Some critics vigorously denounce the practice of brand exten

Some critics vigorously denounce the practice of brand extensions, because they feel that too often companies lose focus and consumers become confused. Other experts maintain that brand extensions are a critical growth strategy and source of revenue for the firm. What is you position on this debate? Are brand extensions good or bad?

Solution

More often than not, companies end up milking their successful brands by doing brand extensions. The problem with this is that it leads to brand dilution and the equity of the brand gets eroded. There are very high chances that all extensions might not be as successful as the original brand. It may also happen that the brand extension is a complete failure. In such cases the brand equity erodes and the original value of the brand also diminishes for the customer. Thus my position is that companies must tread carefully while doing brand extensions, avoid taking risk by exposing the brand too much in different categories.

Brand extensions are good if used in a limited way.

For example \"DETTOL\" is a successful brand in the antiseptic segment. The company - Reckitt Benckiser - wanted to capitalize on the brand and extended it to the category of soaps. This was a success as well. The company, later on, further tried its luck by extending the brand to shaving creams. This turned out to be a failure.