Product line extension is the practice of using an already established product’s brand name to introduce a new merchandise in the same product category. Kadiyali et al. , (1999) emphasizes that, this happens when a company is introducing a new products that falls under the same category within an already existing brand. The new item may be different from the already existing products in terms of new colors, new flavors, size of packaging, different forms, added ingredients etc (Kadiyali et al. , 1999). It involves adding depth to the current product line thus offering to customers greater choices as well as helping in fighting competition.
Brand extension can be confused with product line extension but they are very different. Brand extension involves a company using an already established brand to introduce new products while product extension is improving launching new products within the already existing product category (Coca-Cola, Vanilla Coke, Diet Coke) (Quelch and Kenny 1994). Firms have different reasons as to why they depend on product line extension as one of their marketing strategies. Some managers takes line extension as a low risk and low cost strategy of satisfying needs of different customer segments by offering various goods which falls under a specific brand.
It is a competitive weapon that managers use to increase control of brands over few shelf space (Kadiyali et al. , 1999). However product line extension has a number of disadvantages. Over-segmenting a product line can have some negative effects on the strategic role of every specific product. To add salt on the injury, line extension can also risks undermining company’s brand loyalty. Researcher have noted that, product line extension in most cases does not increase category demand, while on the other hand, the retailer spends extra self expansion costs as they try to accommodate the new products.
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Product line extension can also have some impact on the parent brand. Quelch and Kenny (1994) notes, shift in resources and cannibalization can affect the core brand negatively which can result to weak market position of the parent brand. Moreover, if product line extension results to confusion instead of reinforcing the image of the parent brands in the customers’ eyes then line extension might affect the overall market position of that specific product category (Kadiyali et al. , 1999).
However, cannibalization can be of advantage to the product line if it fights for consumer loyalty thus preventing customers from going for the rival brands. In this case, product line extension helps to fight competition thus maximizing the profitability of the firm. Roedder et al. (1998) studied the negative impact of product line extension which involves the risk of diluting the image of the parent brand.
In their study they noted that if product line extensions are inconsistent in regards to the parent brand image or in one way or the other they happen not to satisfy consumer expectations, the results will be dilution of what the brand name means to the consumers. Researchers are currently investigating brand name dilution in empirical studies. It is now very clear that, under specific conditions, product line extension can destroy consumers’ attitude which involves consumers’ feelings and beliefs towards specific product categories (Loken and John 1993; Sullivan 1990).
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