Leveraging Brand EquityOne of the most important changesin the market is the proliferation ofextensions.
Managerial QuestionsWhen considering entering a new productcategory, two important questions:1. Should the firm use a brand extensionstrategy or a new brand strategy?2. If the firm chooses to use a brandextension strategy, under what conditionswill extensions be successful in capturingsufficient market share?
Why Extensions?Managers use extension strategies underthe assumption that brand associations(e.g., quality, reliability, status) and affect(attitudes) will transfer to the extension.
Line Extension Strategy When a brand is used to brand a new product that targets a new market segment within a product category currently served by the parent brand.Examples:• Coca-Cola diet• Colgate for Kids• Watt´s pear juice
Example• Bisleri is the pioneering brand in the mineral water category.• Originally, Bisleri used to come in a one litre bottle.• But recently, Bisleri has exhibited a spate of innovations.• The brand launched bottles of different sizes and quantities.• The Bisleri portfolio now includes one litre, 1.2 litre, 1.5 litre and 5 litre bottles.
• According to Gautam Singhania, Chairman and Managing Director, Raymond India: "Raymond aims to acquire a dominant position in the apparel sector in the country.• We believe that venturing into exclusive stores for our apparel brands will make our brands stronger and give the right impetus to our growth plans.• We have enhanced our offerings under all our apparel brands to provide a complete wardrobe solution."
• "Men today want different solutions for different occasions - formalwear, relaxed work wear, evening wear, club wear, traditional wear, travel wear as well as sportswear.• Our brands Park Avenue, Parx and Manzoni, have different categories to cater to this need.• Thus, all our brands offer a solution to changing mens fashion needs at different price points," says Shreyas Joshi, President, Raymond Apparel.
Why Line Extensions?• In most of the product categories including fast moving consumer goods, consumer durables and services, line extension has been the name of the game.• It is an expansionist move.• The firms seem to seek growth more vigorously.
Nine prominent reasons………• Customer Segmentation• Customer need for variety• Pricing Breadth• Capacity Utilization• Quick gains• Competitive Reasons• Trade Demands• Counter Competition• Image Benefits
Line Extension Risks• There are several dangers associated with line extensions.• Line Confusion - Marketers sometimes add products to their line without sound logic and reasoning, without any clear role and goal. This may confuse the customers and the retailers and will affect the brand’s owner company in the long run.
Line Extension Risks…• Encourage Variety seeking – Brand loyalty is every marketers dream. By line extension, customers practice and become the habitant of variety seeking. Hence it influence brand switching behaviours. The loyalty is thus weakened.
Line Extension Risks…• Success Myopia – An idea may be a grand enough to be converted into a full-fledged independent brand. But the lure of extension seems to be so strong that the ideas are brought into the market as line extensions. This implies loss of a winning asset in the long-term.
Line Extension Risks…• Strained relations - When the lines expand, marketers tend to pressurize their trade partners such as wholesalers and retailers to carry the complete line in accordance with their wishes. The pressure appears to be applied more intensely at the retail level. The marketers seek adequate shelf space, promotion and information. But at the retailers end, it brings confusion and chaos.• The result is the strained relations between the marketer and the retailer.
Brand Category Extension StrategyEffort to use a successful brand name to introduce a new product intoa different product category.Examples:Nike MP4 playerColgate toothbrushSony digital camera
BRAND EXTENSIONS• Using an existing brand name to promote a product in a different category, is Brand Extension.• The key difference between line and brand extension is the product category.• In line extension the pdt. Category remains constant whereas in brand extensions product category is a variable.
EXAMPLE• Ponds - Cold cream, Toilet soap Shampoo, Tooth paste, Moisturising lotion, Talc & Face wash.• LG – Television, Refridgerators, Computer monitors, Microwaves, Air Conditioners, Washing Machines & Mobile phones.• Park Avenue – Shirts, Shaving cream, Jeans, Belts, Perfumes, Soap & Razar.
Sub-Branding Strategy Using a new brand name in conjunction with a family brand name to introduce new products. Examples:• Courtyard by Marriott• Technics by Panasonic• Levi’s Dockers• Milo de Nestle
Co-Branding/Brand Alliance Strategies When two or more brand names are attached to a product. Examples:• Compaq - Intel (“Intel inside”)• Lan Chile-Mastercard-Banco Stgo
Example of Strategies• Parent Brand: Salomon (ski-equipment)• Line Extension: New type of skis• Brand (Category) Extension: Salomon tennis racquet• Sub-Brand: Avenger by Salomon• Co-Brand: ingredient brand for grip, frame, or strings (Wilson and Goodyear rubber on soles of ProStaff Classic tennis shoes)
Why Brand Extension?• Cost of New launches• Promotional Efficiency• Consumer Benefits• Feedback effects• Returns
Types of Extensions• Product form extension – A product launched in a different form usually means line extension, but if a different product form constitutes an entirely different product category.• Example:• Amul milk Amul Condensed milk• Real Juices Real Juice Concentrate
Types of Extensions• Companion Product – The idea here is to capitalise 0n product complementarity. The consumer may view both the products jointly.• Example : Colgate Dental Colgate Cream Tooth Brush Gillette Gillette Gillette Razors Shave forms After Shave
Customer Franchise• A marketer may extend a product range in order to meet the needs of a specific customer group. J&J J&J J&J J&J J&J Baby Baby Baby Baby Baby Oil Cream Shampoo Diapers Talc
Company Expertise• Brand Extensions often come in the forms of different product category introductions using a common name but emanating from a common expertise pool. This strategy is particularly seen in Japanese companies. Honda Honda Honda Lawn scooters Cars movers
Brand Distinction• Many brands achieve distinction in the form of a unique attribute, benefit or feature which gets uniquely associated with the brand.• For instance, Parachute may have expertise of ‘coconut nourishment’ in customers’ minds over time. This would give Marico Industries, the brand owner, the opportunity to launch a variety of products exploiting this distinction.• Parachute Hair Cooking Baby Baby Shampoo Cream Oil Oil Soap Oil
Brand Image or Prestige• A brand extension may involve a foray into unrelated product categories based on a brand’s exclusive image or prestige value.Steel, Automobile, Heavy Vehicles, Watches, S/W devpt. Training etc .,
Distinctive Taste, Ingredient orComponent• A brand may develop equity based on any and / or combination of taste, ingredient or component. Then the marketers can make entries into unrelated product categories capitalising on these properties. Nescafe Nescafe Nescafe Nescafe Nescafe Milk Cold Coffee Chocolate Biscuits Supplement Coffee
• Extensions involve transfer of associations from the parent brand to the extension.• The brand extendability depends on its character.• The brands can be classified into 5 types through extendability.
Five forms of brands• The Product Brand - it is a situation where there is very little difference between the brand and the product.• The brand is used as an identity of the product.• Example : vicks,
Form 2 – Formula Brand• Formula means a set procedure• A brand which comes in the formula category simply implies that a standard procedure has been used to make the product.• Example : cooking oil, pickles etc.,
Form 3 – Know – how brand• Know – how is an expertise that a firm develops in a specialized area of activity.• Example : nokia is known for user friendly.• Amul has developed its brand as an expertise in milk processing.
Form 4 – Interest brand• A brand may be defined by its centre of interest. It may reflect its core spirit.• Example – Gillette maintains its focus on men’s grooming in all its brands.• Logo is ‘the best a man can get’ which creates the interest among the target audience.• Whirlpool – home maker• Nike – winning – to be on the cutting edge.
Form 5 - Philosophy• The brand at this level acquires more intangible character and orientation.• The philosophy transforms its products in a realm altogether different from its physical reality.• Example : Parker pen, De beers diamond
Forms of brand extendabilityProduct Brand Formula Brands Know –howPillsburry Mother’s Atta brand Interest Recipes Pickles lime, Brand mango, Bajaj Philosophy mixed Disney Brand Irons, Fans, coolers, Toys, Cartier mixers etc., Theatre, Theme park, Watches, movies, etc jewellery, Bags, pens
Extensions……………….• Extensions are not simple as they appear to a layman.• Consumers reject extensions when they do not make sense.• Brand extension is not a physical act of merging two products.• It is a tough process involving marrying two cognitive or perceptual concepts in order to create a consistent entity.• Therefore, it must begin with exploring the brand in a prospect’s mind.
Exploring the brand involves seeking answers tothe following questions……. • What is a brand’s awareness level? • What are its recall and recognition levels? • What are different attributes associated with a brand? • What benefit associations are connected with a brand? • What are a brand’s personality associations? • What are the symbols associated with the brand? • What are a brand’s user associations? • What is the perceived essence of the brand? • What is a brand’s philosophy?
Strength of Associations - Ponds PONDS Talc Body Cream Feminine Floral care Room Nail Freshner, Body Beauty cream, -Body Talc Conditioning enamels soaps, lotion, -Talc for cream, Lip colours Fragrance, Body oil, cleansing Special etc shampoo, creams cream, etc occasions etc
Making an Extensionsuccessful• Aaker & Keller proposed certain assumptions about consumer behaviour which are fundamentally responsible for the success of a brand extension.• The parent brand enjoys positive beliefs and favourable attitude in customers memory.• It is these pre-existing beliefs and attitudes which help in the formation of positive beliefs and favourable attitude toward the brand extension.• The negative associations are not transferred to the brand extensions, also these are not created by the brand extension.
Possible Extensions for the Lubriderm Brand BRAND DEFINITIONS RELATED CATEGORIES moisturizer Soap - face cream - skin cream lotion sunburn - after-shave - babyNivea medicinal antiseptic - first-aid - hemorrhoid creamCream purity cotton - gauze - sterile pads body care emery boards - muscle toner - cotton swabs pump bottle liquid hair net - mustard - glass cleaner fragrance perfume - room deodorizer - deodorant
Category Extension Strategies1. Introduce the same product in a different form examples: Jello Pudding Pops, Starbucks coffee ice-cream2. Introduce products containing the brand’s distinctive taste, etc. examples: Haagen-Dazs Cream liqueur, Philadelphia Cream Cheese salad dressing3. Introduce companion products for the brand examples: Nikon Film, Duracell Durabeam flashlights, Colgate toothbrush4. Introduce products relevant to customer franchise of the brand examples: Visa Traveler’s Checks, Gerber baby bottles
Category Extension Strategies5. Introduce products capitalizing on the firm’s perceived expertise examples: Honda motorcycles, Canon photocopy machines, Canon Scanner6. Introduce products that reflect the brand’s distinctive benefit,attribute or feature owned: examples: Nestle chocolates, Nestle chocolate milkDove cream, Dove deodorant (Mild and Pure)7. Introduce products capitalizing on image or prestige of the brand examples: Calvin Klein clothes, Porsche sunglasses
Expanding Brand Meaning Through Extensions Original Extension New BrandBrand Product Products MeaningNesquik Flavoring Cereals, yogurt, Fun Food for milk chocolate sauce, for Kids (children) postre de leche.Crayola Crayons Markers, pens Colorful Crafts paints, pencils for Kids clay, etc.Nestlé Condensed Baby food, Nutritious and and powered cereales, choco- High Quality milk lates, ice-cream, etc. Food.Gillette Razor Blades Shaving Set, Personal Care deodorant. For Men and Women
Questions for Assignment• Highlight atleast five brands of various product category and find out the extension opportunities of those brands.• Find out which brand can be extended far from its present product, and which can move just above the extension boundary.