Impact of Brand Extensions on Brand Equity

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Part One: Impact of Brand Extensions on Brand Equity
In today’s competitive marketplace it is vital to have a strong brand name. When a company develops a strong brand name of a certain product category they start thinking about the brand extensions, which will help the firm to capture new and unexplored market segments. According to Kotler (2003) a brand extension occurs when a company uses its well-established core brand name to introduce new products in either similar or different product category. In other words the parent brand gives a birth to extension brand or sub-brand. According to Mitchell et al. (2013) there are two main categories of brand extension strategy. The first one is vertical brand extension strategy which is used to introduce a new product or service with different quality or price, but in the same category as the core brand. The second one is horizontal brand extension strategy which is used to introduce a new product or service in either similar to core brand or completely different product category.
Consumers tend to be more receptive to a newly extended pro...

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