To extend or not… the dilemma

A Presentation by Sani Malik

Agenda

• Extensions – What are they!

• Think! Before You Extend

• Recommendations

Opening thoughts…

There’s too many products all doing the same thing from my

favorite brand, which on do I choose?

EXTENSIONS!What & Why?

Launching a new product is a risky endeavor because of the high costs of introduction and the low probability of success. One increasingly popular strategy for lowering the costs and improving the odds of success is to extend a well-known brand name to a new product

The use of existing brand names to launch new products involves at least two strategic options :- line and brand extensions

Line extensions occur when the original brand name is extended by modifying features (such as flavors, sizes, or varieties) within the existing product category (e.g., Diet Pepsi or Lucozade Boost Apple)

Brand extensions take place when the brand name is used to enter a completely different product category (e.g., Jagal detergent or Sterling computers).

extensions tend to reduce the risk associated with new product development because upon seeing the extension consumers immediately have an instant recognition of the brand name will be more likely to try it.

However two potential threats do exist.

1. If the new line extension fails to satisfy; consumer’s attitudes toward other products carrying the same brand name may be damaged and

2. there is the potential for intra-firm competition

between the parent product and the line extension, or between two or more line extensions.

A classic example of an extension failure, was when a huge company like Coke Cola launched the “New Coke” in 1985, the extension immediately conflicted with consumer’s perception and not only did the extension not succeed but it resulted in a drop in sales and declining market share for the original Coke

However, if properly executed extensions can work, a typical example of this would be the 1982 launch of Coca-Cola’s Diet Coke, Indomie Noodles and Marlboro range of cigarettes

THINK….. BEFORE YOU EXTEND

A critical success factor for any line extension are its newly added features; these features must be relevant and resonate well with the target consumer

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New Attributes !

• Are the newly added attributes relevant to the target consumer?

1) It is important that extensions should not perceived to be substitutes to the existing brand

2) It is also important for consumers to feel as the line extension is positioned in a different way

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RECOMMENDATIONS

Less alcohol

Less alcohol

Different Shape + Design

Different Shape + Design

Differentiation

It is of paramount important that extensions are clearly and not ambiguously distinguished from their parent brand; differentiation should be based on attributes that are relevant and of perceived value to the target consumers, be it tangible or intangible.

Smaller Bottle

Positioning

The positioning of the extension should be clearly distinguished from that of its parent brand

Proposition + Promise

Just as the position tells consumers what the extension represents amongst other brands within the same segment, the proposition will represent the kind of satisfaction the extension promises (different from that of the parent brand) after the consumer interacts with it

• A brand extension is not for every company and managers should be careful when adopting one

• Successful brand line extensions are simply new branches on the main plant

• In order to harness the power of the overall brand, line extensions have to make sense, be part of the long term plan and reflect the core images and message of the brand

Will an Extension work for YOU

Thank You