2. What is a brand extension? Discuss three advantages and two disadvantages of brand extensions. Discuss the Nike brand extension with Nike gyms to illustrate.

Potential brand extension for Nike

The Nike Exousia will be a chained fitness center that offers customers an all-in-one solution where customers can purchase or collect apparel, footwear and sportswear from a Nike store on the ground floor while now having access to a gym on the second floor (with all the elements based on Nike brand standards, products and services). It will be equipped with facilities offering the state-of-the-art technologies that Nike possesses for members' usage to reach their goals at their own pace. Nike can also engage personal trainers and in-house diet consultation specialists to provide customized solutions to Nike members.

Customers will be able to become fit while also learning about healthy lifestyle through educational programs like nutrition workshops and yoga courses. The foray into health clubs (gyms) makes sense since it immediately links to what Nike is already working onsmart devices, sports equipment, pros, AI, and machine learningwhile also profiting from their existing products and services, such as running shoes and workout gear.

The brand name proposed for these fitness centers is Exousia, an ancient Greek rooted word meaning "power"; power to do what you want, when you want, how you want and where you want. This type of empowering message is perfectly aligned with the core value and philosophy of Nike as well. "Just Do It" is the main motto of Nike that reflects often in their various campaigns and promotions. By every product, events or any presence, Nike's mission is to inspire and empower people through sports and to remind them of their potentials and capabilities. Exousia is a name that fits into this picture; reminding the korean customers that once again, Nike is at the front line to point at new possibilities and encourage them to Just do what they want and grow limitless.

At the beginning, 3 gyms in relatively more affluent districts, Jongno-gu, Mapo-gu and Gangnam-gu, will be set up, before Nike branches out to set up fitness centers in other parts of Seoul and subsequently beyond Seoul. The chain fitness centers will be established throughout the major cities and will be targeting not only luxury consumers but also the wider middle class consumers who have been a big portion of Nike's loyal customers in Korea. Therefore, Nike will be mostly focusing on the current target market with a new category of product and service.