Harvard Business Review sample

Category: Microeconomics
Last Updated: 22 Jul 2020
Essay type: Review
Pages: 3 Views: 40

By extending the product line which involves launching of new products and splinting large stock–keeping units into smaller ones ensures that the core brand will be in a position to evolve to meet the target customer demands and it makes it difficult for the retailer to use a store label to supplant the species (Roedder et al. , 1998; Kadiyali et al. , 1999). Product line extension or in other words product line evolution involves so many dead-ends. These dead-ends are marginal players who are always on their fingertips and are indeed costly.

However, what is most important is change which is the essence of life and products, thus companies need to be and must always be innovative (Quelch and Kenny, 1994). The most appropriate strategy for product line extension for a specific brand need proper evaluation of the true costs with regards to both the long – term impact on brand equity as well as immediate economic considerations. A successful brand requires its manager to build a clear understanding of its key equity elements and to implement the given guidelines for leveraging them in to the market place.

If every product line extension strengthens the brand's equity, then chances of expanding the brand loyalty are very high (Quelch and Kenny 1994). Different researchers agrees on the point that, failures in line extensions comes in different sizes and shapes. Some of the notable failure case studies includes Pepsi Clear, McDonald's pizza and light whiskeys, which didn’t make any great and valuable sense to the target consumers and they almost did not have anything in common with the benefits and the image of their parent brands.

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It is also reasonable to argue that even a number of the most popular line extension products like Diet Coke and Miller Lite have done some considerable damage to their parent brands market share and long term volume. It is not inconceivable that Miller and Coca–Cola might have generated much larger corporate franchises today if they directed their investment in new brands instead of getting involved in product line extensions (Kadiyali et al. , 1999). Majority of major product line extensions are most likely to breed paranoia in marketers.

Major questions concerning target customers, support level for the centerpieces of a line as well as concerns on benefits becomes almost irresolvable. Most of the major products are in such situations since managers base their decisions on what to push on their fear of cannibalization instead of basing them on consumer responses. However, product line extensions can work out well if they are made to adhere to well-though-out strategies. Product line extensions can also increase a brand's consumer share of requirements within a specific product category, a strategy that Quelch and Kenny (1994) calls "real variety need fulfillment.

" Regardless of the level of product line extension, common sense is the key thing. An extension should and must pass simple tests like its effects on the brand image, share of requirement growth, consumer benefit, activity based profits as well as longevity. Even in such cases, care should be taken since the need to have short–term volume and profits can result to long–term problems. References Deborah Roedder John, Barbara Loken, Christopher Joiner. 1998. The Negative Impact of Extensions: Can Flagship Products Be Diluted? The Journal of Marketing, 62 (1), 19-32.

Loken, Barbara and Deborah Roedder John . 1993. "Diluting Brand Beliefs: When Do Brand Extensions Have a Negative Impact? " Journal of Marketing, 57, 71-84. Quelch, J. and Kenny, D. 1994. Extend products, not product lines. Harvard Business Review , 72, 153-160. Sullivan, Mary. 1990. "Measuring Image Spillovers in Umbrella-Branded Products. " Journal of Business, 63(3), 309-29. Kadiyali Vrinda, Vilcassim Naufel, Chintagunta Pradeep. 1999. Product line extensions and competitive market interactions: An empirical analysis. Journal of Econometrics, 89, 339-363.

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