Brand extension


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Brand extension

  1. 1. Brand Extensions Brands have become the barrier to entry, but they are also the means to entry - Edward Tauber Akash C.Mathapati Asst Professor – Marketing Area Kirloskar Institute of Advanced Management Studies
  2. 2. Results of Extending a Brand More Good The Good Name The Extension The Brand Name Aids the Extension The Bad The Brand Name Fails to Help the Extension EFFECTS OF EXTENDING A BRAND TO A NEW PRODUCT The Ugly The Brand Name is Damaged Akash C.Mathapati Enhances the Brand Name More Ugly New Brand Name is Foregone
  3. 3. The Rationale for an Extension The contributions of both the brand name to the extension, and the extension to the brand name The extension may harm the brand name The extension may harm the brand, or prevent a new brand from being established Akash C.Mathapati
  4. 4. The Good: What the Brand Name Brings to the Extension • Brand Associations – Purchase decisions are based on a limited no. of product attributes – A credible & sustainable point of differentiation with respect to a key attribute can be difficult to create Akash C.Mathapati
  5. 5. • Edward M.Tauber studied 276 brand extensions & Concluded that most fit into 7 approaches: – – – – – – – Same product in a different form Distinctive taste/ingredient/component Companion product Customer franchise Expertise Benefit/attribute/feature Designer or ethnic image Akash C.Mathapati
  6. 6. Quality Associations • Many situations product attribute positioning may be futile – Brand can get into specification battle • 248 business managers were asked to identify their business’s sustainable competitive advantage – Most frequent mention was a reputation for quality • Infact some corporate names are on so many products that they lack strong specific associations Akash C.Mathapati
  7. 7. Awareness/Presence • 1st step is developing awareness of the brand & associating it with the product class • Brand name awareness provides a familiarity which can affect purchases of low involvement products • High recognition within the product class – a high visibility or presence • Creating awareness of a name & associating of a name & associating it with a product class can be expensive Akash C.Mathapati
  8. 8. – E.g.,Esso to Exxon ($200m), Black & Deckar $100m – GE line purchased in 1982 • When the brand can support heavy advertising on other categories, the brand awareness of the extension will benefit – E.g., Helen of Troy licenced the vidal sassoon name Akash C.Mathapati
  9. 9. Trail Purchase • A brand name purchased to a new name product reduces the risk for a prospective buyer • In a study of 58 new products introduced into the philadelphia area, the most important predictor of trial levels was the extent to which a know family brand was involved Akash C.Mathapati
  10. 10. More Good: Extensions Can Enhance The Core Brand • Extensions can enhance the core brand • An extension can provide name recognition & association to new segments – Winnebago industries Akash C.Mathapati
  11. 11. The Bad: The Name Fails To Help The Extension • The name does not add value – When a brand name is added simply to provide recognition, credibility, and a quality association – Substantial risk even if the brand is initially successful, it will be vulnerable to competition • E.g., Pillsbury Microwave Popcorn – Orville Redenbacher • 1989 Orville held 36% of Market Share of $420M, Pop Secret 21.7% Akash C.Mathapati
  12. 12. • It is particularly important for the brand extension to provide a benefit if the product class is well established – Designer name does not always guarantee success – An effort to establish the Beatrice name using the tag line “you’ve know us all along” did not add any value to the involved brands such as Wesson & Orville Redenbacher • Its useful to run a concept test to see if a name actually adds value Akash C.Mathapati
  13. 13. • Negative Attribute Associations – There is also the risk that a brand extension strategy could stimulate negative attribute associations • E.g., The Bic name, associated with disposable pens, lighters & razors did not work for perfume • Campbell soup called their line of spaghetti sauces Prego after they found that a campbell name left a connotation of being orange & watery Akash C.Mathapati
  14. 14. – Log cabin’s leader in the griddle-oriented syrup – disappointed efforts to enter the pancake-mix arena – Aunt Jemima was successful in going the other way • Negative associations can sometimes be reduced or suppressed by adding a second brand name with the right connotations or by elaborating the concept – E.g., Campbell’s special Torino Spaghetti Akash C.Mathapati
  15. 15. • The fit is Poor – The customer needs to be comfortable with the concept of the brand name’s being on the extension • Aaker & Keller found that two types of relationships between product classes were related to the acceptance of extension concepts: – Transferability of skills & assets – Complementarity Akash C.Mathapati
  16. 16. • Fit can also be based on functional attributes relating to brand performance or on intangible attributes such as prestige or status – Park, Milberg & Lawson’s Study – When prestige is the basis of fit, a brand can stretch further than when a functional attribute is the basis Akash C.Mathapati
  17. 17. • The extension is not Supported – Temptation to establish a new entry “on the cheap” relying on the brand name – Diet cherry coke – Some extensions reply too heavily on a brand name & thus skimped on advertising & promotion support Akash C.Mathapati
  18. 18. The Ugly: The Brand Name is Damaged • Having the extension fail is usually not nearly as bad as having it “succeed,” or at least survive, and damage the brand name by creating undesirable attribute associations, damaging the brand’s perceived quality, or altering existing brand associations Akash C.Mathapati
  19. 19. Undesirable Attribute, Associations are Created • An extension will usually create new brand associations, some of which can be potentially damaging to the brand in its original context – – – – Miller’s lite Black & Decker Sears financial network Lipton Soup Akash C.Mathapati
  20. 20. Existing Brand Associations Are Weakened • The brand associations created by the extensions can fuzz a sharp image which had been a key asset – Cadbury’s • As a brand is extended its product class associations may be weakened, but it may also develop a useful association with a type of product – Pillsbury(Flour), – Green Gaint (Vegetables) Akash C.Mathapati
  21. 21. • For majority of firms value is mainly on providing name recognition & Perceived Quality Akash C.Mathapati
  22. 22. Quality Image is Affected • A reputation for perceived quality is the basis of sustainable competitive advantage – General Mills attempted to capitalize on the Lacoste alligator • Attaching the brand to a lower price point enhances that the quality image of the brand itself will be affected – Hilton Hotels, Rolls - Royce – Cadillac introduces Cimarron in 80’s (version of GM’s Pontiac 2000 & Chevrolet Cavalier Akash C.Mathapati
  23. 23. A Disaster Occurs • A disaster out of control of a firm – Ivory Model – Tylenol Boxes – Audi 5000, 4000, Quattro Akash C.Mathapati
  24. 24. The Brand Franchise is Cannibalized • An important part of brand equity is a brand’s customer loyalty • If sales of a brand extension come at the expense of the original brand – Gillette attacked Barbasol with low end entry (Good News!) – Campbell’s Prego Brand attacked Progresso Akash C.Mathapati
  25. 25. More Ugly: A New Brand Name is Foregone • Perhaps the worst potential results of an extension is a foregone opportunity to create a new brand equity • Consider where would P&G would be without Ivory, Camay, Dreft, Tide, Pampers, Crest, Pringles etc • Establishing a new brand name provides a vehicle with which to generate a set of distinct associations without being burdened with an existing set e.g., HP, Dustbuster Akash C.Mathapati