Brand extensions allow companies to leverage existing brand equity when introducing new products. There are two main types: line extensions which target new segments within an existing product category, and category extensions which enter a new product category. Brand extensions provide several advantages for companies, including facilitating new product acceptance and reducing risks and costs. However, extensions also carry disadvantages like potential consumer confusion and dilution of the parent brand's image if not executed properly. When evaluating potential extensions, consumers assess how well attributes and benefits associated with the parent brand transfer to the new product category based on their existing knowledge of the brand.

1. Brand Extension “ A new product or service that is related to an existing brand, but that offers a different benefit and/or appeals to a different target segment”. Presented By: Varsha Rana PG – 06 - 095 Sannoj Jaiprakash PG – 06 - 102 Vishal wadekar PG – 06 - 119

2. Scope of the Presentation New products and brand extensions Advantages of extensions Disadvantages of extensions How consumers evaluate extension

3. New Products and Brand Extensions

4. Ansoff’s Growth Share Matrix Product Development Diversification New Markets Current Markets Current Products New Products Market Penetration Market Development

5. New Product – Branding Decisions 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

6. Brand Extensions When a firm uses an established brand name to introduce a new product (Approaches 2 &3) When a brand is combined with an existing brand (Approach 3)the brand extension can also be called a sub-brand An existing brand that gives birth to a brand extension is referred to as the parent brand If a parent brand is associated with multiple products through brand extensions then it is called a family brand

7. Types of Brand Extensions

8. Line Extensions The 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 It often involves a different flavour or ingredient variety, a different form or size, or a different application for the brand

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11. Category Extensions The parent brand is used to enter a different product category from that currently served by the parent brand

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13. Success of Extensions Most new products are line extensions Typically 80% – 90% in any one year Many of the most successful new products are rated by various sources, are extensions Nevertheless, many new products are introduced every year as new brands

14. Strategies for Category Extensions - Tauber Introduce the same product in a different form E.g.: Liril Shower Gel Introduce products that contain the brands distinctive taste, ingredient or component E.g.: Haagen-Dazs Cream liqueur Introduce companion products for the brand E.g.: Duracell flashlights Introduce products relevant to the customer franchise of the brand E.g.: Visa travelers cheques

15. Strategies for Category Extensions - Tauber Introduce products that capitalise on the firm’s perceived expertise E.g.: Honda lawn mowers Introduce products that reflect the brands distinctive benefit, attribute or feature E.g.: Fa ‘ freshness’ soap Introduce products that capitalise on the distinctive image or prestige of the brand E.g.: Porsche sunglasses

16. Advantages of Extensions

17. Reasons for Failure of New Products The market was too small The product was a poor match for the company Inadequate or ignored research result Failure to capitalise on a market window Poor profit margins and high costs The product was not new or different The product did not go hand in hand with familiarity Credibility was not confirmed on delivery\Consumers could not recognise the product

18. Advantages of Brand Extensions Facilitate new product acceptance Improve brand image Reduce risk perceived by customers Increase the probability of gaining distribution and trial Increase efficiency of promotional expenditures Reduce costs of introductory and follow up marketing programs Avoid cost of developing a new brand Allow for packaging and labeling efficiencies Permit consumer variety-seeking

19. Advantages of Brand Extensions Provide feedback benefits to the parent brand and company Clarify brand meaning Enhance the parent brand image Bring new customers into the market franchise and increase market coverage Revitalise the brand Permit subsequent extensions

20. Disadvantages of Extensions Can confuse or frustrate the consumers Can encounter retailer resistance Can fail and hurt parent brand image Can succeed and cannibalise sales of the parent brand Can succeed but diminish identification with any one category Can succeed but hurt the image of the parent brand Can dilute the brand meaning Can cause the company to forge the chance to develop a new brand

21. How Consumers Evaluate Extension

22. Managerial Assumptions In analysing potential consumer response to a brand extension, it useful to assume that consumers are evaluating the brand extension based only on What they already know about The parent brand The extension category Before any advertising, promotion or detailed product information is made available This helps in determining whether the extension should be gone ahead with at all

23. Essential Assumptions for Extensions Consumers have some awareness of and positive associations about the parent brand in memory At least some of these positive associations will be evoked by the brand extension Negative associations are not transferred from the parent brand Negative associations are not created by the brand extensions

24. Factors Influencing the Success of Extensions In creating extension equity How salient parent brand associations are in the minds of consumers in the extension context What information comes to the mind about the parent brand when the consumers think about the proposed extension and the strength on these associations

25. Factors Influencing the Success of Extensions How favourable any inferred extensions are in the extension context Whether the information is seen as suggestive of the type of product or service that the brand extension would be Would these associations be viewed as good or bad in the extension context How unique any inferred associations are How the perceptions compare with those of competitors

26. Factors Influencing the Success of Extensions In contributing to parent equity How compelling the evidence is concerning the corresponding attribute or benefit association in the extension context How unambiguous is the information in concerning product performance and imagery How relevant and consistent the extension evidence is concerning the attribute or benefit for the parent brand How strong are the existing attributes and benefit associations about the parent brand in the consumer’s mind

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