MODULE-6 MODULE-6 BRAND EXTENSION BRAND EXTENSION

What Is A “Brand”What Is A “Brand”A BRAND is symbolic embodiment

of all the information connected to a Company, Product or Service.

It serves to create associations and expectations from products made by a producer, in the mind of the consumer.

The key objective being “to create a Relationship of TRUST with its consumers”.

Brand StrategyBrand StrategyLine Extensions

Brand ExtensionsMulti-brandsNew Brands

Line ExtensionsBrand Extensions

Multi-brandsNew Brands

Brand SponsorBrand Sponsor

Manufacturer’s BrandPrivate Brand

Licensed BrandCo-branding

Manufacturer’s BrandPrivate Brand

Licensed BrandCo-branding

Brand Name SelectionBrand Name Selection

SelectionProtection

SelectionProtection

Major Brand Major Brand Decisions Decisions

Brand Brand StrategyStrategy

LineExtension

Multibrands

BrandExtension

NewBrands

Bra

nd

Nam

e

Existing New

Product Category

Existing

New

Brand StrategyBrand StrategyLine ExtensionLine Extension

◦ Existing brand names extended to new forms, sizes, and flavors of an existing product category.

Brand ExtensionBrand Extension◦ Existing brand names extended to new

product categories.Multi-brandsMulti-brands

◦ New brand names introduced in the same product category.

New BrandsNew Brands◦ New brand names in new product categories.

BRAND EXTENSIONSBRAND EXTENSIONSUsing an existing brand name to

promote a product in a different category, is Brand Extension.

The key difference between line and brand extension is the product category.

In line extension the Product Category remains constant whereas in brand extensions product category is a variable.

BRAND EXTENSIONSBRAND EXTENSIONSPonds - Cold cream, Toilet soap

Shampoo, Tooth paste, Moisturizing lotion, Talc & Face wash.

LG – Television, Refrigerators, Computer monitors, Microwaves, Air Conditioners, Washing Machines & Mobile phones.

Park Avenue – Shirts, Shaving cream, Jeans, Belts, Perfumes, Soap & Razor.

LINE EXTENSIONLINE EXTENSIONThe parent brand is used to brand

a new product that targets a new market segment with in a product category currently served by the parent brand.

A line extension often adds a different flavor or ingredient variety, a different form or size, or a different application for the brand.

Coke’s Line ExtensionCoke’s Line Extension

Head

&Shoulder’s

Extension

CATEGORY EXTENSIONCATEGORY EXTENSIONThe parent brand is used to enter

a different product category from that currently served by the parent brand.

ITC’s Category ITC’s Category ExtensionExtension

Why Brand Extensions?Why Brand Extensions?Leveraging brand equity/value by

introduction of logical & complementary new product categories

E.g HPProduct Innovation to surpass consumer

expectationsIt increases awareness of the brand nameIncreases profitability from offerings in

more than one product category.(widening the net to catch new consumers.)

It’s a great way to reinforce a brand, reach out to new customers, create a BUZZ

Why Brand Extension?Why Brand Extension?Cost of New launchesPromotional EfficiencyConsumer BenefitsFeedback effectsReturns

Advantages Of Brand Advantages Of Brand ExtensionsExtensions

Improve brand image Reduce risk perceived by Customers Permit consume variety-seeking

Advantages Of Brand Advantages Of Brand ExtensionsExtensionsClarify brand meaning

Brand Original Product

Extension Products

New Brand

Meaning

Weight Watchers

Fitness Centre

Low-calorie foods

Weight loss &

maintenance

Sunkist Oranges Vitamins, juices

Good health

Kellogg’s Cereal Nutri-grain bars,

Special K bars

Health snacking

Aunt Jemima

Pancake mixes

Syrups, frozen waffles

Breakfast foods

Advantages Of Brand Advantages Of Brand ExtensionsExtensions Increase the probability of gaining

distribution and trial Increase efficiency of promotional

expenditures Reduce costs of introductory & follow-

up marketing programs (save 40-80%) E.g. Apple iPods Avoid costs of developing a new brand Allow for packaging & labeling

efficiencies

Advantages Of Brand Advantages Of Brand ExtensionsExtensions

Enhance the parent brand image Bring new customers into brand

franchise and increase market coverage

Revitalize the brand Permit subsequent extensions

Disadvantages Of Brand Disadvantages Of Brand ExtensionsExtensions

Can fail & hurt parent brand image Xerox Computers-synonymous with

copiers & no one believed they could make computers

Can succeed but cannibalize sales of parent brand

Amul Butter-”reduced salt butter” is slowly eating up Amul normal

butter

Disadvantages Of Brand Disadvantages Of Brand ExtensionsExtensions Can succeed but diminish

identification with any one category

Can succeed but hurt the image of parent brand

Disadvantages Of Brand Disadvantages Of Brand ExtensionsExtensions Can confuse or frustrate consumers

Can encounter retailer resistance

Can dilute brand meaning Can cause the company to forgo the chance to develop a new brand

When are Brand When are Brand Extensions Appropriate?Extensions Appropriate?When Prior Brand equity existsConsumer must see some

“connection” between the proposed extension and the parent brand.

The proposed extension contributes to and reinforces the overall brand equity of the parent brand.

Conditions For Evaluating Conditions For Evaluating Consumer’s Brand Consumer’s Brand ExtensionExtension

Consumers have some awareness & positive associations about the parent brand

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

Negative association are not transferred from the parent brand

Negative associations are not created by the brand extension

Evaluating Brand Evaluating Brand Extension OpportunitiesExtension Opportunities

Define actual & desired consumer knowledge

Identify possible extension candidates

Evaluate potential of the extension candidate

Evaluate potential candidate feedback effects

Consider possible competitive advantages & reactions

Design marketing campaign

Evaluate extension success & effects on parent brand equity