What is the Definition of Product Extension and Refinement?

“Product extension is the marketing strategy using an established product's brand name on a new product that is in the same category.”

“Refinement is the process of removing impurities or unwanted elements from a substance, modifying the products as per the latest trends.”

What is the Meaning of Product Extension and Refinement?

Product extension and refinement are strategies implemented by companies to increase their sales and create a competitive market. Product extension means the use of an established product brand name for a new item in the same product category. The strategy of product extension could be of different color or size or may have different patterns, flavors, and colors to it. This process helps in increasing sales and gaining a good amount of profits for the brand. The risk is much lower while adapting to this strategy because the brand is already grown and the product can grow with the goodwill of the brand. Refinement also aims to increase the sales but by making some changes in the product which may be visible or invisible. It is an ongoing process. The refinement of products is practiced after researching the failures or errors in the product and thus making some changes in the product. The main objective of refinement is to improvise an existing product and achieve profits.

What is the Difference Between Product Extension and Refinement?

• Product extension refers to launching a new product under the same brand name of an existing product, while refinement is making change in an already existing product.
• There is a factor of risk in the case of product extension if the product is not getting a good response in the market, whereas in the case of product refinement if the research is not carried out properly, there may be a risk involved.
• Product extension refers to developing a new product, while product refinement focuses on making some modifications to the product.
• Product extension brings in a new product, whereas refinement adds value to the existing product, which may be visible or invisible.
• It could be possible that product extension may not gain a great value or significance in the market during the early stages of its introduction because there is an entirely new product brought in, while refinement may gain a good value in the early stages of the introduction as it is trendy and there are minor changes made in this process which increase the value of the product.
• Product extension aims at increases sales, refinement also increases sales and profits but it mainly aims at reducing the production cost for a new product by only making some changes to the product.

What are the Examples of Production Extension?

Gillette- A grooming brand started first with men’s products then extended with women’s.

Colgate- A Toothpaste Company has a product that focuses on whitening teeth and then provides toothpaste that reduces tooth sensitivity, extended product variants by adding in salt, adding cooling crystals, etc.

What is the Difference Between Product Extension and Brand Extension?

Often, there is confusion between product extension and brand extension. There is a big difference between the two terms. While product extension focuses on bringing in a new product in the same category under the same brand name. Brand extension refers to “the use of the existing brand name on the product in a new category.”  Product extension refers to “bringing in a new product in the same product line.” The difference between the two is that product extension uses the current brand name to enter a new target market in the same product class. Also, product extensions are safer than brand extensions as the extension part is easier than creating a new category of products. The Brand extension uses the current brand name to enter in a completely different set of products. The main difference between line extensions and brand extensions is the product category. If the product category is new for the brand, then it is considered a brand extension, if the category is the same as old products for the brand, then it is merely a line extension Various Brand Extension strategies are- Line branding, Range branding, Umbrella branding, Source/Double branding, Endorsement branding, etc.       

What is the Importance of Production Extension and Refinement?

Product extension adds in new variants to the original product, thus it gives many options to the customer to choose from. This helps in building up brand loyalty as the customer would go for the same brand that he is used to, without any hesitation. Refinement will lead to constant modification of the products according to the new trend and technology in the market, thereby gaining customer satisfaction and being trendy and up-to-date in the market. 

What are the Steps of Product Extension?

• Knowing the target audience.
• Researching on the trends and new technologies, customer taste, and preferences.
• Determining the specific needs of customers in a target market segment.
• Creating suitable features to the product which can be catchy to the customers.
• Choosing the best alternative and creating a unique value proposition to help position the product.
• Choosing the sales and distribution channels that will best reach those customers.

What are the Steps of Product Refinement?

• Analyzing the data collected by the target customers regarding the product response.
• Incorporate the findings- working on designing the solution for making a new development.
• Deciding what to do next- the entire team of members working on refinement come together and decide about the changes that need to be made for refining the product, keeping in mind that the refined product should please the customers.
• Finally implementing the changes and modifying the product.
• Releasing the products in the target market by selected distribution channels.

When should a company go for Production Extension and Refinement?

Both the strategies are used to boost sales. Product extension strategy should be opted for when the company wants to launch a new product in the market. It also helps in regaining the customers that have stopped buying from this brand and have been shifting to the other brands for experiencing a different variety. Thus the extension is focused on acquiring those customers back.  Refinement strategy should be practiced when the company wants to save the costs on research as well as on manufacturing an entirely new product. Also, refinement strategy is taken up in the case where the trends are changing and new technologies are coming up.  So to develop a product that is up to date, refining of the products is done. Both the strategies help in gaining goodwill and customer loyalty.

What are the Advantages of Production Extension and Refinement?

• Product extension and refinement help to increases sales and profits.
• Both the strategies lead to developing a wide range of products.
• It increases brand image and goodwill for the brand.
• As the changes would not be major, these strategies are quite cost-effective.
• Since the customers get the variants in the same brand, it makes it convenient for the customers and thus helps in strong customer relationships.
• The product extension and refinement strategy is done for the same brand. Thus, there are no extra costs of branding and advertising for the products.
• Refinement brings in the use of new technology thus the products are up to date with the market trend.
• Refinement encourages innovation and creativity.
• These strategies help in encouraging manufacturing capabilities.

What are the Disadvantages of Production Extension and Refinement?

• Adding in too many variants to products may affect the sales of the original product.
• If the product does not gain value in the market or takes time to be accepted in the market, it would lead to a loss of the manufacturer.
• If the product does not get a good response from the market, it may decrease brand loyalty and thus may affect the value of the brand.
• If there is no proper research done before the refinement strategy is being implemented, it could lead to the draining of resources.

Context and Applications:

This topic is significant in the professional exams for both undergraduate and graduate courses, especially for

• Bachelor of Business Administration
• PGDM Marketing
• Master of Business Administration