The Curious Case of Brand Extensions

The Curious Case ofBrand Extensions

• Introduction of a host of new products under their strongest brand names

What is a Brand Extension?

• Improved odds of new-product success• Positive feedback effects• Lesser cost of advertisements

Pros of a Brand Extension

• Brand dilution• Cannibalization of existing products• Loss of core customers

Cons of a Brand Extension

Concepts and Ideas Based onthe HBR article-

“Preserve the Luxury or Extend the Brand”

Chateau de Vallois

Gaspard- the owner, is dilemmatic,Whether to extend the brand, or preserve the luxury.

Preserving Luxury

Difference between Exclusivity and Scarcity

Perceived Brand Value

Gaspard feels it is not right to upset his distributors(negociants) by introducing a new brand of wine, and sell it directly

Importance of Distribution Channels

There is a high risk of:• Brand dilution• Perceived brand value’s loss• Loss of core customers• Might annoy the distributors

Concluding…

• They don’t have enough grapes

• They don’t own a distribution channel

• The core customer base is extremely loyal

• Distributors enjoy a healthy relationship

•

Deciding factors

What should Gaspard do?

He must lean towards Preserving the Luxury

Any alteration to the tradition can be counter-productive

A peek into the Indian Context

• India is a developing and densely populated country• Huge market segments• Most segments’ size increasing rapidly

The Key Factors

• Entered the Indian market in 1990• Initially positioned as a premium and fashionable menswear brand

How Van Heusen initiated?

• Targeted age group- 25-45 years• Young office goers- fashion for the corporate world

Demographics

• The segment of below 25 years age was increasing rapidly

OPPORTUNITY!!

The need for extension

The Launch of VDot

• Launched in 2006, as a club wear brand• Offered denim collection with trendy designs• Differentiated its product from regular wear by promoting boldly

and attractively

How did it make its mark?

And again…

Introduced Van Heusen Woman with Indian celeb Nargis Fakhri named as the brand ambassador

• In early 1990s, number of women entering workforce started increasing

• No formal wear brand for office going women in India

OPPORTUNITY!!

The Key Factors

•Van Heusen Woman launched in India in 2006• Offered complete wardrobe solutions to women

Thus..

And the recent one..

Van Heusen SportLaunched in 2011, it produces wear with a sporty look

• It registered a 10% increase in sales in 2012-13• Up to 20% growth in turnover in fiscal 2013• It maintained its focus on the new categories

How did it go for Van Heusen?

•Menswear continued to be the primary growth driver

•Womenswear- small but fast growing

The current players

Concluding..

Van Heusen’s decision to extend was a spot-on success!

• Parent brand’s equity• Optimal POPs & PODs• Implications on parent brand’s profitability• Earlier scenario of the to-be-introduced product line

What judges the potential success of an extension?

Savlon introduced itself as a product which:• Had a different smell• Didn’t turn cloudy in water• Didn’t give a stinging sensation

All differing with the existing leader, DETTOL

The Case of Dettol & Savlon

A case of Optimal POD selection

Savlon advertised the superior efficacy of the product and highlighted the “no-sting” property

• Brand extension can be rewarding, but may prove to be equally fatal simultaneously.• With proper concepts, market segment knowledge, and a little

research, one can increase the odds of a successful brand extension.• A luxurious brand, though, enjoys a higher level of brand loyalty. It

must take extra care before extending. The loyal customer base must never be played with.

Summary

A very big Thank You to

Prof. Sameer Mathurfor making this internship

a great experience by teaching and guiding usmethodologically and enhancing our knowledge

manyfold.

By: Kumar Ankur

IIT-BHU