Are brand extensions good or bad? How can companies improve its market share by brand extensions?

This was a question posted on LinkedIn. Check out my answer on this –

Companies tend to leverage strong brand awareness by extending it to product variants in the same product line (e.g.:- a different size, flavor or color) or different product categories, as long as the essence of the brand you are leveraging fits the new product.

So when adding new products to your portfolio of offerings, you will need to consider both the fit of the product and the brand. The brand extension should be logical from a customer perspective

In technology products you will need to consider that the promise of quality carries over to your brand extension. You might want to consider how brand extensions work with other products in the portfolio or other products marketed by the company.

The product’s brand is not established before the first purchase of the new product. Thus the brand concept extended well can provide immediate customer attention, help associate existing brand strengths to the new product and eventually help the new product to be sold briskly, & thus gaining market share.

There are certain risks associated with brand extensions. The new product may be perceived significantly different from the original product and would eventually cause confusion in the market place. If the new product fails, there could be negative impact on to the core brand.

So before you develop a brand extension, you might want to consider how far a brand can be extended before it dilutes its identity with customers. What market segment are you targeting the brand extension to? You might want to consider a flanker branding strategy instead. If there are significantly different value propositions, you might want to use a separate branding.

Are brand extensions good or bad? How can companies improve its market share by brand extensions?

GOOG Quote

I came across a very interesting quote by Eric Schmidt the CEO of Google.

SCHMIDT: The company isn’t run for the long-term value of our shareholders
but for the long-term value of our end users.

How many times have we heard anyone in corporate world say this? Don’t search for the answer.

It is Zero.

A lot of companies focus on their customers, but when it comes to defining key success
metric, almost everyone I have heard, talks about shareholder return and value.

Focusing on your customers, and delivering long term value to your customers
as opposed to focusing on shareholder return,  this is a mantra that separate’s
a good company from a great one.

Google when it started out, did not really have a business model. But they focussed on
delivering a great search experience for their users and this eventually helped the
company build themselves into what it is today. This is the key reason that they are
a great company.

GOOG Quote