Brand extension by bhawani nandan prasad mba, iim calcuttaDocument Transcript
Brand Extension by Bhawani Nandan Prasad - MBA, IIM CalcuttaBrand extension is a marketing strategy in which a firm marketing a product with a well-developed image uses the same brand name in a different product category.Organisations use this strategy to increase and leverage brand equityTwo FMCG companies P&G (Procter & Gamble) and Unilever are concentrating on bigbrands that generate sales of more than $1 billion. P&G recently launched two newproducts using brand extension: new biodegradable wipes named Kandoo, launchedunder Pampers parent brand, and a new product for washing cars under Mr. Cleanparent brand.Brand Extension is the use of a successful brand name to launch a new or modifiedproduct or service. Explain this strategy with suitable examples.Park Avenue is one of the many brands offered by the Raymond Group. It providesstylish and innovative wardrobe solutions and is famous for its good fittings. The brandprovides formal clothing for various occasions like regular office wear, high poweredcorporate meetings and festivals. Park Avenue started off as a men’s wear brand. In2007 ‘Park Avenue Woman’, a range of business wear for women was launched. It isdesigned for the working women professionals of today.Brand Proposition of the original product- Park Avenue Men’s WearThe rationale for using the name Park Avenue for Raymond India’s ready to wear men’sclothing was to give a western name which was synchronous with great fabric and greatfit.The brand has over the years undergone many changes as it tries to reach out to theurban young corporate consumer. While it started off as a brand that was fashionableand meant for slightly older customers who trusted the Raymond heritage, the brandrepositioned itself later to tap the new managers, who wanted to be different, thatemerged in the 90s.In 2000 the brand came up with the new positioning tagline- ‘Start Something New’. Thebrand launched a new print and television campaign in order to shed its old image andtarget the young entrepreneurs who were emerging in the booming IT era. It realizedthat these young consumers wanted to be different and break away from the traditionalways to start something new.Analysis of the Brand “Park Avenue”Target Audience: The brand targets young middle class corporate employee who arefashion conscious but need to wear formal clothes on a daily basis. The brand also has asecondary audience in the form of older men which is primarily due to the strongheritage that this brand has.
Brand Personality: Park Avenue symbolizes a person (male) who likes to explore theunknown, do something different. He has an entrepreneurial spirit and wants to bea leader in everything he does. He is a person who wants to express himself and hisstyle through his clothes. Key Brand Values: The key brand values are- Smart, innovative, different, exciting,premium, trusted. We also believe that the brand also stood for masculinity beforeventuring into female clothing.Example of Brand Extensionsby Park AvenueThe brand has extended into: Accessories: Ties, belts, shoes, cufflinks Men’s Toiletries: Soaps, deodorants, aftershave, shaving cream, talcum powder, gelsAnalysis on the basis of Criteria for Brand Extensions:-Extension Category:The new category into which a brand extends should be in line with the nature of the parentbrand and sometimes even the expertise it represents. Accessories: While extending into accessories, Park Avenue leveraged its expertise inclothing and the association that consumers make with looking good in a corporate/formalenvironment. This is a natural extension for the brand to give consumers the full range offormal dressing-right from clothes to belts and shoes. Men’s Toiletries: Men’s toiletries are an extended part of a man’s looks. The products in thiscategory which fit in line with the brand Park AvenueThe value perceptionA successful brand extension has to ensure that there is consistency in the value perceptionof the brand in the new category as compared to in the original category Accessories: The accessories that Park Avenue sells are premium and elegant due to whichthey fit in with the values that the brand stands for.The description for accessories as follows: Shoes: Crafted from fine European leather and finished with a lustrous shine. Ties: Complete your ensemble with the perfect tie from Park Avenue. These exquisite wovenand printed ties come in various designs. These silk ties give a new meaning to the termpower dressing. From these descriptions, it is clear that Park Avenue continues to maintainthe premium, classy, new age, youthful image that it has built in clothing. Men’s Toiletries: The deodorants and perfumes that they sell have a label which reads asfollows-“Genuine French Eau De Parfum” with information on the pulse points which act asmini fragrance pumps. The French fragrance again adds uniqueness to the perfume which isin line with the brand values. The logic behind entering perfumes and deodorants was thatresearch showed that there was no major perfume brand in the men’s market.
On analyzing the distribution strategy of Park Avenue’s toiletries, we saw that thecompany’s distribution strategy is in line with its pricing strategy. Park Avenue soaps anddeodorants are available at normal general stores. Perfumes are available at supermarketsunlike big brands which are available only in shopping malls. The perfumes, which are pricedat around Rs. 450, need to be made available easily to the middle class consumer. We feltthat the pricing strategy in toiletries was in line with the pricing in clothing which is toappeal to the middle class consumer.On the whole we felt that Park Avenue’s brand extensions maintained the original values ofthe parent brand.Competitive EdgeThe last criterion we used for analyzing the brand extensions was to see the competitiveedge. A great brand in one category need not always offer a competitive difference overother brands in another category. It is necessary for the brand to offer consumers someadvantage in order for them to adopt the product in the new category.What are the pitfalls in brand extension strategy?a) Dilution of the existing brand image: underlines that the extensions are using the mostimportant asset of the company that i.e. its brand name. It can be a major advantage for theextension but it represents as well a huge risk for the existing brand because the brand imagecan be diluted. Park, McCarthy & Milberg, (1993, p60) said that those positive and negativeconsequences are “reciprocity effects” and defined as “a change in the initial customer’sbehavior regarding the brand, after an extension”. She explains that a brand extension candamage the brand. A dilution of the brand capital can happen by the occurrence of undesirableassociations or by the weakening of the existing associations. This latter can be a consequenceof new associations transferred from the extension.b) an accident occurring with a product can lead to tarnish the image of the all brand. In addition,it is sometimes difficult to associate one brand to two products without weakening the brandposition in the customer’s mind.c) Cannibalization: The extensions can cannibalize the existing products of the brand when thereare positioned in a close market. It means the extensions sales are increasing while those of theexisting brand’s products are following the opposite curved.Example of Brand Extension failureFollowing are example of brand extension failure in India:-i. Rasna Ltd. - Is among the famous soft drink companies in India. But when it tried to move awayfrom its niche, it hasn’t had much success. When it experimented with fizzy fruit drink“Oranjolt”, the brand bombed even before it could take off. Oranjolt was a fruit drink in whichcarbonates were used as preservative. It didn’t work out because it was out of synchronizationwith retail practices. Oranjolt need to be refrigerated and it also faced quality problems. It has ashelf life of three-four weeks, while other soft- drinks assured life of five months.
ii. Ponds toothpaste is a classic case of product failure by extension. Brands need to be careful tochoose the territory in which they tread. Brands need to be cautious while choosing the territoryin which they tread. Lack of proper research before entry into a new market or segment canlead to catastrophic results which include wasting of big sum of money on product developmentand marketing.HUL brand Ponds successfully moved from cold cream to other extensions such as Age defyingcreams, soap, shampoo & talc, because the basic premise of protection for the skin and freedomfrom wear and tear remained the same, while as in case of Ponds toothpaste its failed eventhough both the product are also to be used for cleanness and freshness.With toothpaste we clean & then spit it out, whereas with cream, soap or shampoo we apply itexternally. Thus perception of cleanness and freshness is taken so differently in differentproducts. Even-though the attributes are same, soap & toothpaste yet the market does notperceive it to be same.How does brand extension strategy could augment a core product and value proposition that setit apart from competitors? Presence: Initially consumers become aware that such a brand exists. It’s very important fora brand to have a solid base as it builds on this (i.e. only those who are aware of the brandare likely to consider it for further evaluation). Success of this stage primarily depends oneffective communication & word of mouth (which in turn depends on performance, thethird stage of this pyramid). Relevance: Out of those who are aware of the brand, some find its proposition relevant totheir needs. This is the stage where a brand gets into the consideration set of prospectiveconsumers. Performance: If the first two stages of the brand has invoked enough interest in theconsumers’ mind then they experiment with the brand. Those who find its performancesatisfactory at this stage put the brand into their repeat consideration set. Advantage: Those consumers who are satisfied at the 3rd stage of pyramid, start repeatingthe brand & their interaction with the brand starts. At this stage they start experiencing the‘extra advantages’ that the brand offers to them. Bonding: Out of those who have found extra advantages about the brand, some interactvery frequently & intensely with the brand & form an emotional bond with the brand.Example Look at how various extensions have strengthened ‘Park Avenue’ overall as a brand: Presence: As ‘Park Avenue’ did advertisement (especially Print ads) of accessories & sometoiletries (especially soap), it strengthened base (presence) of the ‘Park Avenue’ brand. Relevance: By evolving as a “complete grooming solution”, they have increased theirrelevance to the consumer. Performance & Advantage: Here the brand values of ‘Park Avenue’ which were transferredto extensions boosted these two levels of the brand pyramid.
Bonding: Consumers’ bonding with the brand increased as it gave them ‘a completegrooming solution’.