Brand Extensions Good

8/3/2019 Brand Extensions Good

1/23

Brand BuildingBrand Building

Session XIII

Introducing and Naming NewBrands and Extensions

Lectures 1 - 2 of 2


2/23

Scope of the PresentationScope of the Presentation

New products and brand extensions

Advantages of extensions

Disadvantages of extensions

How consumers evaluate extension


3/23

New Products and BrandNew Products and Brand

ExtensionsExtensions


4/23

Ansoffs Growth Share MatrixAnsoffs Growth Share Matrix

Product

Development

Diversification

New Markets

Current Markets

Current Products New Products

Market

Penetration

Market

Development


5/23

New Product BrandingNew Product Branding

DecisionsDecisionsA new brand individually chosen for

the new product

An existing brand name applied in someway

A combination of a new brand with an

existing brand


6/23

Brand ExtensionsBrand Extensions

When a firm uses an established brand name tointroduce a new product (Approaches 2 &3)

When a brand is combined with an existingbrand (Approach 3)the brand extension canalso 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 iscalled a family brand


7/23

Types of Brand ExtensionsTypes of Brand Extensions

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 differentapplication for the brand

E.g.: Head & Shoulders Dry Scalp Shampoo

Category Extensions The parent brand is used to enter a different product

category from that currently served by the parentbrand

E.g.: Swiss Army Watch


8/23

Success of ExtensionsSuccess of Extensions

Most new products are line extensions

Typically 80% 90% in any one year

Many of the most successful newproducts are rated by various sources,are extensions

Nevertheless, many new products areintroduced every year as new brands


9/23

Strategies for CategoryStrategies for Category

Extensions - TauberExtensions - Tauber Introduce the same product in a different

form E.g.: Liril Shower Gel

Introduce products that contain the brandsdistinctive 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 customerfranchise of the brand

E.g.: Visa travelers cheques


10/23

Strategies for CategoryStrategies for Category

Extensions - TauberExtensions - Tauber Introduce products that capitalise on the

firms perceived expertise E.g.: Honda lawn mowers

Introduce products that reflect the brandsdistinctive benefit, attribute or feature E.g.: Fa freshnesssoap

Introduce products that capitalise on thedistinctive image or prestige of the brand E.g.: Porsche sunglasses


11/23

Advantages of ExtensionsAdvantages of Extensions


12/23

Reasons for Failure of NewReasons for Failure of New

ProductsProducts 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


13/23

Advantages of BrandAdvantages of Brand

ExtensionsExtensionsFacilitate new product acceptance

Improve brand image

Reduce risk perceived by customers

Increase the probability of gaining distribution andtrial

Increase efficiency of promotional expenditures

Reduce costs of introductory and follow upmarketing programs

Avoid cost of developing a new brand

Allow for packaging and labeling efficiencies

Permit consumer variety-seeking


14/23

Advantages of BrandAdvantages of Brand

ExtensionsExtensionsProvide 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


15/23

Disadvantages of ExtensionsDisadvantages of Extensions


16/23

Disadvantages of ExtensionsDisadvantages 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


17/23

How Consumers EvaluateHow Consumers Evaluate

ExtensionExtension


18/23

Managerial AssumptionsManagerial Assumptions

In analysing potential consumer response to abrand extension, it useful to assume thatconsumers are evaluating the brand extensionbased only on What they already know about

The parent brand The extension category

Before any advertising, promotion or detailedproduct information is made available

This helps in determining whether theextension should be gone ahead with at all


19/23

Essential Assumptions forEssential Assumptions for

ExtensionsExtensionsConsumers have some awareness of and

positive associations about the parent brandin memory

At least some of these positive associationswill be evoked by the brand extension

Negative associations are not transferred

from the parent brandNegative associations are not created by the

brand extensions


20/23

Factors Influencing theFactors Influencing the

Success of ExtensionsSuccess of ExtensionsIn creating extension equity

How salient parent brand associations are

in the minds of consumers in the extensioncontextWhat information comes to the mind about the

parent brand when the consumers think about

the proposed extension and the strength onthese associations


21/23


Success of ExtensionsSuccess of Extensions How favourable any inferred extensions are

in the extension contextWhether the information is seen as suggestive

of the type of product or service that the brandextension would be

Would these associations be viewed as good orbad in the extension context

How unique any inferred associations areHow the perceptions compare with those of

competitors


22/23


Success of ExtensionsSuccess of Extensions In contributing to parent equity

How compelling the evidence is concerning thecorresponding attribute or benefit association in the

extension context How unambiguous is the information in concerning

product performance and imagery

How relevant and consistent the extensionevidence is concerning the attribute or benefit forthe parent brand

How strong are the existing attributes and benefitassociations about the parent brand in theconsumers mind


23/23

Thank You!Thank You!

Documents

Brand Extensions Good