What are the product extension strategies and their advantages?

Product extension strategy is actually a standardized product strategy, that is, to provide the same products to the international market as the domestic market. This strategy is adopted if the international market demand of the enterprise's existing products is similar to or the same as the domestic market demand, or the existing products have been understood by customers in the target market and formed preferences, or the existing products are easily accepted by the target marketing host country. Generally speaking, industrial products such as petroleum, automobiles, steel and machinery can adopt this strategy. Advantages of standardized product strategy:

(1) to form economies of scale. Enterprises can mass-produce standardized products, form economies of scale, and reduce production costs.

(2) It helps to adapt to the liquidity of customers. Standardized products help customers who are active all over the world to identify products and cause purchases, help meet the needs of brand loyalists of a certain product, and strengthen and consolidate the close relationship between brand loyalists and enterprises.

(3) It is helpful to prolong the life cycle of internationally marketed products. A product that has entered a mature period or even a recession in developed countries may just enter an introduction period or a growth period in developing countries. Enterprises can extend the product life cycle by selling products to these markets through standardized strategies.

(4) It is conducive to improving the visibility of enterprises. Adopting standardized product strategy is conducive to expanding the global reputation of enterprises, establishing a unified image for enterprises, thus helping to improve the visibility of enterprises and enhance their competitiveness in the international market.

Disadvantages of standardized product strategy: In the case of great difference between the target market demand and the domestic market demand, standardized product strategy lacks adaptability, can not meet the needs of different markets and customers well, and affects the sales of enterprise products.

The meaning of brand extension

Brand extension refers to a marketing strategy of applying the original brand to new products or services on the basis of brands with considerable popularity and market influence in order to reduce the risk of new products entering the market. Brand extension has many functions, such as increasing the acceptability of new products, reducing the risk of consumer behavior, improving the efficiency of promotional expenses and meeting the diversified needs of consumers, so it is widely used in advertising and brand marketing.

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A summary of the theoretical model of brand extension

Modern marketing theory holds that the construction of brand extension mode should start with the core factors that determine the success of brand extension. At present, theoretical research holds that brand strength and product relevance are two core factors that determine the success of brand extension. Among them, brand strength is influenced by brand perception, positioning and popularity, while product relevance is influenced by specific product relevance and audience relevance.

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Brand strength

(1) brand recognition

Brand perception refers to consumers' "perceived quality" of brands. It is a comprehensive experience that consumers compare the information conveyed by the brand with similar products, which determines the effect-value ratio of the brand. The higher the consumer's brand perception, especially the quality of the original brand, the higher the acceptance of the extended product, and vice versa. Therefore, the promotion of brand perception is mainly achieved through product advertisements, public relations activities and services, and consumer participation and experience are also important aspects of enhancing perception.

(2) Brand positioning

Brand positioning refers to the unique taste and personality characteristics of the brand, and it is the choice and determination of its brand style, market and development strategy based on the enterprise's own advantages and consumer evaluation. Positioning degree has the characteristics of personalization, uniqueness and specialization. Brand positioning is influenced by brand adaptability and brand (core) competitiveness.

Brand fitness refers to the target market range that the brand is suitable for, which reflects the width of the brand and is of great significance in the extension process. Brand core competitiveness refers to the ability of enterprises to develop unique products, technologies and marketing methods, which determines the characteristics of brands such as supernormality, uniqueness, leadership and integration.

(3) brand awareness

Brand awareness refers to consumers' awareness and familiarity with the brand. Because brand recognition reflects consumers' existing experience and understanding of brands to a certain extent, it has a great influence on consumers' initial purchase decision from the perspective of consumer psychology. Brand recognition includes brand recognition and brand memory. Brand recognition means that people can distinguish a brand from other brands as soon as they see or hear it, mainly in the visual characteristics such as logo, slogan, name, packaging, mascot and color. Brand memory refers to how well people remember a brand when they mention it. If consumers make plans to buy in advance, their memory level will play a great role.

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Product correlation

According to relevant research, the so-called product relevance refers to the extension of the "similarity" between the product and the original brand, that is, the degree of correlation between the original brand knowledge and the recognition of the new product in the eyes of consumers. The higher the correlation between the original product and the extended product, the higher and lower the consumer's evaluation (cognition and emotion) of the extended product.

(1) product-specific relevance

The relevance of a specific product refers to the degree of relevance between the original brand and the extended product in terms of technology, function, material and form. The higher the product relevance, the easier it is to be accepted by consumers, and the easier it is for its brand extension to succeed, and vice versa.

(2) the relevance of the audience

Audience relevance means that the original brand and extended products are influenced by the characteristics of consumers such as gender, age, culture, occupation and region. Obviously, in brand extension, it is easy to succeed to extend the original brand to the original loyal consumers and their products.

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Basic idea of brand extension mode [1]

The basic idea of brand extension model is that consumers' attitude towards extended brand or extended product depends on three factors, namely, the perceived quality of the original brand, the correlation between the original product and the extended product, and the manufacturing difficulty of the extended product. As shown below.

Specifically, the brand extension model contains four basic assumptions:

① The higher the quality of the original brand perceived by consumers, the higher the acceptance of extended products, and vice versa.

② The stronger the correlation between the original product and the extended product, the easier it is for the extended product to benefit from the high-quality features of the original product, otherwise this benefit or communication effect will be limited.

③ The stronger the correlation between the original product and the extended product, the higher the consumer's evaluation of brand extension, and vice versa.

④ The more difficult it is to design and manufacture extended products, the higher and lower the consumer's evaluation of brand extension.

The reason is that extending the brand with high-quality image to products with little value and easy to manufacture may make consumers feel disgusted, and even make consumers feel that this brand extension is purely to use consumers' psychology of advocating famous brands to increase the value of these "trivial" goods. Regression analysis can be used to test the above assumptions. The dependent variable Y in the model consists of y 1 and y2, where y 1 stands for "the overall quality of the extended product" and y2 stands for "the possibility of purchasing the extended product". Both of them are measured with a 7-level scale, and their arithmetic mean is the value of the independent variable Y. There are five main variables in the model: x 1 stands for the overall quality of the original brand or product. X2, x3 and x4 respectively represent "transferability" (whether the original product design, manufacturing technology and used resources can be transferred to the development and manufacturing of the extended product), "complementarity" (the possibility that the original product and the extended product can meet the same or similar requirements) and "substitution" (that is, the possibility that the original product and the extended product can replace each other in some cases). These three variables are used to measure the correlation between the original product and the expanded product. X5 stands for "manufacturing difficulty", that is, the difficulty of manufacturing and developing extended products, 1= extremely easy, 7= extremely difficult. For experimental hypothesis 2, that is, to test whether there is interaction between three related variables and "original brand total quality" x 1, the independent variables in the model also include three interactive items: x 1x2, x 1x3 and x 1x4. Therefore, if represented by algebra, the brand extension model can be expressed as follows:

y = A0+a 1x 1+a2 x2+a3x 3+a4 x4+a5x 5+a 12x 1x 2+a 13x 1x 3+a 14x 1x 4

Where A0, A 1, A2, A3, A4, A5, A 12, A 13 and A 14 are all parameters to be estimated.

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