Benefits and Risks of Line Extension
Benefits of Line Extension
-
Gain more potential customers
-
Reinvigorate brand or product line
-
Increase consumer awareness of brand
-
Tap into new markets
-
Increase diversity of inventory
-
Release new products
-
Increase market share in a given sector
-
Enable companies to promote new products with reduced promotional costs because brand is already known and established
-
Offer customers more variety
-
Expand shelf space presence
-
Greater production efficiency
-
Greater marketing efficiency
-
Increased profits
Risks Associated with Line Extension
-
Potential for failure which may damage existing brand
-
Possibility of creating competition within brand. Having current customers switch from already established product
-
If it fails, customers might feel less likely to try released under same brand in the future
-
Possibility that if you have too many different products, your more successful products will lose their perception of being specialized by your brand and you may lose existing clients