12.1

INTRODUCING AND NAMING NEW INTRODUCING AND NAMING NEW PRODUCTS AND BRAND EXTENSIONSPRODUCTS AND BRAND EXTENSIONS

12.2

Leverage the BrandLeverage the Brand

Firms are seeking to build “power” Firms are seeking to build “power” or “mega” brands that establish a or “mega” brands that establish a broad market footprint, appealing to broad market footprint, appealing to multiple customer segments with multiple customer segments with multiple products all underneath multiple products all underneath the brand umbrella. the brand umbrella.

12.3

Ansoff’s Growth Share Ansoff’s Growth Share MatrixMatrixCurrentCurrent

ProductsProductsNewNew

ProductsProducts

CurrentCurrent

MarketsMarkets

Market Market penetration penetration

strategystrategy

Product Product development development

strategystrategy

NewNew

MarketsMarkets

Market Market development development

strategystrategy

DiversificatioDiversification strategyn strategy

12.4

Brand ExtensionsBrand Extensions When a firm uses an established When a firm uses an established

brand name to introduce a new brand name to introduce a new productproduct

Brand extension classificationBrand extension classification Line extensionLine extension

Using a sub-brand to target a new market Using a sub-brand to target a new market segment within the same product categorysegment within the same product category

Category extensionCategory extension Using the parent brand in a different Using the parent brand in a different

product categoryproduct category

12.5

Advantages of ExtensionsAdvantages of Extensions Facilitate new product acceptanceFacilitate new product acceptance

Improve brand imageImprove brand image Reduce risk perceived by customersReduce risk perceived by customers Increase the probability of gaining distribution Increase the probability of gaining distribution

and trialand trial Increase efficiency of promotional expendituresIncrease efficiency of promotional expenditures Reduce costs of introductory and follow-up Reduce costs of introductory and follow-up

marketing programsmarketing programs Avoid cost of developing a new brandAvoid cost of developing a new brand Allow for packaging and labeling efficienciesAllow for packaging and labeling efficiencies Permit consumer variety seekingPermit consumer variety seeking

12.6

Advantages of Extensions Advantages of Extensions (Cont.)(Cont.)

Provide feedback benefits to parent Provide feedback benefits to parent brandbrand Clarify brand meaningClarify brand meaning Enhance the parent brand imageEnhance the parent brand image Bring new customers into brand Bring new customers into brand

franchise and increase market coveragefranchise and increase market coverage Revitalize the brandRevitalize the brand Permit subsequent extensionsPermit subsequent extensions

12.7

Disadvantages of Disadvantages of ExtensionsExtensions

Can confuse or frustrate consumersCan confuse or frustrate consumers Can encounter retailer resistanceCan encounter retailer resistance Can fail and hurt parent brand imageCan fail and hurt parent brand image Can succeed but cannibalize sales of parent Can succeed but cannibalize sales of parent

brandbrand Can succeed but diminish identification with Can succeed but diminish identification with

any one categoryany one category Can succeed but hurt the image of the parent Can succeed but hurt the image of the parent

brandbrand Can dilute brand meaningCan dilute brand meaning Can cause the company to forgo the chance to Can cause the company to forgo the chance to

develop a new branddevelop a new brand

12.8

Creating Extension EquityCreating Extension Equity

1.1. SalienceSalience of parent brand of parent brand associations in the minds of associations in the minds of consumers in the extension contextconsumers in the extension context

2.2. FavorabilityFavorability of any inferred of any inferred associations in the extension associations in the extension contextcontext

3.3. UniquenessUniqueness of any inferred of any inferred associations in the extension associations in the extension contextcontext

12.9

Successful ExtensionsSuccessful Extensions

Must create points-of-parity and Must create points-of-parity and points-of-difference in extension points-of-difference in extension categorycategory Must recognize competitive reactionsMust recognize competitive reactions

Must enhance points-of-parity and Must enhance points-of-parity and points-of-difference of parent brandpoints-of-difference of parent brand

Must maximize the advantages and Must maximize the advantages and minimize the disadvantages of minimize the disadvantages of brand extensionsbrand extensions

12.10

Successful Category Successful Category ExtensionsExtensions

Ivory shampoo and conditioner Vaseline Intensive Care skin lotion Hershey chocolate milk Jell-O pudding pops Visa traveler’s checks Sunkist orange soda Colgate toothbrushes Mars ice cream bars Arm & Hammer toothpaste Bic disposable lighters Aunt Jemima pancake syrup Honda lawn mowers

12.11

Unsuccessful Category Unsuccessful Category ExtensionsExtensions Campbell’s tomato sauce

LifeSavers chewing gum Cracker Jack cereal Harley Davidson wine coolers Hidden Valley Ranch frozen entrees Bic perfumes Ben-Gay aspirin Kleenex diapers Levi’s Tailored Classics suits Nautilus athletic shoes Domino’s fruit-flavored bubble gum Smucker’s ketchup Fruit of the Loom laundry detergent

12.12

Evaluating Brand Extension Evaluating Brand Extension OpportunitiesOpportunities

Define actual and desired consumer Define actual and desired consumer knowledge about the brandknowledge about the brand

Identify possible extension Identify possible extension candidatescandidates

Evaluate the potential of the Evaluate the potential of the extension candidateextension candidate

Design marketing programs to Design marketing programs to launch extensionlaunch extension

Evaluate extension success and Evaluate extension success and effects on parent brand equityeffects on parent brand equity