brand extension

Case Study Businesses have discovered that a new product linked by name with a brand familiar to consumers can serve as a low-cost method for gaining initial market acceptance. The possibility of a brand extension poaching sales from the existing product (buying Honey Nut Cheerios in place of regular Cheerios) can be an acceptable cost for additional shelf space and new customers that are likely to be attracted to a new but familiar brand with a different smell, shape, taste, or color. Not all brand extensions are successful, however. In 2004 and 2005 Swiss food company Nestlé introduced consumers in Great Britain to ten new flavors of its very successful KitKat candy bar. Unfortunately for Nestlé, consumers were so put off after their initial sampling of the new products, that demand faltered and the market became swamped with unsold KitKat bars that retailers began offering at steep discounts. The result was a decline in sales for the entire line. Nearly all of the KitKat extensions were soon discontinued, and the Nestlé executive who engineered the new products was reassigned and so resigned.