Brand extension

Essay by Sharp1University, Bachelor's January 2006

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Before discussing brand extension it is important to briefly look at branding and also define the word brand. A brand is a distinguishing name or symbol designed to, identify to origins of a good or services differentiate those goods or services from those of the competition and protect the consumer and producer from competitors who would attempt to provide products that appear to be identical. Branding is the process of creating an association between a symbol/object/emotion/perception and a product/company with the goal of driving loyalty and creating differentiation. For example, through product packaging and advertising, Coca Cola has created an association between many different objects and its brands. The hourglass shaped bottle, the red and white colours, and even the font of its logo together make Coca Cola distinctive from competitors. The product's past ability to satisfy consumer needs and its widespread distribution play an important role in consumption, however constant advertising has been successful in reinforcing past positive associations between the brand and consumers (Assael,1998).

In addition to recognition, branding may consist of building emotional responses (Volvo with a feeling of safety) or cultural responses (Mountain Dew with youth and adventure). As consumers are bombarded with a variety of products to meet the same need, branding provides a way for consumers to reduce their decision making to consider only those products that they feel are relevant to them or that have met their needs acceptably in the past.

The turning point of understating brands started in the 1980s. Management came to realise that the prime asset of a company was, in fact, its brand. In the past, the assessment of a company was evaluated in terms of its building construction and land and then its tangible assets (plant and equipment). But recently it became obvious that the factual value...