Brand Extension is often confused for Line Extension and vise versa. So let’s clarify these two terms with a few examples.
Brand Extension is a marketing strategy according to which, a well known brand uses the same brand name to enter into a totally unrelated product category. It is done primarily to leverage on the existing brand equity. Some marketers argue that since building a brand is costly affair, once you have built a brand you should leverage its value by using the same brand name to other new categories as well. For example,Virgin, which was initially a record label, entered into other line of business like aviation, game stores, video stores, telecom, etc. Godrej, which was initially a brand which signified locks and cupboards, later on entered into whole new product categories like refrigerators, furniture and real estate.
Line Extension (or product extension) is a marketing strategy according to which the scope of the product a brand represents is increased i.e. when you are adding varieties or variations or flavors of the same branded product, you are basically doing line extension. Like brand extension, line extension is also done to leverage on the brand equity by targeting a bigger chunk of the user base. When Coke introduced Diet Coke to target the diet conscious people, they did line extension. When Amazon, started selling various other products other than books, they also did line extension.
While there are some benefits to both line and brand extension, marketers today believe that both strategies dilute the brand positioning widening their focus Experts like Jack Trout and Al Ries have argued against both the strategies saying that in an age when brands are becoming more and more niche and specific it is not a very good idea to dilute the brand by trying to be “something to everyone”, instead of being “everything to someone.”
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