Brand extension


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Brand extension

  2. 2. What Is A “Brand”• Brand is a name, term, sign, symbol, design, or acombination of them, intended to identify the goodsor services of one seller or group of sellers and todifferentiate them from those of competitors.• A BRAND is symbolic embodiment of all theinformation connected to a Company, Product orService.• It serves to create associations and expectations fromproducts made by a producer, in the mind of theconsumer.• The key objective being “to create a Relationship ofTRUST with its consumers”.
  3. 3. How does a firm grow?• Ansoff’s Growth Share Matrix
  4. 4. LineExtensionBrandExtensionMultiBrandsNew BrandsExisting NewExistingNewBrandNameProductCont……Cont……
  5. 5. • The three choices of a firm when they areintroducing a new product– New brand for new product– Use of existing brand for the new product– Combination of the new brand with the existingbrand– (Second and the third options are related to brandextension)Introduction of new products
  6. 6. • A Brand Extension occurs when a firm usesan established brand name to introduce a newproduct (approaches 2 or 3)• When a new brand is combined with anexisting brand (approach 3), the brandextension can also be called a sub-brand.• An existing brand that gives birth to a brandextension is the parent brand.• If the parent brand is already associated withmultiple products through brand extensions,then it may also be called a family brand.BRAND EXTENSIONS
  7. 7. Reseach finding in favour of BE• 30% new brands survive longer than 4-years.50% Brand extensions survive the sameperiod.• Trial rate of BEs is 23% higher.• Conversion rate is 17% vs. 13% for newbrands•• Loyality rate is 61% higher.
  8. 8. LINE EXTENSION• The parent brand is used to brand a newproduct that targets a new market segmentwith in a product category currently served bythe parent brand.• A line extension often adds a different flavoror ingredient variety, a different form or size,or a different application for the brand.• Eg: Head & Shoulders
  9. 9. Head&Shoulder’sExtensionCoke’s Line ExtensionCoke’s Line Extension
  10. 10. CATEGORY EXTENSION• The parent brand is used to enter a differentproduct category from that currently servedby the parent brand.• Eg: ITC
  11. 11. Strategies For Establishing a Category• Introduce the same product in a different form• Introduce product that contain the brand’s distinctivetaste, ingredient or component.• Introduce companion product for the brand.• Introduce products relevant to the customer franchiseof the brand.• Introduce products that capitalize on the firm’sperceived expertise.• Introduce products that reflect the brands distinctivebenefit, attribute or feature.• Introduce products that capitalize on distinctiveimage or prestige of the brand.
  12. 12. Product Form ExtensionAmul MilkAmulCondensed MilkReal Juices RealJuice Concentrate
  13. 13. Image-related extensionColgate DentalCreamColgate ToothBrushGillette Razors GilletteShave FoamGillette AfterShave
  14. 14. Customer FranchiseJ & JBabyShampooJ & JBabyTalcJ & JBabyOilJ & JBabyDiapers
  15. 15. Unrelated extensionHondaCarsHondaGensetsHondaScootersHondaLawnmovers
  16. 16. Brand ExtendibilityProduct 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 identifythe product, maybe for internal purposes. The brand does not play any role from thecustomer’s point of viewFormula Brand Formula means a set procedure (used to make the product). This type of brand may befind in categories like cooking oil, food, and picklesKnow-howBrandKnow-how is an expertise that a firm develops in a specialized area of activity. Sony isknow to have expertise in miniaturization and robotics. Honda has know-how inengines. Amul has developed expertise in milk processingInterest Brand It’s the centre of interest or the core spirit of the brand. Gillette brand maintains itsfocus on men’s grooming in all its brands. Nike’s focal point is winning. Whirlpool’scentre of interest is the home (‘homemaker’)Philosophy The brand at this level acquires more intangible character and orientation. Thisgenerally happens in case of designers and artists. The Armani signature on theproduct provides a higher philosophical meaning – a meaning proudly expresses inArmani’s creatively styled products
  17. 17. Product dissimilarityPhilosophy BrandCartierInterest BrandDisney (Entertainment)Know-how BrandBajaj (Electronics)Formula BrandMother’s RecipesProduct BrandRose Brand FlourPicklesLemonPicklesMangoPicklesMixedOTGIronsFansCoolersMixersToastersToysTheatreMoviesThemeParksMusicClothesAcces-soriesGamesWatchesJewelleryBagsPensExtendibility of a Brand
  18. 18. Advantages Of Brand Extensions• Facilitate New Product Acceptance– Improve brand image– Reduce risk perceived by Customers– Permit consume variety-seeking
  19. 19. Advantages Of Brand Extensions• Increase the probability of gainingdistribution and trial• Increase efficiency of promotionalexpenditures• Reduce costs of introductory & follow-upmarketing programs (save 40-80%)• E.g. Apple iPods• Avoid costs of developing a new brand• Allow for packaging & labeling efficiencies
  20. 20. Advantages Of Brand Extensions• Provide Feedback Benefits to the ParentBrand and Company– Clarify brand meaning– Enhance the parent brand image– Bring new customers into brand franchise andincrease market coverage– Revitalize the brand– Permit subsequent extensions
  21. 21. Disadvantages Of Brand Extensions• Can confuse or frustrate consumers• Can encounter retailer resistance• Can fail & hurt parent brand image– Xerox Computers-synonymous with copiers & noone believed they could make computers• Can succeed but cannibalize sales of parentbrand– Amul Butter-”reduced salt butter” is slowly– eating up Amul normal butter•
  22. 22. Disadvantages Of Brand Extensions• Can succeed but diminish identification withany one category• Can succeed but hurt the image of parentbrand• Can dilute brand meaning• Can cause the company to forgo the chance todevelop a new brand
  23. 23. When are Brand Extensions Appropriate?• When Prior Brand equity exists• Consumer must see some “connection”between the proposed extension and theparent brand.• The proposed extension contributes to andreinforces the overall brand equity of theparent brand.
  24. 24. Reasons For Product Failure• Products Showcase and Learning Center inIthaca, New• York identifies this.– The market was too small (insufficient demandfor type of product).– The product was a poor match for the company.– The product was justified on inadequate orinaccurate marketing research, or the companyignore research result.– The company was too early or too late inresearching the market.– The product provided insufficient return oninvestment.
  25. 25. Reasons For Product Failure• The product was not new or different (a pooridea that really offered nothing new).• The Product did not go hand in hand withfamiliarity.• Credibility was not confirmed on delivery• Consumers could not recognize the product
  26. 26. Conditions For Evaluating Consumer’s BrandExtension• Consumers have some awareness & positiveassociations about the parent brand• At least some of these positive associationswill be evoked by the brand extension• Negative association are not transferred fromthe parent brand• Negative associations are not created by thebrand extension
  27. 27. Evaluating Brand Extension OpportunitiesDefine actual & desired consumer knowledgeIdentify possible extension candidatesEvaluate potential of the extension candidateEvaluate potential candidate feedback effectsConsider possible competitive advantages & reactionsDesign marketing campaignEvaluate extension success & effects on parent brandequity