Brand Extensions 09

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Brand Extensions 09

  1. 1. Brand Extensions
  2. 2. Growth strategies Current Products New Products Current Market New Market Market Penetration Strategy Product Development Strategy Market Development Strategy Diversification Strategy
  3. 3. Brand Extensions <ul><li>When a firm introduces a new product, it has three choices on branding </li></ul><ul><li>Develop a new brand </li></ul><ul><li>Apply one of its existing brands in some way </li></ul><ul><li>Use a combination of new and existing brand </li></ul>
  4. 4. Brand Extensions <ul><li>Brand extension –when a firm uses an established brand to introduce a new product </li></ul><ul><li>When a new brand is combined with an existing brand, the brand extension can also be called a sub-brand </li></ul><ul><li>The existing brand is called the parent brand, and if associated with multiple product is called a family brand. </li></ul>
  5. 5. Brand Extensions <ul><li>Brand extension can be classified as: </li></ul><ul><li>Line extensions : when the parent brand is used to brand a new product that targets a new market segment within the same product category </li></ul><ul><li>Category extensions : when the parent brand is used to enter a different product category </li></ul>
  6. 6. Advantages of Extensions <ul><li>Well planned and well implemented extensions offer a number of advantages: </li></ul><ul><li>Facilitate New Product acceptance : high failure rate of new products. A familiar brand name reduces the risk and as a brand extension is more likely to succeed </li></ul>
  7. 7. Advantages of Extensions <ul><li>Improve brand image : a well-known and well-liked brand evokes consumer expectations on performance. </li></ul><ul><ul><li>Brand extensions also evoke consumer expectations based on prior associations/knowledge of the brand and the extent to which these are relevant to the new product. </li></ul></ul><ul><ul><li>These inferences may improve strength, favorability and uniqueness of the extension brand's association </li></ul></ul>
  8. 8. Advantages of Extensions <ul><li>Reduce risk perceived by consumer – due to familiarity </li></ul><ul><li>Increased probability of gaining distribution and consumer trial </li></ul><ul><li>Increase in efficiency of promotional expenditure </li></ul><ul><li>Reduced costs of introductory and follow-up marketing programs </li></ul>
  9. 9. Advantages of Extensions <ul><li>Avoid costs of developing a new brand in terms of market research, brand elements development cost </li></ul><ul><li>Allow for packaging and labeling efficiencies –identical packaging elements lowers production cost </li></ul><ul><li>Permit Consumer variety seeking </li></ul>
  10. 10. Advantages of Extensions <ul><li>Provide Feedback benefits to Parent brand </li></ul><ul><li>Clarify Brand meaning – e.g. Cadbury’s means ‘sweetness and celebration’ </li></ul><ul><li>Enhance the Parent brand image – by adding new brand associations </li></ul><ul><li>Bring in new customers and increase market coverage. </li></ul><ul><li>Revitalise the brand </li></ul><ul><li>Permit subsequent extensions </li></ul>

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