Close extensions are in the products in the same category where the distance of the extended product from the core product is less. Distance extension might be in unrelated product categories and rely on overall quality associations from the parent for success . Distancing is the purposive increase in the perceptual distance of the extension from the core product. Authors  studied the transfer of these quality perceptions of the core brand as the key in umbrella branding in which the same brand name is used for several products. The results showed strong support for the main premises  underlying an information economics view of umbrella branding..

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Vertical Extension

In the case of vertical extension, a related brand is introduced in the same category but with a different price and quality balance. The new products can extend vertically in two directions, upscale, involving a new product with higher price and quality characteristics than the original; or downscale, involving a new product with lower quality and price points.

The vertical upscale extension carries lesser risk and seems more appealing to the management. In this case functional products are ruled out.

For example, when Gillette came up with a gold tone plated luxury Trac II razor in a hinged prestige gift box, there were few buyers.

Upscale extensions of prestige products are more acceptable, for example, limited luxury editions of automobiles.

The vertical downscale extension, as stated earlier, is more successful in functional products such as a stripped down version of computer software at a lower price.

The new product is inferior to the earlier product but the quality-price balance is appropriate. Though in the case of prestige oriented product, the core audience is bothered and feels cheated with the ‘prestige’ of their product being tarnished. For example, with the introduction of Pierre Cardin pens (at the price of Indian rupees seven each), a part of their core audience moved away as their ‘designer’ label was now within reach of everyone.

 

 

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