22/11/2011  

Emporio The marketing club of IIM A

Marketing Quotation "What’s a brand? A singular idea or concept that you own inside the mind of the prospect." - Al Ries  

Articles Editor’s Message Hello folks,

Niche is back with yet another interesting issue on Emporio, which talks about almost everything under the sun, right from G+ to Pond’s talcum powder, from Indica to Axe deodorants and even THE RAJINIKANTH (I am sure the last name will act as a sure shot “unique value proposition”) J

As you scroll down, you will read about how companies have leveraged a well-known brand name in one category to launch new products in different categories and thus exploited the power of “brand extension”. This edition talks about some of the most successful as well as the most disastrous brand extensions and gives you an interesting insight on the only brand extension thumb rule known to marketers: “NO RULES FOLLOWED”

While the marketing giant like HUL does an amazing job with its Axe brand extensions, it also manages to create a marketing faux pas with its Pond’s brand extension into the toothpaste category (yes, there was a Pond’s toothpaste, read about it below !)

We also touch the “always on our mind” topic of Facebook and G+ and explore if the Google brand extension will work this time.

Happy Reading!

 

Brand Extension Gone Too Far - Kushal Agarwal

From Talcum To Tooth Paste - Mugdha Goud

G+: What Works - Varsha Verma

Brand “New” – about cars, deodorants and THE RAJINIKANTH - Vishwanath Hariharan    

 

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Brand Extension Gone Too Far

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Kevin Roberts, the CEO of Saatchi and Saatchi, has widely talked about the “mythology of a brand”. According to him the best brands in the world have a “mythology” that its loyal followers associate to. One of the most apt examples of a brand with a mythology is Harley-Davidson.

Harley Davidson doesn’t just sell bikes; it sells you the dream of having the open roads all to yourself, the freedom, the adventure and that bad-boy rebel feeling. Harley owners aren’t just loyal; they live the brand and carry the brand personality along with themselves. The macho connotation that the brand signifies completely overshadows their bike’s technological deficiencies. Indeed, many testosterone-charged Harley owners even tattoo the Harley Davidson name and imagery onto their bodies.

Sighting the unique strength and position of its brand, the company conjured a unique definition of the brand. They believed the brand stood for "Americana" and that the brand represented a promise to "fulfill the dreams of our customers [and] exceed their expectations." And hence in the late 1990’s the mature, iconic cult brand went brand extension crazy and building upon its self-professed brand identity, started licensing merchandises from footwear to cigarettes, prophylactics and cake-decorating kits. For a loyalist, this was an abuse of their beloved brand. Many of Harley Davidson’s core fans accused the company of ‘Disneyfying’ the brand.

A question that companies increasing face these days is should a brand be extended into other markets, milking their brand and if so, when is the appropriate time to do it.

Companies use many sophisticated marketing strategies such as Line extension, megabranding and variable pricing to milk brands rather than build them. While milking may bring in easy money in the short term, in the long term it tends to dilute the brand until it no longer stands for anything.

“The best brands in the world have a mythology that its loyal foloowers associate to”

 

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This quest for more products and to broaden the Harley Davidson line went against the way the company had built the brand in the first place. Harley Davidson has been deeply associated with strong, masculine, very rugged values. For Harley Davidson to go into a sector that doesn’t live up to what those values would turn out to be disastrous.

However, luckily for Harley Davidson, the disaster was a relatively limited one. Admitting its mistake, the company stopped producing perfumes and other inappropriate products. Joe Nice, the director of corporate communications for Harley Davidson, spoke candidly of the company’s branding failures. ‘Over the years,’ he said, ‘we’re tried a number of different approaches to merchandising and put the Harley Davidson brand on some things that, in retrospect, we may not have been well-advised to do. The company is much more selective today about who we work with and how we go about extending the brand.’ An important piece of advice Harley’s former CEO gave to B school students in UW – Madison - "Don't prostitute your brand. Licensing is not free money."

Lessons from Harley Davidson

• Focus on the core values of a brand and device a brand extension around it. If your values are ‘strong, masculine and very rugged,’ you shouldn’t be selling perfume or wine coolers. A range of baby clothes could mean Dooms day.

• Don’t alienate your core customers. For brands that stimulate strong brand loyalty, try not to test their limits. This could lead to a great deal of brand dilution or at worst complete annihilation of the brand.

• Remember that at times, more is less. ‘When you study categories over a long

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period, you can see that adding more can weaken growth, not help it,’ writes Jack Trout in his book, Big Brands, Big Trouble: Lessons Learned the Hard Way.

• Do not risk losing your brand’s “Points of Difference”. The more you add, the more you risk undermining your basic differentiating idea, which is the essence of your brand.

• Keep it tight. Harley Davidson built its brands by staying true to what it does best, namely making big, classic, US motorbikes. The further it moved away from this original focus, the further it got into trouble. Any brand, which attempts to be a ‘Jack of all trades’, will ultimately fail to carve a strong identity in any category.

• Handle ‘lovemarks’ with care. Lovemarks are the aspects that inspire loyalty beyond reason. Lovemarks reach consumer’s heart as well as mind, creating an intimate, emotional connection that a consumer just can’t live without. Ever. Take a brand away and people will find a replacement. Take a Lovemark away and people will protest its absence. In a now famous article for Fast Company magazine’s September 2000 issue, Roberts cited Harley Davidson as a supreme example of a lovemark and commended the company for not following the marketing rulebook.

 

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What first comes to your mind when you think of Ponds’? Typically this picture:

It has been the talcum powder that most people in India use on a daily basis. You automatically associate it with the fragrances of dream flower, sandal, lavender and cold creams that promise the softest, most irresistible skin. Now think of Ponds’ toothpaste - There is an immediate disconnect.

In the early 2000s, HUL used brand extension as a strategy to spur growth. Shampoos like Clinic Plus were extended to hair oils, Lifebuoy soap was extended to hand wash, Lux beauty soap to face wash and body wash, Fair and Lovely skin lightening cream to soaps and the list is endless. Mr. M. S. Banga, the then Chairman of HUL, had these thoughts about successful brand extensions: "I believe that each extension must strengthen the core and the core must remain unchanged. When the core of the equity is in one direction and the product extension is in another and you graft the two, you are unlikely to succeed.” Yet this is the same error of judgment that HUL made with Ponds’.

From Talcum To Tooth Paste

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Ponds’ was launched in the fifties in India with its cold cream. Thereafter, the talcum powder was launched and Ponds’ became a household name as the market leader in the talcum powder category. HUL wanted to extend the attribute of freshness of Ponds’ to the toothpaste. Blind tests were conducted and consumers could not differentiate between the Ponds’ toothpaste and Colgate, which was the market leader in the segment. HUL believed this was enough evidence to launch the toothpaste.

The most significant product attribute of any toothpaste turns out to be its taste. It is associated with freshness and minty breath. Combine it with the floral image of the brand and it led to dissonance in the consumers’ minds, which can be categorized as a cognitive dissonance Secondly, the method of consumption of the products was also very different. Ponds’ talcum powder or cold cream is for external application only. Toothpaste has to be used on the teeth and gums. This is a more functional dissonance.

Needless to say, the consumers rejected the product and it became a case study to warn marketers about the consequences of misaligned brand extensions!

 Brand Trivia

1. This record label X branched into the aviation sector by taking on the country's largest airline Y by offering free cash to passengers travelling by the airline Y as a way to promote the new airline Z which was a low cost carrier. ID X, Y, Z 2. It took about a 100 years for the world's biggest brand to introduce a brand extension! Identify the brand and the brand extension both of which are omnipresent today

 

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Google Homepage has my name written on it, which is, well cute isn’t it? While Facebook has Smart Lists that basically creates lists for you by picking up basic profile information like institute, organization or city, in G+ you can create your own personalized Circles of friends and people that you want to follow. With Group Video Chat, you can hold a videoconference with your friends and co-workers, hold discussions with hobby-pals and schedule matches with fellow gamers. You can even get news updates on selected topics and areas of interest. You can share photos with your friends. These are the things where Facebook misses.

Will the “tortoise” win this race as well? Like the proverbial tortoise, Google has always been slow and steady. Its products have been known to perform. Chrome, that during its launch in fall 2008 was quite a surprise in the already saturated browser market with offerings like Internet Explorer, Firefox, Opera and Safari, is currently competing neck to neck with Firefox to become the second largest browser with a little over 26% market share. Google’s smart phone app Android has a formidable 56% market share (July - August) in terms of new acquirers in the US with Apple at the second highest with 28% market share.

Google has always played hardball and is currently battling in all directions, competing with the biggest players in a wide array of categories. Despite a lukewarm welcome, with reports of Google’s own employees not using the application, something seems to be working for G+. During the past 100 days a mind-boggling 3.4 billion photos were shared on Google.

G+ is still new and looks very promising, but exactly how well it will be received, only our “friends” will tell.

G+: What Works?

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G+, a Google project headed by Vic Gundotry and Bradley Horowitz, has been designed as the social extension of Google. With various successful projects like Gmail, Maps, Chrome, YouTube, AdWords, AdSense and the smart phone market storming Android in its kitty, Google seems to be in the doldrums with this one. Despite its circles, sandbar, sparks, huddle, hangouts and the famous +1, G+ still seems to be losing out to the ever elusive “friends” to Facebook which being the most popular social networking site has had the first mover advantage and claimed its 800 millionth user in September. Even though it’s the fastest growing social networking site today, yet G+ claims to have only 40 million users worldwide.

So the question, like Sean Parker, co-founder Facebook, puts it, is – “Everybody I know is already on Facebook, so why switch to G+?”

Other than the convenience of “everybody being on Facebook”, the site has an excellent and familiar user interface. Its recent launches like smart lists, top stories and music sharing with Spotify (now with the private listening option) have been well received. There has been some hue and cry over timelines, but we are yet to see how that works as its still in the developer mode. Facebook has excellent user engagement at about 20 minutes per session in India and the highest at 38 minutes per session in Singapore.

What’s plus about G+ For G+, access is not an issue; the black bar on the top of the Google homepage takes you directly to the G+ homepage. Each Google+ user can replace his or her standard Google profile, which will stream everything that user, has shared as well as the +1 content. G+ has interesting features like Photo sharing, Group video chat, circles sharing etc. not currently available with Facebook. With G+ there is something about personalization that Facebook doesn’t offer. The black bar on the

 

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Brand “New” – about cars, deodorant and THE RAJINIKANTH

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Very few of us know that the earliest form of Brand Extension took its roots in ancient India. Going back to Hindu mythology, each of the 10 different avatars of Lord Vishnu were all “new and improved versions” of the lord (albeit all of them catered to the mass market).

In recent times, be it the TV commercials of the ‘the brand new, stronger and improved’ Surf Excel (product extension), the flamboyance of the Mallya-driven Kingfisher brand spilling over to its entire product range from soda to airlines (brand extension) or simply the evolution of brand Aamir Khan which smells of perfectionism, category extensions are happening galore.

This article discusses about three prominent but dissimilar categories - Cars, Grooming Products and Film stars - which smell of profound category extensions.

Car-naama

Indica (India Car): The development launch of the indigenous Tata Indica in 1998 was nothing short of an engineering marvel in a country, which prided itself on carrying the whole family of 4 on the Chetak bike and was an unknown destination on the auto road map. Despite initial flaws and consumer complaints, the reliability associated with the Tata brand served as the assuring factor for the average Indian auto-buyer. 13 years hence, Indica is still one of the leading and largest-selling cars in the Indian auto industry.

And it is not for nothing that the car brand is a trusted one. Time and again, a lot of positive, engineering tinkering in the form of the various extensions - Indica V2, Rejuvenated Indica V2, Indica V2 Turbo Diesel, Indica Xeta, Indica

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Vista, have ensured its quality and refinement over the years.

This paved the way for the launch of the next offering of Tata in the sedan segment for the growing Indian auto industry– Tata Indigo, which was a hot-sell before other entrants made their way.

Axe-ially:

Axe deodorants, easily the “naughtiest” product brand in the market with creative ad commercials featuring ordinary, confident and good-smelling men turning on women, has held fort as one of the most impactful products. Despite repeated attacks from competitors like Old Spice, Rexona and Denim, this dynamic HUL brand has come up with a host of male-grooming fragrance products from time to time, like the Axe VooDoo (Entry), Axe Pulse, Axe Dark Temptation (remember the Dark Chocolate ad!), Axe Instinct (scent of cardamom, amber which promises to produce a spicy scent of leather.) as product extensions.

What’s more interesting is that it has capitalized on the growing youth appeal and freshness factor

 

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associated with the ‘Axe’ Brand by introducing other products like Axe ”Rise up” (Shower gel), Axe (Boost Shower gel), Axe Cool Metal (Shampoo) and Axe Absolute (Anti perspirant) thus extending the brand further.

The Rajinikanth

Possibly one of the few brands which cuts seamlessly across geographical boundaries, gender and ages. The rag-to-riches story of the man’s evolution into a superstar, the aura and

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style surrounding his cigarette-flicking or sunglasses-wearing and heavy ‘south’ accent are all ingredients of brand Rajinikanth. Besides blockbuster films, brand ‘Rajinikanth’ as an epitome of completeness and unwavering domination, has been exploited and leveraged to the fullest by ad commercials for products like Castrol, Chennai Super- Kings and Amul butter (print ads). Rajinikanth jokes have also been a popular source of web-traffic for prominent networking sites and are being increasingly used as value-added services by telecom companies.

 

Brand Trivia Cont.

3. In 2005, this Seattle based company, whose owner once also owned the Seattle supersonics branched out to actually enter the liqueur segment. Identify this iconic brand and the extension. 4. This lady is perhaps a brand by herself but she launched an extension of sorts with a magazine in 2000. She appeared alone on the cover of every issue till 2009 when a certain first lady joined her. Identify the magazine. 5. This musical superstar launched his own line of pet products in 2006, which included a hoodie for dogs selling at $14.99. Identify the superstar. He has also been part of a Bollywood movie as a singer. 6. In what is considered to be one of the most unsuccessful brand extensions, This Company, which is known for a cult following among macho men, launched cake-decorating kits, completely abandoning its core value proposition. Identify the brand. 7. This beauty product company was in a fix whether to branch out into selling vitamins. After all, who would put a beauty cream name in their mouth! However, they successfully launched their line of vitamins and marketed them as lifestyle and beauty products. Identify the beauty care brand.

Answers - 1. X is Virgin Records, Y is British Airways & Z is Virgin Atlantic 2. Coca Cola, the extension is Diet Coke 3. Starbucks Liqueur 4. Oprah Magazine, famous as O 5. Snoop Dogg 6. Harley Davidson 7. Oil of Olay