a.) Starbucks introducing an instant coffee;
Starbucks introducing an instant coffee would not be a good move because it would run counter to its brand image. It must be remembered that one of the key marketing points of Starbucks is that it offers premium coffee quickly at an affordable price. The key product line of Starbucks shows that it offers premium home roasted beans. It does not offer blends and instant mixes.
Extending the brand of Starbucks to instant coffee will weaken the brand image and tarnish the quality symbol. Instant coffee has traditionally been associated with low quality coffee that is made from poor quality beans and roasts. Supplying this type of product will imply that Starbucks no longer places emphasis on quality and therefore the brand image could suffer as a result of this.
b.) Dell introducing an eBook reader;
An eBook reader would be a logical brand extension for Dell. The reason for this is that Dell has the proper marketing tools and has built its brand image to be able to fully take advantage of this brand extension. Dell has built an image of quality and affordability in the consumer electronics industry, particularly with its computers. While Dell may not create or cater to high end products, its computers have been known to offer bang for buck. The features that it is able to provide at an affordable price are a reasonable alternative for most.
Introducing an eBook reader would be a logical extension of the brand into the consumer electronics market. Dell will be able to capitalize on the brisk sales that it has and if it is able to price its eBook reader competitively against Amazon’s eBook reader it can definitely provide a good alternative for the market. The current eBook readers available are pretty restrictive when it comes to the prices and do not offer a lot of other features. Dell can use its existing model to offer a cheap product that offers several other features that the market does not currently have.
c.) Amazon launching an encyclopedia-like site that will be a direct competitor to Wikipedia;
It may seem that launching an encyclopedia-like website would be a logical step for Amazon given the fact that it has a large number of users and a large consumer base. However, a closer analysis of this brand extension plan shows that there are several flaws in this plan. First of all, Wikipedia is the industry leader in the encyclopedia market. It is the established brand in this field and while Amazon may be a leader in its own field it is still only known for the books that it provides and the shopping opportunities. The brand of Amazon is built on selling consumer products and not on processing information or even providing it.
By creating another branch, Amazon will be exposing itself to several brand problems. The public will be confused on what it is Amazon really provides and this may result in a backlash. Brand extension is not the proper thing to do here but rather collaboration. Wikipedia, as an information source, can use the books and products of Amazon in order to improve the positioning of both brands. Amazon should not compete with Wikipedia but rather work with Wikipedia.
d.) Cheerios introducing frozen waffles.
Cheerios is known for selling breakfast products. Its wide range of cereals has been the main business for this company and its brand image has been similarly patterned. Just because this product association exists, however, does not mean that Cheerios can launch any breakfast product that it wants. Frozen waffles, while considered a breakfast product, are not necessarily within the brand of Cheerios. This expansion into relatively familiar territory could be disastrous but could also be advantageous for the company.
The key, therefore, is being able to introduce frozen waffles in such a way that is consistent with the Cheerios brand. While this is a brand extension, it should not be done right away but gradually in order to take advantage of the market perception of Cheerios as a breakfast brand and not simply a cereal brand.
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