Brand extension

The fascinating world of brands

ByLaise Mon K.A

NEW PRODUCTS AND

BRAND EXTENSIONS

Overview

New Product & Brand ExtensionBrand ExtensionTypes of Brand ExtensionAdvantagesDisadvantagesHow Consumers Evaluate Extensions?

What Is A “Brand”Brand is a name, term, sign, symbol, design, or a

combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.

A BRAND is symbolic embodiment of all the information connected to a Company, Product or Service.

It serves to create associations and expectations from products made by a producer, in the mind of the consumer.

The key objective being “to create a Relationship of TRUST with its consumers”.

New Product & Brand ExtensionsAnsoff’s Growth Share Matrix

Line Extension

Brand Extension

Multi Brands

New Brands

Existing New Exis

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Bra

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Cont……

The three choices of a firm when they are introducing a new product

• New brand for new product• Use of existing brand for the new product• Combination of the new brand with the existing

brand(Second and the third options are related to brand extension)

Introduction of new products

BRAND EXTENSIONSA Brand Extension occurs when a firm uses an

established brand name to introduce a new product (approaches 2 or 3)

When a new brand is combined with an existing brand (approach 3), the brand extension can also be called a sub-brand.

An existing brand that gives birth to a brand extension is the parent brand.

If the parent brand is already associated with multiple products through brand extensions, then it may also be called a family brand.

TYPES OF BRAND EXTENSION

LINE EXTENSION

The parent brand is used to brand a new product that targets a new market segment with in a product category currently served by the parent brand.

A line extension often adds a different flavor or ingredient variety, a different form or size, or a different application for the brand.Eg: Head & Shoulders

Head &

Shoulder’sExtension

Coke’s Line Extension

CATEGORY EXTENSION

The parent brand is used to enter a different product category from that currently served by the parent brand.

Eg: ITC

ITC’s Category Extension

Strategies For Establishing a Category

1. Introduce the same product in a different form2. Introduce product that contain the brand’s

distinctive taste, ingredient or component.3. Introduce companion product for the brand.4. Introduce products relevant to the customer

franchise of the brand.5. Introduce products that capitalize on the firm’s

perceived expertise.6. Introduce products that reflect the brands

distinctive benefit, attribute or feature.7. Introduce products that capitalize on distinctive

image or prestige of the brand.

Why Brand Extensions?Leveraging brand equity/value by introduction of

logical & complementary new product categoriesE.g HP

Product Innovation to surpass consumer expectations

It increases awareness of the brand nameIncreases profitability from offerings in more

than one product category.It’s a great way to reinforce a brand, reach out to

new customers, create a BUZZ

ADVANTAGES OFBRAND EXTENSIONS

Reasons For Product Failure

Products Showcase and Learning Center in Ithaca, New

York identifies this. The market was too small (insufficient demand for

type of product). The product was a poor match for the company. The product was justified on inadequate or

inaccurate marketing research, or the company ignore research result.

The company was too early or too late in researching the market.

The product provided insufficient return on investment.

Reasons For Product Failure

The product was not new or different (a poor idea that really offered nothing new).

The Product did not go hand in hand with familiarity. Credibility was not confirmed on delivery Consumers could not recognize the product

Advantages Of Brand Extensions

Facilitate New Product Acceptance

Improve brand image Reduce risk perceived by Customers Permit consume variety-seeking

Advantages Of Brand Extensions

Increase the probability of gaining distribution and trial

Increase efficiency of promotional expenditures Reduce costs of introductory & follow-up marketing

programs (save 40-80%)

E.g. Apple iPods Avoid costs of developing a new brand Allow for packaging & labeling efficiencies

Advantages Of Brand Extensions

Provide Feedback Benefits to the Parent Brand and Company

Clarify brand meaning Enhance the parent brand image Bring new customers into brand franchise and

increase market coverage Revitalize the brand Permit subsequent extensions

Advantages Of Brand Extensions

Clarify brand meaning

Brand Original Product

Extension Products

New Brand

Meaning

Weight Watchers

Fitness Centre

Low-calorie foods

Weight loss &

maintenance

Sunkist Oranges Vitamins, juices

Good health

Kellogg’s Cereal Nutri-grain bars,

Special K bars

Health snacking

Aunt Jemima

Pancake mixes

Syrups, frozen waffles

Breakfast foods

Disadvantages ofBrand Extensions

Disadvantages Of Brand Extensions

Can confuse or frustrate consumers Can encounter retailer resistance Can fail & hurt parent brand image

Xerox Computers-synonymous with copiers & no one believed they could make computers

Can succeed but cannibalize sales of parent brandAmul Butter-”reduced salt butter” is slowlyeating up Amul normal butter

Disadvantages Of Brand Extensions

Can succeed but diminish identification with any one category

Can succeed but hurt the image of parent brand Can dilute brand meaning Can cause the company to forgo the chance to

develop a new brand

When are Brand Extensions Appropriate?

When Prior Brand equity existsConsumer must see some “connection”

between the proposed extension and the parent brand.

The proposed extension contributes to and reinforces the overall brand equity of the parent brand.

How Consumers Evaluate Extensions

Conditions For Evaluating Consumer’s Brand Extension

Consumers have some awareness & positive associations about the parent brand

At least some of these positive associations will be evoked by the brand extension

Negative association are not transferred from the parent brand

Negative associations are not created by the brand extension

Evaluating Brand Extension Opportunities

Define actual & desired consumer knowledge

Identify possible extension candidates

Evaluate potential of the extension candidate

Evaluate potential candidate feedback effects

Consider possible competitive advantages & reactions

Design marketing campaign

Evaluate extension success & effects on parent brand equity

Reference

Strategic Brand Management by

Kelvin Lane Keller

Marketing Management by

Philip KotlerKelvin Lane KellerAbraham KoshyMathileshwar Jha

Thank You