Types of Brand Extension Strategies and Their Role in Brand Congruency in Corporate Brand Extensions

Abstract

Owing to the high costs of launching new products, brand extensions have been the basis of national and international strategic growth for many firms over the past few decades. Brand extension strategy consists of using an established brand name to launch new product. One of the main advantages of using brand extensions is the reduction of communication costs; as a result of the synergies generated between experience and communication of any products of the firm. Furthermore, brand extensions reduce the costs of brand name introduction and enhance the probability of success since consumers transfer their perceptions and attitudes from the original brand to the extension. Brand extensions can also have positive effects for the parent brand. They can strengthen the brand meaning, help to build brand equity, and encourage purchasing of other products from the firm, particularly amongst nonusers of the parent brand.