Branding plays an important role in strategic aspects of marketing and marketers has to choose the branding strategy to build a brand. There are several branding strategies available and they are explained below:
Line Extension (Branded Variant)
This is where the company adds new products of same category/variations to the existing products to added to expand the breadth of the product line. This will expand the product line/category under the same brand name. As an example introduction of KFC submarines under the brand name of KFC can be seen a line extension as KFC Submarine is new addition to existing category of KFC chicken burgers.
Advantages of line extension are ability to spread the total brand management cost across large product range, new products can be introduced to the market confidently using the existing brand name and life cycle of the brand is made longer as new products are added to the brand. Disadvantage of line extension strategy is that it distracts the specific values and associations brand has already built due to large breadth of new products.
This is where an existing brand introduces a new product category to the market under existing brand name. A classic example would be introduction of Google Docs by Google when Google was known as a brand for search engine and emails.
Advantages of Brand extension are the acceptance of new product category by loyal customer of the brand, less promotion cost is incurred as the existing brand name will help to capture market share and Brand reputation/brand awareness can be increased. Disadvantages of the brand extension are failure in poor products can harm the reputation of entire brand, Certain product can fail as not all products are suitable to be introduced under certain brand names and brand dilution can occur. (over extension of brands can lead to loss of original values and association of brands losing the identity of the brand)
This is where a company introduces new brands under the same product categories. As an example, Nestle manages Milo, Nido and Nespray under the same product category of diary products. Advantages of multi brands are that customer preference can valued by introducing different products/brands at their choice/price (segmentation can be managed well), build barriers to entry to new players by acquiring shelf space in super markets and flanker brands (introducing new products to under existing category of products to maintain/capture market share) can be introduced to capture market share. Disadvantages of this strategy would be loss of economies of scale, increased brand management cost due to increase in number of brands and competition between in house brands may lead to suboptimal pricing decisions.
This is where a company decides to introduce a new brand with a new product category as existing brands are outdated. New brand strategy requires huge investment.
This where the 02 existing brands get together and form a new brand. Classic example would be Sony and Ericsson merging to form Sony Ericsson. This will have the advantage of the ability to cater to loyal customers of both brands.