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Brand extension


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Brand extension

  1. 2. <ul><li>  </li></ul><ul><li>1Brand = 1 Product = 1 Promise (Also known as House of Brands) </li></ul><ul><li>  </li></ul><ul><li>P&G have 4 brands of shampoos all having separate promises & target markets. </li></ul><ul><li>Head & Shoulders dominates the dandruff control category. </li></ul><ul><li>Pert-Plus , the perky category poineer targets the market for a combined conditioner shampoo market. </li></ul><ul><li>Pantene ---for hair so healthy it shines---a brand with a technological heritage focuses a market concerned with enhancing hair vitality. </li></ul><ul><li>Lately Herbal Essence for those who believe in nature. Organic pleasure. </li></ul><ul><li>  </li></ul>
  2. 3. <ul><li>Believes in extending the brand into various other categories for the following reasons: </li></ul><ul><li>  </li></ul><ul><li>1.Brand has both subjective and objective features. It’s an assest. It’s built over time and accumulates </li></ul><ul><li>tangible and intangible capital. It should therefore be used to fill in the financial growth gap. </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>2.R&D and advertising costs are very high in building a brand. Launching costs of a new brand,on </li></ul><ul><li>an average,is 21% higher than a Brand extension. Subsequently,marketing a Brand extension is much </li></ul><ul><li>more economical. </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>3.Brand extension gives access to accumulated Image Capital of the brand. </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>4.Brand extension defends risks from competition. </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>5.It re-inforces Image Capital. </li></ul><ul><li>  </li></ul>
  3. 4. <ul><li>Examples: Dettol having been extended into shaving cream,Talcum powder,Soap &Band aid tape. </li></ul><ul><li>National spices into Ketchup,Aachar and Jam jellies. </li></ul><ul><li>  </li></ul><ul><li>  </li></ul>
  4. 5. <ul><li>30% new brands survive longer than 4-years.50% Brand extensions survive the same period. </li></ul><ul><li>  </li></ul><ul><li>2.Trial rate of BEs is 23% higher. </li></ul><ul><li>  </li></ul><ul><li>3.Conversion rate is 17% vs. 13% for new brands </li></ul><ul><li>  </li></ul><ul><li>4.Loyality rate is 61% higher. </li></ul>
  5. 6. <ul><li>Line:Variety in the same brand </li></ul><ul><li>LUX has rose,oil of cade,white &several other variety. </li></ul><ul><li>Mitchell’s has tomato ketchup,garlic and mustard sauce. </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>Range: Multiple SKUs &Sizes </li></ul><ul><li>Colgate is available in large,medium &small packs. </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>Brand: Extending into different category </li></ul><ul><li>Lifebuoy soap into Lifebuoy shampoos </li></ul><ul><li>Lipton Tea into Dates,Soups,Coffee </li></ul>
  6. 7. <ul><li>When extension is made close to the brand core value,it is called close extension. Mars chocolates </li></ul><ul><li>were extended into Mars Ice cream-both are fun food items. </li></ul><ul><li>Gillette extending into foam,gel & deodorant </li></ul><ul><li>  </li></ul><ul><li>Yamaha Motor cycles,generators& keyboards are remote extensions. </li></ul>
  7. 8. <ul><li>3 key factor have to be considered seriously before embarking upon a brand extension decision. </li></ul><ul><li>  </li></ul><ul><li>1.Fit </li></ul><ul><li>  </li></ul><ul><li>2.Added Value </li></ul><ul><li>  </li></ul><ul><li>3.New associations enhancing Brand Equity </li></ul><ul><li>  </li></ul>
  8. 9. <ul><li>Fit: </li></ul><ul><li>  </li></ul><ul><li>Know the brand well. Understand its essence and deeper meaning. Take the brand vision,picture,associations,persona and positioning into consideration. </li></ul><ul><li>  </li></ul><ul><li>BIC depicts disposability .Its pen,razors & lighters worked well. But perfumes did not. </li></ul><ul><li>Dettol well received by the market in the Water Purifying segment. </li></ul><ul><li>McDonald could not succeed in Photo coping </li></ul><ul><li>Caterpillar shoes succeeded because core values of heavy machinery & safety shoes were the same---strength. </li></ul><ul><li>Lacoste not extending into leather jackets </li></ul><ul><li>  </li></ul><ul><li>  </li></ul>
  9. 10. <ul><li>Adding Value: </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>Wherever the brand goes,it should help the new offering. The brand name alone help customers articulate </li></ul><ul><li>Why the offering is superior to other brands. This will assist the brand offer associations that will be relevent,credible and valued by customers. </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>Ralph Lauren ---POLO,Collections,Chaps </li></ul><ul><li>Teffall ---Weighing scales,Kitchen wares,Telephones </li></ul><ul><li>Toshiba--- TV,Laptop,Refrigiator </li></ul><ul><li>Philips- --CT scanners,Electric shavers,DVDs </li></ul>
  10. 11. <ul><li>Enhancing Brand Equity through Associations: </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>The equity should be enhanced by the brand’s presence in another context-not only from increased </li></ul><ul><li>Visibility but from the associations generated. </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>Virgin Cola’s outrageous plan to attack Coke strengthen the underdog image that is the essence of the </li></ul><ul><li>Brand. </li></ul><ul><li>  </li></ul><ul><li>Sualin,Saduri,Kaarmina,Joshandi from Hamdard </li></ul><ul><li>  </li></ul><ul><li>Cerelac,Kit Kat,Pure Life,Polo Milk Pak from Nestle` </li></ul><ul><li>  </li></ul><ul><li>  </li></ul>
  11. 12. <ul><li>It’s vital that both internal and external researches are conducted—Quantitative &Qualitative---to find out where consumers want the brand signature. </li></ul><ul><li>  </li></ul><ul><li>  </li></ul>
  12. 13. <ul><li>1.Expected Volumes :Potential winners should not bear house name. Small volume products should . </li></ul><ul><li>AVA.Fontalia.Mountain Dew. </li></ul><ul><li>  </li></ul><ul><li>2. Competion: In a vacuum,the brand should not bear the house name. In a crowded field,it should. </li></ul><ul><li>Lays.Pringle </li></ul><ul><li>Revlon-cosmetics.Cogate-Palmolive. </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>3.Advertising Support: Big budget brands should not bear the house name. Small budget brands may. </li></ul><ul><li>Lipton.Supreme.Rooh Afza </li></ul><ul><li>UBL-Address.ABL-credit card </li></ul><ul><li>  </li></ul><ul><li>4.Significance: Break through products should not bear the house name. Commodity products should. </li></ul><ul><li>Walkman.Next </li></ul><ul><li>Guard Rice.Ashrafi atta. Engro Urea.Fauji Fertilizer </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>5.Distribution: Off-the shelf items should not bear the house name. </li></ul><ul><li>Lux.Habib Cooking oil.Pepsi.Coke </li></ul><ul><li>  </li></ul><ul><li>  </li></ul>
  13. 14. <ul><li>The Brand Relationship Spectrum(indicates degree of Brand extension by various companies) </li></ul><ul><li>  </li></ul><ul><li>1. House of Brands :No link is shown to the Corporate or the parent brand </li></ul><ul><li>Examples:Almost all brands of P&G.Shampoo brands or Detergents like Ivory,Tide,Ariel </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>2.Endorsed Brands: Brand is stronger than the endorser but the link remains. </li></ul><ul><li>Examples :Nestle`s Kit Kat,Polo,After Eight.Alto.Cultus.Belino </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>3.Sub-Brands: Normally the sub-brand is weaker and the endorser plays the driver’s role. </li></ul><ul><li>Examples :NBP-Siaban.Nestle` Pure life. </li></ul><ul><li>  </li></ul><ul><li>4.Branded House: No brands. Company is the only brand. </li></ul><ul><li>Examples :Siemens.BMW.Virgin.Samsung.Nokia.LG.Toshiba </li></ul><ul><li>  </li></ul><ul><li>  </li></ul>
  14. 15. <ul><li>1. As a rule when BE is close to its core, it should not receive a new brand name. </li></ul><ul><li>National spices, Aachars,Ketchup </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>2. When it’s remote,it should be helped by a specific or sub brand name. </li></ul><ul><li>Energile. Dalda. Blue Band. Signal II. </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>  </li></ul>
  15. 16. <ul><li>1. Foreseeing Risks. Price Fischer didn’t not enter the toddler segment because of accidents that may </li></ul><ul><li>come with it. </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>2.Extension should ensure transfer of positive attributes; non-transfer of negative attributes. </li></ul><ul><li>TCS offering both international and local courier service </li></ul><ul><li>Lifebuoy and Obsession are for two different segment. Link may damage the market. </li></ul><ul><li>  </li></ul><ul><li>  </li></ul>
  16. 17. <ul><li>1. Low advertising(Lux bathing gel) </li></ul><ul><li>  </li></ul><ul><li>2.Low quality(Trust cotton swabs) </li></ul><ul><li>  </li></ul><ul><li>3.Failure to highlight the main brand and focus only on the extension(Hilal’s orange drink) </li></ul><ul><li>  </li></ul><ul><li>4.Coherence of the marketing mix. Marketing mix to gel in properly. Signal chewing gums displayed </li></ul><ul><li>with toothpaste. </li></ul><ul><li>  </li></ul><ul><li>5.Brand extensions are likely to fail in new markets or in growth stage. This is so because young </li></ul><ul><li>markets have little competition. Few brands. Few positionings. While brand extension needs a brand </li></ul><ul><li>with strong positioning. </li></ul><ul><li>  </li></ul><ul><li>Pepsi Diet.RC Diet both launched in early stages. Coke came up with Tab </li></ul>
  17. 18. <ul><li>1.The only way for a brand to give a single meaning to a collection of extensions is to regard them </li></ul><ul><li>from a higher view point(Brand Vision) </li></ul><ul><li>  </li></ul><ul><li>2.To make distant extensions more meaning ful,the brand has to serve more as a source of inspiration and a value system that can embed itself in different functions. </li></ul><ul><li>  </li></ul><ul><li>3.Brands having only a physical facet and no profound identity do not lend themselves for large extensions. When a brand is close to its product class, it's difficult to extend. </li></ul>
  18. 19. <ul><li>Product brand = Egg shampoo. Palm oil. Umbrella cocu nut oil </li></ul><ul><li>Formula brand =Mitchels,Shan,National </li></ul><ul><li>Know-how =Levers.Gillette.Palmolive </li></ul><ul><li>Interest =Sony.LG.Samsung </li></ul><ul><li>Value = GE. </li></ul>
  19. 20. <ul><li>Brand managers should be aware of the dangers of excessive extension practices. Sometimes an extension is chosen through simple laziness or for the sake of conformity. In reality it would be </li></ul><ul><li>better to launch a new brand. This is certainly more risky,costly and needs more and energy,but the future of the company rests on its portfolio of strong brands. </li></ul>
  20. 21. <ul><li>There is an opportunity cost for brand extension that is not quantifiable: it is the strong new brand that was not created. This new brand could have allowed a better coverage of the present market,or a deeper penetration of new,young and emergent markets which could bring much growth to the company. </li></ul>
  21. 22. <ul><li>Stress on the brand through extensions </li></ul><ul><li>1.Type of the brand and ability to extend </li></ul>A B C D E Values Interest Know How Formula Product Degree of Dissimilarity Type of Brand
  22. 23. <ul><li>Stress on the brand through extensions </li></ul><ul><li>2.Under and over exploitation of a brand capital </li></ul>A B E Values Interest Know How Formula Product Degree of Dissimilarity Type of Brand Y X