NEW PRODUCTS ANDBRAND EXTENSIONSByNavneet Agrawal
Overview New Product & Brand Extension Advantages Disadvantages How Consumers Evaluate Extensions?
What Is A “Brand” 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 –BrandingDecisions A new brand – individually chosen for the new product. An existing brand name applied in some way. A combination of a new brand with an existing brand.
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 a sub- brand.
BRAND EXTENSIONS 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.
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.(widening the net to catch new consumers.) It’s a great way to reinforce a brand, reach out to new customers, create a BUZZ
Advantages Of Brand Extensions Improve brand image Reduce risk perceived by Customers Permit consume variety-seeking
Advantages Of BrandExtensions 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
Advantages Of BrandExtensions 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 BrandExtensions Enhance the parent brand image Bring new customers into brand franchise and increase market coverage Revitalize the brand Permit subsequent extensions
Disadvantages Of Brand Extensions 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 BrandExtensions Can succeed but diminish identification with any one category Can succeed but hurt the image of parent brand
Disadvantages Of BrandExtensions Can confuse or frustrate consumers Can encounter retailer resistance Can dilute brand meaning Can cause the company to forgo the chance to develop a new brand
When are Brand ExtensionsAppropriate? 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 EvaluatingConsumer’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 ExtensionOpportunities Define actual & desired consumer knowledge Identify possible extension candidates Evaluate potential of the extension candidate Evaluate potential candidate feedback effects Consider possible competitive advantages & reactions Design marketing campaign Evaluate extension success & effects on parent brand equity