Line Extension

Line Extension

Taking the name of an established product and using it on a new one

Advantages of Line Extension

• Line extension provides short term advantages– Instant flash of understanding– Instant flash in sales– Quick profit growth

• Example:– Diet Coca Cola– Packard Clipper– Alka-Seltzer Plus

Disadvantages of Line Extension

• Disadvantages of Line Extension is always in long run– No independent position in mind– Names are forgettable– Contribute to blur the image of the parent brand– Brand name becomes a substitute, may get

segregated

• Example:– Levis for feet– Procter and Gamble– Pierre Cardian

Tests for the Line Extensions

• The shopping-list test– Classic test for line extension• E.g. Pampers, Nestle, Shezan

• The bartender test– Difference in point of view of drinker and serving• E.g.• Chivas Regal

– Johnnie Walker

• Cutty Sark Brand– Cutty 12

Concepts of Line Extensions

– Act One: • Big Breakthrough

– Act Two:• Fueled by Greed and Vision

– Act Three:• Denouement

A Name is a Rubber Band

• More you stretch a name

• The weaker it becomes

Rules of the Road

• Expected Volume– Potential Winners (No)– Small Volume (Yes)

• Competition– Vaccum (No)– Crowded Field (Yes)

• Advertising Support– Big Budget (No)– Small Budget (Yes)

• Significance– Breakthrough Products (No)– Commodity Product (Yes)

• Distribution– Off-the-shelf (No)– Sales Representatives (Yes)

Positioning a Company: Xerox

• Position anything:– A person– A Product– A Politician– A Company

Name Problem

• Your company name ought to stand for something within your industry

– Example:

• Greyhound (More than a bus company)

Standing for Something

• Corporate programs settle on routine and unimaginative approach based on people, resources, innovation etc.

• Example:– Ford Company stand for their people

Diversification is not the Problem

• May be able to make more money• Think twice for brand positioning through

diversification• Positioning and diversification are two poles

apart– Example:• General Motors

Xerox’s Mind

• Well known brand name for copiers• Office marketing moving towards computer

based information system (Xerox Data System)

• Office automation products, XTEN network, ethernet network, star workstation, 802 personal computers

What’s in Prospects Mind

• Office automation system is not in cards• Xerox does not make chart, when asked about

the preference for office information system• Prospects mind cannot be changed• Copier is the strongest asset of Xerox

Brand Name Percentage Respondent

IBM 81%

Wang 40%

Digital Equipment 36%

AT&T 22%

Hewlett-Packard 21%

Third-Leg Opportunity

• Xerox is left with the only option of “Output Leg”

• AT&T’s telephone leg becomes communication leg

• IBM’s typewriter leg has become the input• Options:– Laser typewriters, Laser printers and Laser

memory systems

The Fourth Technology

• Thermography– Infrared rays, special papers

• Xerography– Action of light, plan paper

• Microprocessor Technology– Computer companies, IBM

• Lasography– Laser beam and optical fibers

• Lasography is an opportunity for Xerox to create a broader mental position

Positioning is a Game

• One can not sit still

• One has to be constantly alert

• Keep your position targeted

• For todays problem and todays market

Positioning a Product: Milk Dude

• Looking into the mind– Organized system– Based on communication– Only take place at right time– Under right circumstances

Repositioning the Competition

• On the basis of:– Pack size– Shape– Price– Promotion– Placement

• Example:– Pakistan State Oil,– Pakistan Cricket Board

The Long-Lasting Alternatives

• Solution to positioning problem

• Usually found in prospect’s mind

• Not in the product

Difference between Positioning Product and Service

• Their exists no difference between the positioning of a product and service with respect to strategic point of view

• The major difference between the two is in techniques

POSITIONING A SERVICE

Mohsin AliL1f10MBAM0250

What is Positioning ?• Positioning is owning a piece of consumer’s mind

• Positioning is not what you do to a product– It’s what you do to the mind of the prospect

• You position the product in the prospect’s mind– ‘It’s incorrect to call it Product Positioning’ – Ries & Trout

Positioning

ColgateIs

Protection

GilletteIs

QualityLUXIs

Glamour

AXEIs

Sexual Attraction

Pond’s DFTIs

Confidence

Examples

What is service?

• Intangible• Satisfy need of the customer• An Act• Performance one party offer another part

Types

Retail Financial Insurance Telecom IT/Software Advertising Consultancy Logistics Banking

Entertainment Travel Hospitality Healthcare Internet Media And many more

Salt

Detergents

Automobiles

CosmeticsFast-food outlets

Fast-foodoutlets

Advertisingagencies

AirlinesInvestment

managementConsulting

Teaching

Soft drinks

Intangibledominant

Tangibledominant

Tangibility Spectrum

Positioning a services

“We are in the business of exceeding peoples very high expectations” Eisner - CEO Walt Disney

Service business are more difficult to manage Product waits on the shelf whereas customer interacts with service

provider whose service quality is variable.

TELEGRAMTELEX in Germany

1933

Siemens machine's-Telex 1960

tellex-Puma_teleprinter

1980`s

Positioning a Service:Mailgram

A mailgram is a type of telegraphic message which is transmitted electronically from the sender to a post office and then printed and delivered to the recipient via postal means.

WESTREN UNION

• Preference Of WU• Quality• Delivery• Flexibility• Security• Shorter red tape

Positioning a servicesvisual VS verbal

Product

Picture and visual element

Television and visual orientation

Service

Words and verbal element

Radio and verbal orientation

Positioning a Service

• High speed• Quality services• Proactive approach• Reliability --- delivering on promises

• Responsiveness--- willing to help

• Assurance --- improving trust and confidence

Low Cost vs High Speed

• Example:• Daewoo vs New khan,Niaz

Service preference of Daewoo

• Seat pitch/comfort• Seat width• Reclining capacity• Meal and bevrages• Staffing ratio• Departure & arrival lounge• Insured passanger• Healthy envoirment• Non stop

5-37

Positioning OfferingsPositioning Strategies

1. By attribute or benefit

2. By price and quality

3. By use or application

4. By user

5. By product or service class

6. Against competition