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Mc Donald Case Study on Target Marketing

Essay by   •  February 17, 2012  •  Essay  •  430 Words (2 Pages)  •  1,440 Views

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Brand extensions

Brand extensions consist in using a current brand name to launch a product in a category considered as new for the company-according to Aaker&Keller (1990). This new product has different functions and a different nature in comparison with the product the brand used to do. A brand needs to evolve or change products if it wants to continue existing.

This strategy of brand extension is popular because it is less risky and cheaper compared to the creation of a new brand.

Consumer knowledge: the remaining strong brand used to "promote a new product" makes it less critical to create "awareness and imagery".

Consumer trust: the existing well-known-strong brands represent a promise -of quality, useful features etc. - for the consumer. Thus, the extension will benefit from this fame and this good opinion about the brand to create "a compelling value proposition in a new segment or markets"

Lower cost: compared to launching a new brand, brand extension strategy is cheaper especially because the new product use the name of an already well-known brand.

Enhancement of brand visibility: when a brand appears in another field it can "be a more effective and efficient brand-building approach than spending money on advertising" In addition, he suggests that the relationship with loyal customers will be strengthen because they will use the brand "in another context" and it is expected as well that they will rather this brand to the competitors' one.

Defensive strategy: an extension can prevent competitors from gaining or exploiting a foothold in the market

Similarity

Extensions into categories perceived as more similar to the category of the parent brand are more likely to be accepted compared to extensions into less similar product categories.

Reputation

Brands with higher perceived reputation should provide consumers with greater risk relief and so encourage more positive evaluations than brands of lower reputation. The higher the perceived reputations of the parent brand, the more favorable should be evaluations of the brand extensions.

Perceived Risks

The higher the perceived risk associated with the extension category, the more positive will be evaluations of the brand extensions. This should be particularly true for brands in durable goods and services.

Innovativeness

Innovativeness is a personality trait related to an individual's receptivity to new ideas and willingness to try new practices and brands. The higher consumers' innovativeness, the more positive will be the evaluations of extended brands.

Conclusion

Perceived

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