New Products and Brand Extensions

Introducing andNaming

New Productsand

Brand Extensions

NEW PRODUCTS AND BRAND EXTENSIONS

How does a firm grow?

A firm can:Focus on current products and markets•Market penetration strategy

Put existing products into new markets•Market development strategy

Put new products into existing markets•Product development strategy

Put new products into new markets•Diversification strategy

Fig : Ansoff’s product/market expansion grid

Fig: One way McDonald’s grows its brand is through market development and expanding in overseas markets such as Japan

When a firm introduces a new product, it has threechoices for branding it:

1. develop a new brand

2. apply one of its existing brands

3. use a combination of a new brand and an existing brand

Brand Extensions

uses an established brand name to introduce a new product

new brand called as sub-brand

existing brand called as parent brand

parent brand with multiple products called as family brand

Fig : Brand Extension

Brand extensions fall into two general categories :

Line extension

Category extension

Brand Extensions

ADVANTAGES OF BRAND EXTENSIONS

Facilitate New Product Acceptance

Improve brand image

Reduce risk perceived by customers

Increase the probability of gaining distribution and trial

Increase efficiency of promotional expenditures

Reduce costs of introductory and follow-up marketing programs

Avoid cost of developing a new brand

Allow for packaging and labelling efficiencies

Permit consumer variety-seeking

Fig : Lancôme is one of L’Oréal’s most successful global brands

Provide Feedback Benefits to the Parent BrandClarify brand meaning

Fig : Expanding Brand Meaning through Extensions

Enhance the parent brand image

Bring new customers into brand franchise and increase market coverage

Revitalize the brand

Permit subsequent extensions