Brand extension is a marketing tool used to market products “riding” on the strength of an existing strong brand. It involves developing new products, mostly related to the product already in the market; it is a method of widening a range of products (or services), by taking advantage of the success of an existing brand.
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It is a method of optimal brand strength utilization by creating additional sales as well as increasing brand equity. Brand extension should be strategic and timely; when over done, it ends to diluting of a brand (Reast, 2005). This paper discusses how to create a brand extension of Nokia Phones with Nokia I-phones.
Brand extension strategy
Generally, brand extension strategy takes four major steps; these steps start from creation of a strong brand name to reaching a decision that the practice can be made effectively. Nokia Phone Company was incorporated in Finland, as a telecommunication company; it entered the phone manufacturing company in early 1990’s. The company enjoys a strong brand name both in the local market and internationally. It specializes in different models of phones, and accessories with varying cost and features.
As a market segmentation practice, the company caters for different needs of the people through features and costs of it products. In this brand extension case, Nokia should aim at middle upper class and high-class markets. With the current brands, these markets are targeted for browser-enabled phones, phones with internal capacity memory, and flashy phones. The same people will be targeted for I-phones. The process of brand extension will be as follows:
Determine Brand And Category Associations
The first stage in brand extension is gauging the current market position and strength of the brand wanted to ride on. It should have a commanding role in the market. If the brand is strong enough, like the case of Nokia, then products that can sell in the same market segment and will add value to a customer are established, in this case I-phones has been recognised as an effective brand extension product.
Players and competitors of the new brand should be analysed; market entry methods should be surveyed. In the case of Nokia-I-phone brand extension, the company should consider competition offered by Apple Electronic Company’s I-pods and I-phone. Their strength and the market position they are enjoying in the market should be interpolated. This stage is undertaking a brand S.W.O.T. analysis. The stage should recognise associations that customers have on a particular brand.
Develop Brand Extendibility Proxies
After recognising customers associations of a particular brand, then the next step is locating/extending proxies. For each association a continuum of attributes and benefits are established and analysed; they are required for learning the strength and approach strategy that the new brand can use to venture in the market. Nokia should seek understand why its product of which it want to extend through is values; then establish an unmet need. The new product should come in to fill the unmet need in the segmented market. Establishing brand relevance will go a long way in recognising of how extension can appear in the future.
Conduct Brand Extendibility Research
After proxies have been established, it is important to research on a more specific angle on the viability of the new product in the market. This will call for getting back to the segmented market and get rich information on whether they have a need in a certain area. It is the point that inputs, evaluation and more insight information regarding a particular product is gotten.
Developing team should aim at understanding customer rationale, virtues and values. In the case of Nokia, the company should randomly have a survey on the viability of new product; this will be through talking to customers and getting to learn how far current products fulfil their needs (Pickton & Broderick, 2005).
Create Brand Extendibility Guidelines
After getting information from the target market, it should be analysed to get an in-depth understanding of whether it is the right time for an extension or not. If it is, then the market is divided into proxies and target market for the product is developed. Through the product will be marketed like any other product/service in the customer, as it penetrates the market, it is rational to advertise it along with the old product and give out the superiority of the new brand.
When marketing, care should be taken to ensure that confidence on the old product is not faded; customers should have a feel that the new product is more focused to their need but not proving the old product inferior. In case confidence in the old product is diluted, then it is likely to affect the brand negatively (Kotler & Keller, 2009).
A strong brand is a company’s intangible asset; maximum use of this asset can be attained through strategic brand extension where new products targeting same or similar market segments are developed. Nokia phones have a strong brand name thus the company should think of developing I-phones to target middle upper class and high class people in the society.
Kotler, P., & Keller, K. (2009). Marketing Management. Upper Saddle River: Pearson Prentice Hall.
Pickton, D., & Broderick, A. (2005). Integrated Marketing Communications. London: Pearson Education.
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Reast, J. D. (2005). Brand trust and brand extension acceptance: the relationship, Journal of Product & Brand Management, 14(1), 4–13