2. Characteristics of Brands
Brand can be considered in terms of four levels:
Generic:
It is the commodity level which satisfies the basic needs such as transportation. It is so easy to imitate a generic product. A
brand continues to add values so as to reach the expected level.
Expected:
A generic is modified to satisfying some minimum buying conditions such as functional performance, pricing, availability,
etc.
Augmented:
Brand is refined further by adding non-functional values along with the functional ones. We may direct advertising to the
social prestige, the possessor of the brand is likely to enjoy.
Potential:
As brands evolve, we become more critical. Creativity plays an important role to grow up the brand to its full potential. If no
creative effort is taken, there is danger of the brand relapsing to its augmented or expected level.
5. A good brand name should:
1. be protected (or at least protectable) under trademark law
2. be easy to pronounce
3. be easy to remember
4. be easy to recognize
5. be easy to translate into all languages in the markets where the brand will be used
6. attract attention
7. suggest product benefits
8. suggest the company or product image
9. distinguish the productâs positioning relative to the competition
10. be super attractive
11. stand out among a group of other brands
Selecting a Brand Name
Criteria for choosing a name:
1. Easy for customers to say, spell and recall (inc. foreigners)
2. Indicate products major benefits
3. Should be distinctive
4. Compatible with all products in product line
5. Used and recognized in all types of media
6. Can be created internally by the organization
6. Branding Challenges and
Opportunities
Savvy Customers: Increasingly, consumers and business have become more experienced with marketing and more
knowledgeable about how it works. A well-developed media market has resulted in increased attention paid to the marketing
actions and motivations of companies. Many believe that it is more difficult to persuade consumers with traditional
communications than it was in years gone by.
Brand Proliferation: Another important change in the branding environment is the proliferation of new brands and products,
by the rise in line and brand extensions. As a result, a brand name may now be identified with a number of different products of
varying degrees of similarity.
Media Fragmentation: An important change in the marketing environment is the fragmentation of traditional advertising
media and the emergence of interactive and non traditional media, promotion and other communication alternatives.
Increased Competition: Both demand side and supply side factors have contributed to the increase in competitive intensity.
On the demand side, consumption for many products and services has built up and hit the maturity stage, or even the decline
stage of the product life cycle. As a result, sales growth for brands can only be achieved at the expense of competing brands by
taking away some of their market share.
Increased Costs: As the competition is increasing, the cost of introducing a new product has also increased. It makes it
difficult to match the investment and level of support that brands were able to receive in previous years.
Savvy-The ability to make good judgements, Proliferation-Rapid increase in numbers
7. Equity Vs Equality
Equality and equity are both terms related to fairness, but they have different meanings.
Equality means that everyone is treated the same, while equity means that everyone is provided with what they need to
succeed.
Inclusion III
8. Brand Equity
What is Brand Equity?
Brand Equity is a qualitative measure of the brandâs positive recognition or goodwill in the minds of the consumers
considering the brand as an independent entity. Brand Equity is the tangible and intangible worth of a brand.
The degree of premium that a brand can charge on its offering is a direct measure of the equity it possesses with its customers.
Brand Equity is kind of power that the brand has over its competitors or the generic brands and is developed over time. It
represents the overall value of the brand in the market.
Brand equity refers to the value consumer derive from a brand. It is based on consumer perceptions and experiences with the
brand.
Anything from a simple logo to the brand name is considered brand equity as long as it has value for the business. Businesses
usually find out how much their branding is worth when they try to sell their company.
The concept of customer loyalty lies at the heart of brand equity.
Example:
Think of Apple and what the value of Apple's brand would be. The Apple logo is recognised everywhere, and the company is
building an increasingly loyal customer base. You can see how everyone lines up in front of the Apple store when the new
iPhone is released.
9. Customer loyalty
Customer loyalty refers to the extent to which customers are content with the product, have a favourable opinion of the brand,
and are willing to make repeat purchases.
Higher customer loyalty would also increase a brand's equity. The reason is that whenever a company launches a new product,
it knows customers will buy its product. This helps drive sales and increase profits.
Example:
There are many branding practices companies use to increase their customer loyalty. Focusing on environmentally responsible
practices is one strategy companies use to improve customer loyalty to their brands. IKEA is one such example. IKEA has
been dedicated to turning its entire business operations into more environmentally friendly.
Started in 1943 by Ingvar
Kamprad and currently legally
headquartered in the
Netherlands, IKEA has been the
world's largest furniture retailer
since 2008.
10. Nowadays, businesses are becoming more aware of the importance of brand equity. As a result, they are making more efforts
to evaluate the potential earnings of influential brand names.
When a specific product category is mentioned, a person's level of brand awareness indicates how readily or effortlessly a
particular brand name is brought to mind. Public awareness of a brand may be significantly increased by advertising.
Brand awareness
You are most likely aware of dozens, if not hundreds, of brands. Some brands you might be able to recall more quickly than
others.
Brand awareness is the extent to which consumers recognize a brand based on its image, features, and characteristics.
For example, when asked to name a sports brand, you might say, Nike, Adidas, Reebok, or Puma. These would be "top-of-
the-mind brands" as they immediately came to mind when thinking of sports brands. Of course, there are various other sports
brands on the market, some of which you might not recognize at all, and some of which you would, with a gentle reminder.
The extent to which you recognize a brand is known as brand awareness.
11. Brand recall
Brand recall refers to how likely customers are to remember the brand or its products.
There are two main types of brand recall:
Aided brand recall
Aided brand recall is the type of recollection that happens when someone is prompted to think about a brand. If you were
asked, âDo you know of HSBC?â, youâre being helped to remember the brand.
Unaided brand recall
When youâre not offered a prompt, but still think of a brand, thatâs unaided brand recall. The brand is so ingrained in the
customerâs experience that the companyâs products or services are the first to pop into mind. If you were asked, âWhatâs your
favourite soft drink?â and you responded with, âPepsiâ, this is an example of unaided brand recall.
12. Brand extension
Brand extension, also known as brand stretching, is a marketing and sales strategy that brands use to open themselves up to
wider market potential. Brands will take their existing and usually well-known brand name and put it on a whole new line or
area of products.
The main goal of a brand extension is to further grow a brand online and offline which can lead to a much larger market share,
plus increased brand awareness and profits.
Usually, brands will extend into products or services that are parallel to their existing offering. A brand extension allows
successful brands to use their existing success and industry presence to launch something new, without having to start from
scratch.
13. Different Types of Brand Extensions
There are several different kinds of brand extensions that a company can attempt. The chosen strategy largely depends on the
type of customers that a brand has.
Line Extension
As the name implies, a line extension is the release of an entirely new product line. The new line exists within a product
category the company carries and the brandâs customers are already familiar with it. This means the company doesnât have to
risk entering a new category. Instead, theyâre just adding a new line of products that may be more successful than their current
offerings.
Because the customer base is already familiar with the brandâs category, this extension will likely do well. For the most part,
line extensions are simple. It may include new flavors, colors, or scents, depending on the product. This type of brand extension
carries the least amount of risk for a company.
Complementary Product Extension
Another successful brand extension strategy focuses on complementary products. A complementary product is a new product
that works with the brandâs current products. Often, complementary products are accessories for main products.
The extent to which products are considered complementary depends on the industry. In sporting goods, complementary
products may be a different kind of apparel than what the company normally makes. For toothpaste companies, toothbrushes
and floss could be considered complementary products.
14. Customer Base Extension
This brand extension strategy is almost exclusive to the largest companies in the world. A customer base extension requires a
parent company or brand, and then sub-brands. Essentially, the parent company releases a brand new product line under its
brand.
This expands the parent companyâs customer base and establishes a completely new brand.
There have been instances in which parent companies have released a brand under a customer base extension. That brand can
then act independently, and branch out even further. This is an excellent business strategy for increasing a companyâs market
share.
Company Authority Extension
Extending company authority requires a level of success that not all companies can claim. Company authority extension
requires a company to have a large, general industry authority. The technology industry is a common area to find this. Having
commanding authority allows these companies to release new products in a new category. These are normally successful
releases, as well.
The best instance of this is a computer company releasing cell phones. Because the company already has authority in the
technology space, customers can expect their new products to work well. Their authority allows them to release just about any
product in the technology category with some success. A failed release will rarely impact the company heavily.
A huge example of this is when Google began releasing smartphones, watches, and laptops.
15. Brand Lifestyle Extension
A lifestyle extension is a really interesting type of brand extension. This strategy relies on building a strong culture or
community around your brand. A lifestyle extension lets you use your brand community and sell your audience new products,
even if theyâre not related to the original product of the parent brand.
For lifestyle extensions, brands often leverage celebrity endorsements or influencer marketing to help raise awareness. For
instance, a car brand might start selling furniture or clothing as part of their brand extension strategy.
One of the most recognizable lifestyle brand extension examples is Red Bull. Red Bull has created an entire world built
around their caffeine-based energy drinks, encompassing extreme sports, events, clothing, accessories, and more.
Red Bull is now synonymous with peak physical performance, risk-taking, and competition. Thanks to strategic lifestyle
extensions, theyâve become so much more than just a drinks brand and have built a global reputation based on energy and
excellence.
16. Brand Extension Examples
Apple
Apple started out as a computer company but after evolving its own expertise, was able to extend its brand as per the needs of
its customers. When digital music grew popular, Apple created the iPod, and when the market needed a great smartphone,
Apple stepped forward with the iPhone.
The tech giant now has product lines spanning laptops, phones, earphones, and accessories as well as streaming services.
Apple has grown into the major international brand it is today through clever and strategic brand extensions that meet an
audience need or gap in the market. This tech giant is able to use its status and expertise to build brand loyalty and trust in new
product lines.
Google
Google is another example of a tech brand that launched brand extensions in line with a rapidly moving market.
Starting out as the search engine we all know and love, as the tech landscape changed and advanced, so too did Googleâs
offering. Gmail, Gdrive, and Gdocs all launched with the sole purpose of making usersâ lives technologically easier.
Google now even offers users Google Hangouts and Google smart home hubs, both of which are brand extensions that grew
from an ever-changing market. Google knew that in order to stay at the top, it had to keep evolving and extending.
17. Colgate
Colgateâs brand extensions have been hit-and-miss, to say the least. Famous for its toothpaste, the brand decided it was time
to expand and in the 1980s launched a line of frozen ready meals.
Yes, thatâs right, you could enjoy a Colgate-branded Lasagna for dinner back in 1982. Perhaps unsurprisingly, the brand
extension failed and nobody was interested in buying their dinner from their toothpaste brand.
Fast forward a few years and Colgate fared much better when it launched another brand extension, this time into the world of
electric toothbrushes. This was the perfect plan. A new line of products that complement its existing ones all while using its
authority and status in the oral health industry to encourage sales. A much better idea than making frozen dinnersâŚ
Amazon
Amazon is a success story of the ages, and much of that success is down to clever brand extensions.
Amazon started off as an online bookstore and is now the biggest online marketplace in the world⌠quite an achievement!
Over the years Amazon has launched various brand extensions including Amazon Fresh, a grocery delivery service, streaming
service Amazon Prime, and virtual assistant Alexa.
Amazon is a great example of a brand who has utilized multiple different types of brand extensions to facilitate growth
including new product lines (Amazon Fresh) and brand lifestyle extensions via Alexa and the Prime delivery service.
18. Failed Brand Extensions
Burger King
People do literally âwant it allâ in a brand stretch. They donât like trading off a primary
benefit, such as the taste of french fries, for a secondary one, such as health. This helps
explain why Burger Kingâs Satisfries was one of many failed brand extensions. The
french fries might have been a healthier option.
Pepsi
Crystal Pepsi was developed to tap into consumerâs interest in purity and health
back in the 1990âs. But the drink didnât catch on. Another of those failed brand
extensions. One reason was the breakage in âmemory structureâ. Pepsi Cola is
associated with a dark black colour, so a clear Pepsi created confusion. It seems
most people still expected a cola taste, whereas in fact it was citrus flavoured.
19. Amazon
The Amazon Fire Phone was a failed brand extension attempt
by the eCommerce giant to enter the huge but highly
competitive mobile phone market. This phone might have had
some emotional âsizzleâ from the association with the Amazon
brand. It was acting as an underdog challenger against Apple
and Samsung.
McDonald
McDonaldâs launched Mighty Wings in 2013 as an attempt to
ride the wave of growing demand for lean protein like chicken.
However, âthe burger giant had 10 million tons of unsold,
frozen chicken wings to get rid of after the initial run of the ill-
fated productââ.
20. Colgate
Colgate is a well-known brand of toothpaste and oral care
products. In 1982, the company decided to launch a line of
frozen entrees under the Colgate brand, hoping to capitalize on
its association with freshness and quality. However, the
consumers were not impressed by the idea of eating food from
a toothpaste brand. The product was a flop and quickly
discontinued. The lesson here is that brand extensions should
be relevant and consistent with the core brand identity and
values, and not confuse or repel the target audience.
Harley-Davidson
perfume
Harley-Davidson is a legendary brand of motorcycles that
evokes a sense of freedom, adventure, and rebellion. In 1994,
the company launched a perfume under the Harley-Davidson
brand, hoping to appeal to a wider and more diverse customer
base. However, the perfume was a disaster and alienated the
loyal fans of the brand. The product did not fit with the image
and personality of the brand, and was seen as a betrayal of its
essence. The lesson here is that brand innovations should be
authentic and aligned with the brand positioning and
differentiation, and not dilute or contradict the brand equity.
21. Advantages and Disadvantages of Brand
Extension
Advantages of brand extension
â˘They can help the product be easily accepted.
â˘They can also improve the overall brand image.
â˘Consumersâ perceived risk can go down with brand extensions.
â˘Since the company has established the brand name as trustworthy and popular, they can also increase the interest of
consumers and make them consider a new product. That also leads to better distribution.
â˘Companies spend less money on promotional expenditure, or the money is better used. By promoting the core brand,
companies are also promoting the extension. The same goes if they are promoting the extension-the core brand will gain
recognition as well.
â˘Companies donât have to develop a new brand from scratch and spend tons of money on it.
â˘Consumers get more variety than before.
22. â˘Packaging and labelling are more efficient, as the machines can print out the same labels and packages.
â˘Less money spent on introductory and follow-up marketing programmes.
â˘Feedback benefits, both for the parent brand and the company itself.
â˘The parent brand gets a better image.
â˘Brand extensions help revive the brand.
â˘One brand extension allows for more extensions in the future.
â˘The brand extensions clarify what the brand stands for.
â˘They attract new customers, as the brand expands on the market.
â˘The core brand is an association for the new product. Thus, if the core brand is also associated with quality, the new product
will be too.
23. Disadvantages of brand extension
â˘Extending the brand name too far may lead to a loss of reliability, especially if the brand extension happens in an unrelated
market. Thus, companies have to know which product categories will work and where they can actually use the brand name.
â˘If the new product is not that great, it may spell trouble for the core brandâs image.
â˘Just because the core brand will lend its brand awareness to the new product, it doesnât mean companies donât have to invest
at all. In fact, if they donât, all their effort may even have the opposite effect.
â˘If the competition in the new category is just better than the brand extension or has an edge over it, then itâs highly unlikely
that the extension will be a success.