Brand Stretching

Brand extension or brand stretching is a marketing strategy in which a firm marketing a product with a well-developed image uses the same brand name in a different product category. The new product is called a spin-off. Organizations use this strategy to increase and leverage brand equity (definition: the net worth and long-term sustainability just from the renowned name). An example of a brand extension is Jello-gelatin
creating Jello pudding pops. It increases awareness of the brand name
and increases profitability from offerings in more than one product

A brand’s “extendibility” depends on how strong consumer’s associations are to the brand’s values and goals. Ralph Lauren’s Polo
brand successfully extended from clothing to home furnishings such as
bedding and towels. Both clothing and bedding are made of linen and fulfill a similar consumer function of comfort and hominess. Arm & Hammer leveraged its brand equity from basic baking soda
into the oral care and laundry care categories. By emphasizing its key
attributes, the cleaning and deodorizing properties of its core product,
Arm & Hammer was able to leverage those attributes into new
categories with success. Another example is Virgin Group,
which was initially a record label that has extended its brand
successfully many times; from transportation (aeroplanes, trains) to
games stores and video stores such a Virgin Megastores.

In the
1990s, 81% of new products used brand extension to introduce new brands
and to create sales. Launching a new product, is not only time consuming
but also needs a big budget to create awareness and to promote a
product’s benefits.Brand extension is one of the new product
development strategies which can reduce financial risk by using the
parent brand name to enhance consumers’ perception due to the core brand

While there
can be significant benefits in brand extension strategies, there can
also be significant risks, resulting in a diluted or severely damaged
brand image. Poor choices for brand extension may dilute and deteriorate
the core brand and damage the brand equity. Most of the literature
focuses on the consumer evaluation and positive impact on parent brand.
In practical cases, the failures of brand extension are at higher rate
than the successes. Some studies show that negative impact may dilute
brand image and equity. In spite of the positive impact of brand
extension, negative association and wrong communication strategy do harm
to the parent brand even brand family.

Product extensions
are versions of the same parent product that serve a segment of the
target market and increase the variety of an offering. An example of a
product extension is Coke vs. Diet Coke in same product category of soft drinks.
This tactic is undertaken due to the brand loyalty and brand awareness
they enjoy consumers are more likely to buy a new product that has a
tried and trusted brand name on it. This means the market is catered for
as they are receiving a product from a brand they trust and Coca Cola
is catered for as they can increase their product portfolio and they
have a larger hold over the market in which they are performing in.
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