“ Brand extension is using the leverage of name in one category to launch in a .”

In a practical term- customers in a new category would

believe the new brand extension is better than the

existing products on an important dimension.

Brand extension’s definitionBrand extension’s definition

a well known brand a new product

categorydifferent

Definition:

(Tauber, M. E. 2004)

Growth strategiesCurrent Products New Products

Current

Market

New Market

Market

Penetration

Strategy

Product

Development

Strategy

Market

Development

Strategy

Diversification

Strategy

How does a firm grow?

A Company/ Brand can: Focus on current products and markets

Market penetration strategy Put existing products into new markets

Market development strategy Put new products into existing markets

Product development strategy Put new products into new markets

Diversification strategy

Why Brand Extension

Leveraging brand equity/ value by introduction of logical & complementary new product categories

Product Innovation to surpass consumer expectations It increases awareness of the brand name Increases 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.

Brand ExtensionsWhen a firm introduces a new product, it has

three choices on branding1. Develop a new brand2. Apply one of its existing brands in some

way3. Use a combination of new and existing

brand

Brand Extensions Brand extension –when a firm uses an

established brand to introduce a new product

When a new brand is combined with an existing brand, the brand extension can also be called a sub-brand

The existing brand is called the parent brand, and if associated with multiple product is called a family brand.

Brand ExtensionsBrand extension can be classified as: Line extensions : when the parent brand

is used to brand a new product that targets a new market segment within the same product category

Category extensions: when the parent brand is used to enter a different product category

Some Terminology Brand Extension - A firm uses an established

Brand name to introduce a new product. Tommy Hilfiger perfume, watches, home

accessories. Sub-Brand - A new Brand is combined with an

existing Brand Ralph Lauren Polo, Safari, V.Dot from Van

Heusen, Dockers from Levi’s. Parent Brand – The pre-existing Brand that gives

birth to the sub-Brand.

Product extension/Line Extensions Product extensions are different/ new versions of the

same parent product. They serve a different segment of the target market and

increase the variety of a product offering. Example: (i) Coke extends itself to Diet Coke in the same product

category of soft drinks. (ii) Amul Butter extends itself to Amul “reduced salt”

butter, Amul Cheese and Cheese slices in its Core area of milk product derivatives.

Brand extensions could be across different product categories. Examples:

(i)Harley Davidson Motorcycles extends to Harley Davidson Accessories.

(ii) Land Rover extends itself from Tough Off Road vehicles to a line of stylish, yet functional outdoor clothing, shoes etc.

Brand Extension Assumptions

In introducing a brand extension, it is typically assumed that:

Consumers have some awareness of and positive associations about the brand in memory

Example: (Raymond – “The complete man”) * This is why Raymond’s

were able to extend from their core in manufacturing fabrics to a readymade clothing brand (Park Avenue) and from there to Accessories & Grooming even!

Some of these positive associations are evoked by the brand extension. -- since Raymond was always positioned as the “The Complete Man” and “Guide to the well-dressed male”, their extension into personal care was automatically promoted as the “Guide to the well-groomed male” and viewed as such by consumers.

Brand ExtensionExample

Proctor &Gamble “Crest”12 different types of toothpaste

Floss, Mouthwash, & Whitening strips

Advantages of Brand Extensions

Some Enhance the parent brand image Improve strength, favorability, and uniqueness of brand

associations Reinforce the brand in the minds of the target group of

consumers and aspiring consumers. Help increase “buy-in” , “consumer mind-share” and slowly

progress to “share of wallet”. Improve consumer perceptions of company credibility

Convey broader brand meaning to consumers Clarify core benefit proposition and business definition of the

company Bring new customers into the franchise and increase market

coverage Facilitate new product acceptance (Nike clothing) Reduced risk perceived by customers (Sony PC, Apple iphone) Increase the probability of gaining distribution by brand’s reputation

When are Brand Extensions Appropriate?

When Prior Brand Equity exists Consumers must see some “connection”

between the proposed extension and the parent brand.

Eg: “Jeep/ Land Rover vehicles extending to Jeep/ Land Rover Brand outdoor clothing etc”.

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

Some Successful extensions Ralph Lauren

Successful Extensions - Apple

Apple Imac Ipod Iphone Brand’s Core Values of Superb Cutting Edge Design and Technology leveraged into first class consumer

products!

Example of successful brand :Example of successful brand : - Yamaha is an original Japanese manufacture for motorbikes but they also moved successfully into branded hi-fi equipment, pianos and sport equipments

- McDonalds extend its brand into another restaurant concepts such as Mc Café

- Sony won the market by extending the brand to laptops and digital camera

Brand Extension End-to-end example 1

Brand Extension End-to-end example 2

T SHIRTS & SPORTS APPAREL

LACOSTE BRAND FRAGRANCES

LACOSTE BRANDED SPORTS & FASHION

ACCESSORIES

LACOSTE SHOES

Here we see an excellent example of how a pure play sports brand extended itself into several other relevant yet lucrative categories, while at all times,

retaining the essence of the mother brand. Their iconic use of the colour green signified freshness and sport-derived from the traditional Wimbledon colours.

Disadvantages of Extensions Extensions have risks, too.

They can fail over time. (Example: The Virgin Megastores retail business didn’t do well and now has been sold to zavvi.co.uk. Even Virgin Cola couldn’t make a dent in the market place.)

Disadvantages of Extensions

Extensions can potentially result in the following troubles/ costs:

They can cannibalize sales of the parent brand (Eg; Amul Reduced Salt Butter is slowly eating

into sales of Amul’s normal Butter.)

Disadvantages of Extensions

Extensions can also Hurt / Erode the image of the parent brand

If the extension fails; 1. Xerox Computers; because Xerox was

synonymous with copiers and no one believed they could make computers too. Luckily they recovered by focussing on “core –competence” and re-invented themselves as “The Document Company”.

Pierre Cardin extended too far by branding all sorts of un-related products with his name.)

Frito Lay™ name is extended from potato chips into other types of snack foods and dips. An introduction of Frito Lay™ lemonade did not succeed because the fruity, sweet drink had little connection to other Frito Lay™ products.

Other examples that did not work in the consumer market include

› Ben-Gay™ aspirin, ›Fruit of the Loom™ laundry detergent.

However, M&M™ ice cream, Reese’s™ peanut butter, and Minute Maid™ orange soda experienced success because the brands held direct and logical connections to their new categories.

A few other Extension Failures

Levi’s Tailored Classics suits did not succeed. Maggi pickles – what’s that?? Amul Instant Pizza failed to inspire the Indian

public

How far is too far?

Example: Maggi. Core Product = 2 minute Noodles Extension 1 = Soup cubes and Sauces/ Ketchup Extension 2 = Soup Packets Extension 3 = Pickles * The first 2 extensions did well and were accepted by

consumers. In these two they created a number of “product line extensions” and introduced new flavours and variants which were accepted.

However, the third (Pickles) met with a poor response because Maggi was viewed as a “westernized ready-to-cook” concept and pickles were largely viewed as home made/ traditional.

How far is too far?

Example: Pierre Cardin. Core Product = Designer Apparel. Extension 1 = Fragrances and Cosmetics Further Extensions = Watches, Pens, Base ball caps,

cigarettes etc etc. The first extensions did phenomenally well and were

accepted by consumers because fragrances and cosmetics etc were a perfect brand fit and thus a natural extension.

However, the other “wildly non-adjacent/ indiscriminate/ commoditized” extensions, met with a poor response on account of a sharp drop in quality as well as perception. There was no way the consumer would believe that these products stood for the same values as the original products and product extensions had.

Is it always too far?

Would it be possible for the luxury designer jewellery brand BVLGARI to successfully extend into Boutique Hotels too?

Considering the core values of BVLGARI are “design”, “craftsmanship” and “aesthetics” - YES!

However, an Hotel’s core values are predominantly built around “hospitality”.

Thus, the BVLGARI designed hotel in Central Milan has RITZ-CARLTON as their “hospitality partner”.

A natural fit, since the RITZ-CARLTON has impeccable credentials in “luxury” and “hospitality.”

To summarize this thought, the extension will most likely succeed, provided the “right” synergies exist and there is a clear “target consumer group”.

Successful Umbrella Brand Extensions

There are also cases of some Super brands that never needed to re-brand or introduce sub-brands and yet created huge successes in brand/ product extensions.

Examples: Godrej covers office furniture through hair dye to ready-to-cook

chicken.

TATA covers a whole range of products/ services from Salt to SUV’s.

Mahindra covers products and services from Tractors to Holidays.