Below is an excerpt from John McKeown's January 2017 Monthly IP Blog.
Brand extensions are closely related to brand equity. The equity of the brand is leveraged by extending the brand to additional wares and services or expansion into new geographical markets. A brand extension can reduce the cost of the introduction of a new product and increase the changes of a successful launch. Costs can be reduced since it may be easier to obtain distribution with a known brand and less promotional activity may be required.
Brand extensions capitalize on the brand image of the core product or service to efficiently inform purchasers about a new product or service. Brand extensions can facilitate acceptance of the new product or service by providing two benefits. First, awareness for the extension may be higher because of previously established brand awareness. Second, consumers may form expectations for the extension on the basis of what they already know about the core brand.
The decision to extend the brand can be a difficult one. Ideally an appropriate extension can help the core brand image by improving the nature of the associations and clarifying the business definition and core benefits for the brand. On the other hand, extensions may harm the core image if the brand becomes associated with a large number of unconnected products or services.
It is important that there is a common sense connection between the core brand and the extension. For example a ZzzQuil branded sleep aid product from the makers of NyQuil makes sense but a Zippo branded perfume for women seems questionable.
A brand may also be extended through licensing. The licensee is typically responsible for production, distribution, sales and marketing while the brand owner must ensure that the product design, quality, distribution and marketing appropriately communicates the brand image to potential customers. A carefully developed and controlled licensing program can help minimize the cost and risks related to extending a brand. The program must comply with the requirements of the Trademarks Act concerning licensing.
Click here to read the entire blog.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
