The company has four choices when it comes to brand strategies.
This is our line extensions, brand extensions, multi brands and new brands.
1. Line Extension : The first brand strategy is for the company to introduce line extensions. Line extensions occur when a company introduces additional items in a given product category under the same brand name. For example, introducing new flavours, forms colours, ingredients or package sizes.
There are some reasons for introducing line extensions. A company might introduce line extensions as a low cost low risk way to introduce new products in order to meet consumer desires for variety, to utilise excess capacity, or simply to command more shelf space for resellers. Even the line extensions have advantages, it also involves risks. An over extended brand name might lose its specific meaning or heavily extend brands can cause consumption of frustration for consumers or buyers. An important point to note is that a line extension works best when it takes away from competing brands, not when it's cannibalizing the company's other items.
2. Brand Extension : This is a situation where existing brand names are extended to new products categories.
A brand extension in other words involves the use of a successful brand name to launch new or modified products in a new category or area. This strategy has some merits. A brand extension gives a new product instant recognition and faster acceptance. It also saves the high advertising costs usually required to build a new brand. On the other hand, a brand extension strategy involves some risk. The extension may confuse the image of the men brand. If a brand extension fails, it may harm consumer attitudes towards the other products carrying the same brand name. In addition, a brand name may not be appropriate to a particular new product even if it is well made and satisfactory.
3. Multi Brand : This is another option in brand strategy. In this case, new brand names are introduced in the same product category. Companies often introduce additional brands in the same category. Multi branding offers a way to establish different features and appealed to different buying motives. It also allows the company to lock up more reseller shelf space. Or the company may want to protect its major brand by setting up flanker or fighter brands.
A major disadvantage of multi branding is that each brand might obtain only a small market share and ultimately known may be very profitable. The company in this situation, may end up spreading its resources over many brands instead of building a few to a highly profitable level.
4. New brands : New brands may be introduced in new product categories. A company may create a new brand name when, it enters a new product category or which none of the products current brand names are appropriate. The rationale for using new brand in new product category is that a company might believe that the power of its existing brand name is waning and a new brand name is needed. The company may obtain new brands in new categories through acquisitions.
Using new brand names in new product categories have disadvantages. Offering to many new brands can result in a company spreading its resources too thin. In some industries such as consumer packaged goods, consumers and retailers have become concerned that there are already too many brands, with too few difference between them.
