Extension Strategies

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Extension Strategies

To try to prevent or delay (postpone) a product (or service) from reaching the stage where sales start to decline, businesses can try different extension strategies.

Update packaging or rebranding

Updating packaging can help to keep a product fresh in consumers’ minds. This is a common way that businesses try to keep consumers’ interest in a product.
- For example, Coca Cola have put people’s names and the names of places on their bottles of Coca Cola and Diet Coke.
- In 2002, British Airways spent £60m rebranding its brand and products. It changed the logos on its planes and changed the business’ strapline.

Update packaging or rebranding: disadvantages

Rebranding or updating packaging can be expensive.
Rebranding or updating packaging may not guarantee increased sales.
Customers may also not respond positively to the changes.

Adding more/different features

Adding more or different features can keep people interested.
- The FIFA video game was first released in 1993. Every year, EA Sports update the game to have better new features. This can attract new customers and help keep existing customers.
- Chocolate manufacturers often do this to increase sales. Wispa was a successful product, so Cadbury launched Wispa Gold (which contained caramel).

Features: disadvantages

Developing new features can be costly and may delay production.
There is also a risk that new features do not appeal to customers

Changing the target market

Businesses can target new markets in an attempt to keep demand (and sales) high. Businesses can enter the same market in a different country or target a different age range in the same country.
- In 2014, the sports brand, UnderArmour won a Marketer of the Year award for its “I will what I want” campaign targeted at women.
Disadvantages:
- Expanding to new markets can require significant investment in marketing and research.
- There is also a risk that the product does not appeal to the new market.

Promotion

Heavily promoting a product can help to keep the demand for a product high. New promotion campaigns can also help to change the product image slightly and attract different customers.
Lots of companies pay £3.5m for a 30 second advert that is shown on US TV during the Superbowl. These adverts can reach an audience of over 110m people. In the UK at peak times (7pm - 9pm), a 30 second advert usually costs between £10,000 and £30,000.

Promotion: disadvantages

Promotional campaigns can be very expensive and may not always increase sales.
Over-promotion may also annoy existing customers.

Choosing an extension strategy

Businesses should recommend and justify the most suitable extension strategy depending on the product and market situation.
For example, if a product has a strong brand but declining interest, updating packaging or rebranding may be the most effective.
If the product is technologically oriented, adding new features could be more appropriate.