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Types of Brand Extension
Each extension affects the brand and its equity in one of four different ways:

Certain extensions exploit the brand capital. The product sells, thanks to the brand's contribution. This is the case when the product concerned scarcely differs from existing market competition: a typical case is Kodak batteries, or Rossignol's entry in the tennis market, adding rackets to its skis. The brand has not fully exercised its transforming role, but succors the product with its aura and its perceived risk-reducing consumer awareness. If this practice is applied too often, however— through a licensing policy, for example—the brand's capital asset dries up because of association with so many common¬place products.

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Other extensions destroy the brand's equity. Levi's slacks and blazers had no relationship whatsoever to the core values inherited from its mythical 501 jeans. Danger arises also when the extension is a top-down one. For example, the now disappeared Flaminaire brand decided to cover the lighter market by being present in all its segments: top of the range (to compete with Dupont and Dunhill), midrange, and the disposable lighter (in opposition to Bic). This was fatal. The lower-range extension killed the firm's credibility at the top of the range, from which it drew its profits.

Similarly, it was a fortunate day when Porsche dropped their 924 model. The only thing which justified the considerable difference in price of these cars from those of their competitors was their prestigious name. None of the objective and subjective values associated with Porsche was found in the 924 model—neither the masculinity, nor the technology, nor their storied ability to surpass themselves. This model seemed to proclaim the end of the Porsche myth. Since at that same time there was no further talk of Porsche entering Formula One, or of having won in the Le Mans 24 hours, the only means of brand communication was through its advertising, a large part of which concerned the 924. To get back on their feet, they ceased production of the 924, and even of the basic 944.

Certain extensions have a neutral effect where brand capital asset is concerned. The product simply falls in the line with what is expected of the brand. It is surprising how, in the electrical appliance field, brands are often credited with far more products than they actually produce. If these brands decided to make inroads in these directions, it would not change their image. This illustration reminds us that purchasers have a different vision of the brand from that of the manufacturer. They may attribute to the brand a wider field of ability, one not simply limited to its existing products.

Certain extensions help develop and nurture the meaning of the brand. These extensions are extragenerative. They revitalize the brand and its nucleus, causing a resurgence of its basic values in a new and powerful way. The green blazer, for instance, is an extragenerative product for the Lacoste brand. It represents a rare symbiosis of the features which go to make up the Lacoste brand—conformity, discretion, social acceptability, and also a certain distancing effect. The green blazer gives a more relaxed look than blue (which is too much like a uniform for the Lacoste image), and recalls the turf of the lawn-tennis court.

Source of Reference:
Jean-Noel Kapfere, The New Strategic Brand Management: Creating and Sustaining Brand Equity Long Term, Kogan Page. You can find this fine book here

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