Brand Extensions 2009

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Brand Extensions



Virgin: An extension-basedVirgin: An extension-basedbusiness modelbusiness model

Case studyCase study











South Africa



Johannesburg



Hong Kong



Canada



Kenya



India



Virgin: An extension-basedVirgin: An extension-based

business modelbusiness model300 companiesBrand’s DNA: Seek opportunities inmarkets choked by ‘false competition’(Underdog business model)




business modelbusiness modelValues: service quality, innovation, fun andvalue for money‘Way of life’ brand – enjoy life to the full – make customers happier Umbrella branding is the ‘glue’




business modelbusiness modelTo finance his expansion, Branson usuallyseeks support from appropriate partners in

order to minimise his own investment, evenif this means not being the majorityshareholder (Virgin Megastores in UK)

Virgin allows start-ups to begin with a world brand as their ‘birth gift’




business modelbusiness modelBranson also resells his businesses - butonly after adding value with his brand

(Virgin Atlantic)The Virgin brand remains the property of Virgin Enterprises, a company of which he

is the sole owner




business modelbusiness modelWeakness: The further you get from theBritish zone of influence, the weaker and less

emotive the brand becomesMajor failures: Virgin Cola, Virgin ClothingQuestion: If Virgin = Branson then what

happens to the company after Branson?



Leveragingthe Brand

Leveragingthe Brand

LineExtensions

LineExtensions

DownDown UpUp

Stretchingthe Brandvertically

Stretchingthe Brandvertically

BrandExtensions

BrandExtensions

Co-branding

Co-branding



Brand ExtensionsBrand ExtensionsWhen a firm uses an established brand name tointroduce a new productBrand extension classification – Line extension

Marketers apply the parent brand to a new product that targets a new market segmentwithin a product category the parent brandcurrently serves

– Category extensionUsing the parent brand in a different productcategory



Line Extensions: WhyLine Extensions: Why

At its beginning, there is only one form of the product (Coca-Cola)

With time, the brand acknowledges differentiatedexpectations and decides to respond with productofferings - it evolves with the consumer Therefore, the extension is an expression of the

brand that it cares - reinforces the relationship



Line Extensions: WhyLine Extensions: Why

Growth and profitability







Successful CategorySuccessful Category

ExtensionsExtensionsAppleKingfisher Ivory

NirmaCaterpillar







Unsuccessful CategoryUnsuccessful Category

ExtensionsExtensionsHarley Davidson wine coolersBic perfumes

Kleenex diapersLevi’s Tailored Classics suitsBournvita biscuitsPond’s toothpaste



Advantages of ExtensionsAdvantages of ExtensionsFacilitate new product acceptance – Improve brand image (VAIO from Sony) – Reduce risk perceived by customers

– Increase the probability of gaining distributionand trial – Increase efficiency of promotional

expenditures (Brand is already known. Focuson product in marketing communications e.g.Dettol)



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

Facilitate new product acceptance – Reduce costs of introductory and follow-up

marketing programs (“Halo effect” – iPod) – Avoid cost of developing a new brand – Allow for packaging and labeling efficiencies (e.g.

printing and merchandising – “Billboard effect” –

Coke) – Permit consumer variety seeking





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

Provide feedback benefits to parent brand – Clarify brand meaning (e.g. Kingfisher,

Gillette)

– Enhance the parent brand image – Bring new customers into brand franchise and

increase market coverage (Chota Coke, AllenSolly for Women, Women’s Horlicks)

– Revitalize the brand (Lifebuoy) – Permit subsequent extensions (Becomes

easier)



Disadvantages of ExtensionsDisadvantages of Extensions

Can confuse or frustrate consumersCan encounter retailer resistanceCan fail and hurt parent brand image (Mercedes

A Class, Maruti Versa)Can succeed but cannibalize sales of parent

brand (Diet Coke, Mach 3 Turbo)





Disadvantages of ExtensionsDisadvantages of Extensions

Can succeed but diminish identification with anyone category (Cadbury in UK – food products)Can succeed but hurt the image of the parent

brand (Evian licensed to J&J – skin care products)Can dilute brand meaning (Gucci – 22k products

– 7k)Can cause the company to forgo the chance todevelop a new brand (Levi’s & Dockers)



Identifying potentialIdentifying potential

extensionsextensions



Perimeters of brand extensionPerimeters of brand extension No-go area

Extension zone

Latent potential

Outer core

Spontaneousassociations

Inner coreKernel lineextension



Building a brand throughBuilding a brand through

systematic extensionssystematic extensions



Nivea extensions galaxyNivea extensions galaxy

No GoNo Go No Go

No Go

Bath care

Hair care

Deo

Beauty

NiveaCreme

NiveaSoft

Face

Hand

Sun

Vital

For men

Baby

Body

No Go

Lip-

care



ReadingReading

Strategic Brand Management by KevinLane Keller. Chapter: 12

The New Strategic Brand Management byKapferer. Ch: 12

Documents

Brand Extensions 2009