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| Franchise Extension |
Brand extension or brand stretching is a marketing strategy in which a firm marketing a product with a well-developed image uses the same brand name in a different product category.
Organizations use this strategy to increase and leverage brand equity (definition: the net worth and long-term sustainability just from the renowned name).
An example of a brand extension : Mr. Raj running a retail shop in the brand name of RKC and he planned to expand his brand because the brand products are so popular in his location, Now he is ready to give his products in other location for that he need one partner to open his showroom in that location so he started franchising to promote his brand in all the locations.
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In the 1990s, 81 percent of new products used brand extension to introduce new brands and to create sales.[1] Launching a new product is not only time-consuming but also needs a big budget to create brand awareness and to promote a product's benefits.[2] Brand extension is one of the new product development strategies which can reduce financial risk by using the parent brand name to enhance consumers' perception due to the core brand equity.
Brand equity is defined as the main concern in brand management and IMC campaign. Every marketer should pursue the long term equity and pay attention to every strategy in detail. Because a small message dissonance would cause great failure of brand extension. On the other hand, consumer has his psychology process in mind. The moderating variable is a useful indication to evaluate consumer evaluation of brand extension.
A franchise extension strategy involves a company's use of an established brand name in its introduction of a product into a category that is new to the firm.