Overview New Product & Brand Extension Brand Extension Types of Brand Extension Advantages Disadvantages How 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
Cont…… Product Existing New Existing Line Brand Extension ExtensionBrand Name Multi New New Brands Brands
Introduction of new productsThe three choices of a firm when they areintroducing 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)
BRAND EXTENSIONS A 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.
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
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 Category1. 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 categories E.g HP Product Innovation to surpass consumer expectations It increases awareness of the brand name Increases 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
Reasons For Product FailureProducts Showcase and Learning Center in Ithaca, NewYork 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 ExtensionsFacilitate 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 ExtensionsProvide Feedback Benefits to the Parent Brandand 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 Extension New Brand Product Products Meaning Weight Fitness Low-calorie Weight loss Watchers Centre foods & maintenance Sunkist Oranges Vitamins, Good health juices Kellogg’s Cereal Nutri-grain Health bars, Special snacking K barsAunt Jemima Pancake Syrups, Breakfast mixes frozen foods
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 brand Amul Butter-”reduced salt butter” is slowly eating 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 exists Consumer 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.
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 effectsConsider possible competitive advantages & reactions Design marketing campaignEvaluate extension success & effects on parent brand equity
Reference Strategic Brand Management by Kelvin Lane Keller Marketing Management by Philip Kotler Kelvin Lane Keller Abraham Koshy Mathileshwar Jha