14 December 2016

Brand extensions can enhance the parent brand, but on the other hand it may question the integrity and competence of the brand.

Despite their potential advantages, brand extensions have some disadvantages. First, it may confuse and perhaps even frustrate consumers. Which product is suitable and the right one for them?

For example, with eight varieties of flavor, consumers can quickly feel overwhelmed. In some situations, greater product variety may induce consumers to buy less. Many retailers do not have enough shelf or display space to stock a large number of new goods and brands continually being introduced even they wanted to. So, some consumers may feel disappointed when they are unable to find an advertised brand extension because a retailer is unable or unwilling to stock it.

Second, brand extensions can encounter retailer resistance. The number stocks of products outpace the growth of retail space in year-on-year. Own-brand or private-label goods also continue to grow as a percentage of total grocery sales. Many brands now come in a multitude of different forms. For example, Indomie’s has introduced some different lines of noodles, including instant noodles, fried noodles, cup noodles, and offers more than ten flavors in all. As a result, it has become virtually impossible for a grocery store or supermarket to offer all the different varieties available across all the various brands in any one product category.

The worst possible situation for an extension is not only to fail but to harm parent brand image in the process. Unfortunately, the negative feedback effects can sometimes happen. Consider Harley Davidson’s experience with wine coolers, aftershave, and perfume. While Harley-Davidson had successfully launched motorbike apparel, the company had lost focus.

Even if an extension initially succeeds, by linking the brand to multiple products, the firm increases the risk that an unexpected problem or even a tragedy with one product in the brand family can tarnish the image of some or all the remaining products.