Discussions
Each module will include a discussion assignment (already completed) Need - substantial (paragraph or little more) responses to at least two classmates postings which are below:
1. Many companies that have a successful brand like to use the brand in a different product category than the new product that they plan to introduce because first off, this brand is already well-known and probably resonates well with consumers. For the consumer, it reduces risk and "provide[s] a sense of security and trust through leveraging positive associations onto a new product" (Milberg et al., 2010). Consumers have established trust with the brand and company, and are therefore more likely to try a new product since it carries the brand and company name.
There are several factors that a company should consider before making this decision. First off, a company cannot assume that since they are successful in one product, that the other new product will also be successful. For example, sometimes new products that are completely different from the parent brand can also be successful like Bic windsurfers and Samsung binoculars. Other times, there have been close extensions like Xerox computers and Campbell's tomato sauce and these have failed (Milberg et al., 2010). If this product is very different from the parent brand, will the company be able to properly link a brand extension to the brand's image? Also how much time and money will this cost the company to complete this linking?
In addition what if something negative happens to the brand, and the new product is associated with it. The same would go if something negative happens to the new product, and the brand name is listed on the product. This one new product could have a negative effect on the overall brand which costs the company to lose many established and loyal customers that trusted the brand. This would also cost the company lots of money and more money would need to go into the brand damage control and repair.
References:
Kotler, P., & Keller, K. (2012). Marketing Management (ed.14). Upper Saddle River: Pearson
Education, Inc.
Milberg, S., Sinn, F. & Goodstein, R. (2010). Consumer Reactions to Brand Extensions in a
Competitive Context: Does Fit Still Matter? Journal of Consumer Research. 37(3).
Retrieved from
https://web.b.ebscohost.com.ezproxy.saintleo.edu/ehost/pdfviewer/pdfviewer?sid=82e9b3
59-983e-407d-9c7f-d2d154161f99%40sessionmgr106&vid=11&hid=118
2.)Brand extension takes place when an organization utilizes the success of an already established brand to introduce a new product. One of the most successful brand extensions in recent history can be seen in CarMax automobile dealerships. CarMax is an extension of a now bankrupt Circuit City Stores Inc. The concept for an electronics store to extend its sphere of influence into the retail market took place in the early 1990s, when Circuit City Stores Inc. CEO tasked his staff with identifying an emerging new retail outlet with the purpose of extending Circuit City's sphere of retail influence into the next decade. Through CarMax, Circuit City Stores Inc. is able to establish a solid foothold in the used auto retail market. Eventually in February of 2002, CarMax became so successful that it successfully split from its parent Circuit City Stores Inc. into its own independent, publically traded company. Unfortunately for Circuit City Stores Inc. CarMax not only surpassed Circuit City Stores Inc., but also outlived the company. So using Circuit City Stores Inc. example, one can see how a properly planned and executed brand extension for a new product looks like. CarMax brand extension was not something that was an overnight product, which went from planning to production in a few months. It took Circuit City Stores Inc. Chief Executive Officer Rick Sharp, and Vice President of Corporate Planning Austin Ligon over three years to take their initial concept from idea to the first brick and mortar store. The planning involved broad spectrum market research to identify the opportunity in the used retail automotive market. Extensive market research was also performed to identify the flaws within the intended market. This allowed CarMax to appeal to those customers who were not satisfied with the current options. In order to have a successful brand extension, one must take into consideration all the factors associated with such an endeavor. Utilizing CarMax as an example, one is able to see all the factors that went into the planning process and the time and effort put into developing the CarMax concept. This allowed CarMax to prosper and outlive its parent company.
References
CarMax (n.d.). The CarMax Timeline. Retrived April 21, 2016 from https://www.carmax.com/enus/company-info/about-us-timeline.html
Janofsky, M. (1993, October 25). Circuit City Takes a Spin at Used Car Marketing. New York Times. Retrieved April 21, 2016, from https://www.nytimes.com/1993/10/25/business/circuit-city-takes-a-spin-at-used-car-marketing.html?pagewanted=all
Kotler, P., & Keller, K. L. (2012). Marketing management (14th ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.
I only require responses to these two postings by other classmates the response is too what they wrote about the topic question:You want to introduce a new product. You already have a successful brand in a different product category than the new product you plan to introduce. You are contemplating using the same brand name (brand extension) for the new product. What factors should you consider before making this decision?
the response doesn't have to be very long, only a paragraph or less to explain agreement disagreement etc