Brand extension

Topic

Brand Extension

Naveed Bashir MB-11-26Nauman SabirMB-11-32Aftab Baloch MB-11-36

What is Brand ExtensionWhat is Brand Extension

Brand extension involve using the name of existing brand to introduce the new

product category.

Martinez, Montaner & M. Pina (2009). Brand extension feedback, the role of advertising: Journal of Business Research

Conti….Conti….Brand extensions are one of the most heavily-researchedand influential areas in marketing. Brand extension directly related with Parent Brand.

Volcker & Sattler (2006) found that fit between the parent brand and an extension product is the most important driver of brand extension success.

Reddy.M, Terblanche, Pitt.L & Parent.M (2009). How far can luxury brands travel? Avoiding the pitfalls of luxury brand extension: Science Direct

Brand extension is a popular Branding strategy to enter in the new product category.

Brand extension strategy is advantageous because it reduce the cost of new product introduction and enhanced the probability of new product.

Swaminathan. V (2009). Sequential brand extensions and brand choice behavior: Journal of Business Research

Brand Extension build and communicate strong brand positioning, enhance awareness and

quality associations, and increase the probability of trial by lessening new product risk for

Consumers.

Dens. N & Patrick De (2010). Attitudes toward the extension and parent brand in response to extension advertising: Journal of Business Research

Brand Extension Process• Major Brand Extension Strategy Decisions:

Product BrandBrand Equity

Brand Positioning

Brand Development

Brand Extension

Name Selection

Success/Failure of Extension

Sponsor-ship

Advertise-ment

ProductProduct Commodity offer for sale.

Non familiar goods or services.

An artifact that has been created by someone or some process.

The set of elements common to two or more sets

BrandBrand Familiar product

Brand is the name, term, sign, symbol, design and combination of them or other characteristic that identify the product and distinguished it from other.

Brand could be tangible and intangible.

To maintain competitive advantages two thing are important.SustainChange

Product Brand

Brand vs. ProductBrand vs. Product Companies Make Products and Consumers Make Brands

Products Can Be Copied and Replaced but Brands Are Unique

Products Can Become Obsolete but Brands Can Be Timeless

Products Are Instantly Meaningful but Brands Become Meaningful over Time

Brand has different type of association as compare to the product.

Brand EquityBrand Equity

A measure of the brand’s ability to capture consumer preference

and loyalty.

The difference between the market value of a Product and the

claims held against it.

Brand Positioning Brand Positioning

The act of designing the company’s offering and image in such a way that it occupies a distinctive place in the minds of customers.”

A brand can be positioned on the basis of:

Product attributesBenefitsBeliefs and values

Brand Development Strategies

Line

Extension

Brand

Extension

Multi-

brands

New Brands

Product category

Existing New

Bra

nd N

ame

Existing

New

New Brands New brand name New product category

Example:Olper’s milk introduced a new product category of juices with a new brand name of Olfrute

Multi-brands New brand name Existing product category

Example:

Unilever has multi-brands in the same product category of shampoos

Such as Dove, Sunsilk, Lux etc.

Line Extension

Existing brand name Existing product category

Example:

Servis shoes has different range of shoes for different people. This strategy is called line extension.

Brand Extension Existing brand name New product category

Example:

Servis shoes have extend their brand by adding a new product category of Servis Tyres & Tubes.

Conti…. Conti….

Brand Extension also called Brand Stretching is a marketing strategy in which a firm marketing a product with a well-developed image uses the same brand name in a different product category. The new product is called a spin-off.

A brand's "extendibility" depends on how strong consumer's associations are to the brand's values and goals

In the 1990s, 81% of new products used brand extension to introduce new brands.

In the 2009s, 90% of new products used brand extension to introduce new brands.

AdvantagesAdvantages Cost reduction in introduce new brand

Customer are familiar with the parent brand name.

Low risk strategy to introduce the new product

Probability of success are higher

Increase Profitability

DisadvantagesDisadvantages Higher the risk to dilute the Parent Brand image

Poor choices for brand extension may dilute and deteriorate the core brand and damage the brand equity

The failures of brand extension are at higher rate than the successes

Negative association and wrong communication strategy do harm to the parent brand even brand family

Factors of Brand ExtensionFactors of Brand ExtensionFactors which making ease in Brand Extension,

Situational InvolvementConsumer MoodBrand Breadth Parent Brand Category Dominance Competitor CharacteristicsPerceived Fit or Congruency Between An Extension & The Parent Brand


Name SelectionName Selection The brand name is a very important brand element, and may heavily influence the way a brand perform.

Brand Names are the key Brand Equity generators because they affect recall and recognition,

Selecting a brand name is crucial part of branding

Olavarrieta. S, Torres & Barra.C (2009). Derived versus full name brand extensions: Journal of Business Research

Conti…Conti…

According to the author there are two ways of selecting a name for new product.

Full name brand extension.

Derived name brand extension.


Full Brand Name ExtensionFull Brand Name Extension

Most brand extension studies to date assume that brand extensions use the full Original Parent Brand Name.

Example: Oral B tooth brush may extend to Oral B dental floss or to Oral B mouth wash.

Reason:

Use the equity of the Parent brand in a new product category To facilitate consumer acceptance and brand association transfer


Derived Name Brand ExtensionDerived Name Brand Extension

In this method company perform sub-branding process in which consumers have the parent brand name as a cue, while companies introduce a new name.

There are Three different types of derived brand extensions way are,

a) The use of a part of a name combined with an identifier of the extension product .( Nestea, NesCafe & Kodacolor Film)

a) The use of a part of the brand name combined with a general concept (Nesquick)

a) The nickname derived brand extension (CAT vs. Caterpillar or TED air shuttle services of UNITED)


Full vs. Derived Brand Extension NameFull vs. Derived Brand Extension Name

firms use derived or partial brand extensions instead of fullbrand extensions because,

may be convenience and practicality like Customer cannot have ultra-long names.

may be psychological appeal and effectiveness like probably partial names, abbreviations, or nick names such as CAT for Caterpillar.


Brand SponsorshipParent Brand adopt Sponsorship way to provide the Financial resources to

make Brand Extension in best form.

3 Sponsorship Options:

National brand

Licensed Brand

Co-brand product

National Brand

“A brand sold out under its own unique brand name.”

Example:(Lay’s Chips)

Licensed Brand

“A brand name or symbol licensed with a name which was previously created by other manufacturers, or the names of celebrities, or characters from popular movies and books.”

Example: Kellogg’s

“Tony the Tiger”(1957)

(Character Logo)

Co-branding “Using the established brand names of two different companies on the

same product.”

Example:Motorola Ferrari co-branding

Advertisement With the Brand Extension, parent company need to create the

awareness among the customers.

companies may apply different communication strategies to increase perceived fit and, consequently, consumer acceptance.

The best communication strategy is “Advertisement”.

Conti…

Brand Extension

Brand Extension

Initial Brand Image

Initial Brand Image

Advertisement

Advertisement

Brand LoyaltyBrand

Loyalty

Final Brand Image

Final Brand Image

Brand Awareness

Brand Awareness

Martinez, Montaner & M. Pina (2009). Brand extension feedback, the role of advertising: Journal of Business Research

Appeals There are two common appeals use in the Advertisement

Informational Advertisement Appeals

Transformational or emotional advertising appeals

Informational Informational advertising provides strictly information about the advertised

product and/or brand. This appeal shows the perceived fit between parent brand and new brand name.


Transformational or emotional

Transformational appeals typically contain less information but picture positive sensorial, social, or emotional aspects of one's experience with the focal item being promoted.


Success & Failure of Extension Brand

Success and Failure of Brand Extension base on the application of all these strategies. If Parent company able to apply these in successful way then extension been successful and vice versa.

According to the survey 90% new product in the in the market are in the result of Brand Extension. More then 50% are fail due to the bad strategy application.

Introduction•Service Industries Limited (SIL) is one of large network working in Pakistan.

•SIL employees more then 6000 and manufactured world class Shoes, Tyres, Tubes and Rubber production facilities in Gujrat and Muridke.

•Now SIL has over all PKR 12 Billion revenue per year.

Naveed Bashir 38

Conti…

•Today the group is Pakistan’s largest footwear manufacturer and exporter in German, Italy, UK and French markets.

•With the growing portfolio of brands and nationwide network SIL touches the millions of life daily.

Naveed Bashir 39

Brand Development Strategies

Line

Extension

Brand

Extensio

n

Multi-brands New

Brands

Product category

Existing New

Bra

nd N

ame

Existing

New

Naveed Bashir 40

Servis BrandsThe Company runs its footwear retail business under ‘Servis’ brand. It has also established some of the most loved footwear brands includes Don Carlos, Cheetah, Calza, Liza, Skooz and Toz.

Naveed Bashir 41

Brand Extension• Existing Brand Name

• New Product Category

Example:

Servis shoes have extend their brand by adding a new product category of Servis Tyres & Tubes.

Naveed Bashir 42

Naveed Bashir 43

Lipton Yellow Label Tea

Lipton in Pakistan

• Lipton Alps mint and Eucalyptus

• Forest Fruit

• Red Fruit

• Caramel Tea

• Ice Tea

• Black Kiss

• Peppermint

• Herbal Tea

• Green Tea Intense Mint

• Tea & Honey

• Infusion Chamomile

• Blue fruits

• Decaffeinated

• Lemon & Ginger

• Chamomile

• Finest Earl Grey

• Rooibos

• English Breakfast

And Others

Lipton’s other extensions

Nike

NIKE, Inc. is the world’s leading innovator in athletic footwear, apparel, equipment and accessories.

Brand Valued $10.7 billion headquartered near Beaverton, Oregon Fortune 500 companies employed more than 44,000 people worldwide

Nike

Nike first products was track running shoes Now Nike produces a wide range of sports equipment wide range of sports, including track and field Shoes

jerseys Shorts Cleats base layers baseball ice hockey Tennis association football (soccer), Lacrosse Basketball cricket.

Nike Air Max

• Nike Air Max is a line of shoes first released by Nike, Inc. in 1987.

Air Huarache

• Additional product lines were introduced later,• such as Air Huarache, which debuted in 1992.

Nike 6.0

• The most recent additions to their line are the Nike 6.0,

Nike NYX

• Nike NYX

Nike Brands

Nike markets its products under its own brand, as well as

Nike GolfNike 6.0Nike ProNike+Air JordanNike Skateboarding and With some subsidiaries

Nike Jorden

Nike +

• Nike And Apple• Monitor Performance with Radio Ferquency

Nike Pro

Nike Acquisitions• First acquisition was a footwear company “Cole Haan” in 1988

Bauer Hockey

• Buy Bauer Hockey in 1994

Hurley International

• Hurley International in 2003

Converse• Paid $309 million to acquire Converse

Starter Clothing

• acquired Starter in 2004

Acquisitions

• In Order to focus on their Core

• Sold Starter in 2007 and Bauer Hockey in 2008.

• Nike sold Umbro in 2012 and Cole Haan in 2013

• As of 2013, Nike owns two key subsidiaries Converse Inc. and Hurley International.