Brand and Line extensions

Brand Explosion Brand Consolidation Brand variants

Brand Extensions: How does a firm grow? A firm can: Focus on current products and markets Market penetration strategy Put existing products into new markets Market development strategy Put new products into existing markets Product development strategy Put new products into new markets Diversification strategy

A firm can:

Focus on current products and markets

Market penetration strategy

Put existing products into new markets

Market development strategy

Put new products into existing markets

Product development strategy

Put new products into new markets

Diversification strategy

Brand Extensions Brand extension Involves using an existing brand name to launch a product in a different category. Category extension Parent brand is used to enter a different product category from that currently served by the parent brand Swiss army watches, Porsche bicycles

Brand extension

Involves using an existing brand name to launch a product in a different category.

Category extension

Parent brand is used to enter a different product category from that currently served by the parent brand

Swiss army watches, Porsche bicycles

Ponds LG Park Avenue

Line Extensions Line extension Parent brand is used to brand a new product that targets a new market segment within a product category currently served by the parent brand H&S dry scalp shampoo Line extension Involves making entries in brand’s exiting product category by using same brand name. These entries can come in the form of varying product sizes, flavors, colors, and ingredients and forms

Line extension

Parent brand is used to brand a new product that targets a new market segment within a product category currently served by the parent brand

H&S dry scalp shampoo

Line extension

Involves making entries in brand’s exiting product category by using same brand name. These entries can come in the form of varying product sizes, flavors, colors, and ingredients and forms

Advantages of Extensions Reduce risk perceived by customers & distributors Decrease cost of gaining distribution & trial Increase efficiency of promotional expenditures Avoid cost (and risk) of developing new names Allow for packaging and labeling efficiencies Variety-seeking

Reduce risk perceived by customers & distributors

Decrease cost of gaining distribution & trial

Increase efficiency of promotional expenditures

Avoid cost (and risk) of developing new names

Allow for packaging and labeling efficiencies

Variety-seeking

Advantages of Extensions Enhance the parent brand image Improve strength, favorability, and uniqueness of brand associations Improve perceptions of company credibility Convey broader brand meaning to consumers Clarify core benefit proposition and business definition of the company Bring new customers into the franchise and increase market coverage

Enhance the parent brand image

Improve strength, favorability, and uniqueness of brand associations

Improve perceptions of company credibility

Convey broader brand meaning to consumers

Clarify core benefit proposition and business definition of the company

Bring new customers into the franchise and increase market coverage

Disadvantages of Extensions Extensions have risks, too. They can fail. Moreover, extensions can potentially result in the following costs: Cannibalize sales of the parent brand Hurt the image of the parent brand Forego the chance to develop a new brand name or market the parent brand differently (opportunity cost)

Extensions have risks, too.

They can fail.

Moreover, extensions can potentially result in the following costs:

Cannibalize sales of the parent brand

Hurt the image of the parent brand

Forego the chance to develop a new brand name or market the parent brand differently (opportunity cost)

Consumers have some awareness of and positive associations about the brand in memory Some of these positive associations are evoked by the brand extension Negative associations are not transferred from the parent brand Negative associations are not created by the brand extension Brand Extension Assumptions

Consumers have some awareness of and positive associations about the brand in memory

Some of these positive associations are evoked by the brand extension

Negative associations are not transferred from the parent brand

Negative associations are not created by the brand extension

Product Form Extension Real Juice Concentrate Real Juices Amul Condensed Milk Amul Milk

Companion Product Gillette Shave Foam Gillette After Shave Gillette Razors Colgate Tooth Brush Colgate Dental Cream

Customer Franchise J & J Baby Talc J & J Baby Oil J & J Baby Diapers J & J Baby Shampoo

Company Expertise Honda Gensets Honda Scooters Honda Lawnmovers Honda Cars

Types of Brand Extensions Brand Distinction *hypothetical Parachute Cream Parachute Hair Oil Parachute Shampoo Parachute Cooking Oil* Parachute Coconut Expertise

Brand Distinction

Types of Brand Extensions Distinctive Taste, Ingredient or Component Cartier Watches Cartier Purses Cartier Pens Cartier Jewellery

Distinctive Taste, Ingredient or Component

The Product Brand Formula Brand Know-how Brand Interest Brand Philosophy

The Product Brand

Formula Brand

Know-how Brand

Interest Brand

Philosophy

Brand Extendibility The brand at this level acquires more intangible character and orientation. This generally happens in case of designers and artists. The Armani signature on the product provides a higher philosophical meaning – a meaning proudly expresses in Armani’s creatively styled products Philosophy It’s the centre of interest or the core spirit of the brand. Gillette brand maintains its focus on men’s grooming in all its brands. Nike’s focal point is winning. Whirlpool’s centre of interest is the home (‘homemaker’) Interest Brand Know-how is an expertise that a firm develops in a specialized area of activity. Sony is know to have expertise in miniaturization and robotics. Honda has know-how in engines. Amul has developed expertise in milk processing Know-how Brand Formula means a set procedure (used to make the product). This type of brand may be find in categories like cooking oil, food, and pickles Formula Brand It is a situation where there is very little difference between the brand and the product. Brand is a close approximation of the product. Passively, the brand is used to identify the product, maybe for internal purposes. The brand does not play any role from the customer’s point of view Product Brand

Extendibility of a Brand Product dissimilarity Philosophy Brand Cartier Interest Brand Disney ( Entertainment) Know-how Brand Bajaj ( Electronics) Formula Brand Mother’s Recipes Product Brand Rose Brand Flour Pickles Lemon Pickles Mango Pickles Mixed OTG Irons Fans Coolers Mixers Toasters Toys Theatre Movies Theme Parks Music Clothes Acces- sories Games Watches Jewellery Bags Pens

Brand Extendibility Amul Milk Amul Milk Type I II III Amul Expertise In milk processing: Milk, Ghee, Butter, Condensed Milk Amul Symbol Personality: Lovable Indianness Taste Fun Trustworthy Value Good Ice Cream Cheese Mil Additive Chocoloate “ Amulishness” Drinks? Energy Bar? Energy Tabs? Mil Cakes? Biscuits? Product Formula/ Expertise/ Brand Recipe Know-how Interest Philosophy Time / Brand’s Evolution Products are manifestations of Brand Brands identifies the product