Brand Extension-A double edged sword
Nabajyoti Choudhury

Brand is any name, term, sign, symbol or logo which is associated with a product or a service or a company, which in turn allows it to differentiate itself from its competitors. In the same line brand extension is a very important activity that any company emphasizes into.

Brand extension means when a company uses a same brand for launching its new products. The most fitting example substantiating the above statement is the ‘House of Tatas’. Tatas have used their heritage and brand value to launch new products and services in the market successfully over a period of time. The brand image of Tata is so strong that consumers take anything from the house of Tatas with a greater seriousness than that of its competitors. Thus, Tatas are being able to extend their operation successfully to various diversified fields from steel to tea and locomotives to software and many more.

The success of Tatas and some other companies in organizing its brand extensions, leads to a very interesting dilemma where a brand manager has to decide that whether the company should go for brand extension or go for a different brand for launching its new product.

Brand extensions are broadly categorized into related and unrelated areas with respect to a company’s domain of operation. Under ‘Related Brand Extension’ a company can either extends its brand based on ‘Image Related & Category Related’ to its existing line of products. For example if Lux extends its product line to skin care products it will be image related extension. Again extending to products like Lux Liquid soap, Lux Shampoo, etc are category related extension, which essentially performs similar function to the much known Parent Lux brand.

On the contrary unrelated brand extension means extending the brand name to launch a new product which does not belong to the main domain of operation of the company. For example Atul Shah whose brand name “ANCHOR” was more known for its electrical appliances, launched toothpaste with the same brand name and also pretty well it the market.

Thus, it becomes quite a decision for a brand manager to be made, whether the company should go for a same Brand for launching its new products or go for a new brand name instead. Any ways the theoretical facts hardly gives any indication or a fixed formula, which would ensure success. Like ‘Dettol’ which is known for its antiseptic lotion did not do well when it launched its toothpaste. Also a powerful brand like ‘Nirma’ got a beating when it launched a bathing Soap. On the contrary the  brand like ‘Wills’ which extended from tobacco to become Dressmakers made success all the way.

As a result of which one can not be sure whether a brand extended to unrelated areas would ensure success or not. For example if Maruti Udyog Ltd. comes up with ‘Papads’ or ‘Toothpaste’ which is completely unrelated to its operations, it leaves behind a great amount of apprehension whether it would do well with the market.

On the contrary if Tata comes up with similar unrelated products, it would definitely gets a better head start. This definitely because of the heritage that few brands like ‘Tata, Reliance or AV Birla Group’ command in India.

In certain cases where the brand gets extended in unrelated areas and does not do well, it is seen that the parent brand also gets beating. Thus, a Brand manager should be extra cautious in dealing with the brand image and its essence. Firstly, he should check whether the extension is “FIT” to the company’s mission statement.

Secondly, before extending a brand it has to be analyzed what edge it gives the company over its competitors and lastly the consumers value perception for the brand should also be analyzed before indulging off in to a Brand Extension.

Authors: 
NABAJYOTI CHOUDHURY
FINAL YEAR PGDBA
M.S.RAMAIAH INSTITUTE OF MANAGEMEWNT
166/c/459, Lake Gardens, Kolkata--700045
Phone:033-24172034, Mobile:080-36799009

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