact on a company’s product by symbolising expansion, growth, versatility and market enhancement, provided that a company adopts all necessary strategies to turn an extension into a success. It illustrates that the companies going for brand extension strategies become known in a vast bracket of consumers. When a company launches a product with an existing brand name, leading to the enhancement of market activities familiarise an increased number of consumers with the company. Dickson (1994) confirms this point by adding that an already established brand name can help the company to attract consumers’ attention to a new product, which can add to the existing portfolio of business success. Keller (1998) comments that brand extensions are advantageous to the companies in terms of building up their existing customer base, market operations and above all their potency. CONCLUSION Brand extensions save the company not only from the costs incurred on developing new brand names and familiarising the targeted consumers with the brand name, but also from the risks that are associated with the launch of a new product. An already established brand name popular among the consumers is more likely to drive consumer attention than the newly developed brand name that is completely unknown and strange to them. It is therefore evident that opting a brand extension strategy can prove to be the most cost-effective and profitable strategy for a company when it comes to introducing a new product in the market if it already has a well-known product with a popular brand name that is recognised and identified by its consumers. References Books Dickson, P. R. (1994), “ Marketing Management,” The Dryden Press, Florida. Hartley, R. (1998), “Marketing Mistake”, London: Wiley Keller, K.L. (1998), “Strategic Brand Management: Building, Measuring And Managing Brand Equity”, Upper Saddle River, NJ: Prentice Hall Journals Aaker, D. A., (1990), “Brand Extensions. The Good, the Bad, and the Ugly”, Sloan Management Review 31 Bayus, Barry L., Gary Erickson, and Robert Jacobson (2003), “The Financial Rewards of New Product Introductions in the Personal Computer Industry,” Management Science, 49 (2) Fox, R.J., Reddy, S.K., Swaminathan, V. (2001), “The Impact of Brand Extension Introduction on Choice”, Journal of Marketing, 65 (4) Keller, K.L., Sood, S. (2003), “Brand Equity Dilution”, MIT Sloan Management Review, 45 (1) Read More