20496299 Brand Extension
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Transcript of 20496299 Brand Extension
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Brand and Line extensions
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Brand ExplosionBrand Consolidation Brand variants
Brand Extensions: How does a firm grow?
A firm 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
Brand Extensions
Brand extension– Involves using an existing brand name to launch a
product in a different category.
Category extension– Parent brand is used to enter a different product
category from that currently served by the parent brand
Swiss army watches, Porsche bicycles
Ponds
LG
Park Avenue
Line Extensions
Line extension – 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
H&S dry scalp shampoo
Line extension – Involves making entries in brand’s exiting product
category by using same brand name. These entries can come in the form of varying product sizes, flavors, colors, and ingredients and forms
Advantages of Extensions
– Reduce risk perceived by customers & distributors
– Decrease cost of gaining distribution & trial
– Increase efficiency of promotional expenditures
– Avoid cost (and risk) of developing new names
– Allow for packaging and labeling efficiencies
– Variety-seeking
Advantages of Extensions
Enhance the parent brand image– Improve strength, favorability, and uniqueness of brand
associations– Improve 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
Disadvantages of Extensions
Extensions have risks, too. – They can fail.
Moreover, extensions can potentially result in the following costs:– Cannibalize sales of the parent brand– Hurt the image of the parent brand
Forego the chance to develop a new brand name or market the parent brand differently (opportunity cost)
– Consumers have some awareness of and positive associations about the brand in memory
– Some of these positive associations are evoked by the brand extension
– Negative associations are not transferred from the parent brand
– Negative associations are not created by the brand extension
Brand Extension Assumptions
Product Form
Extension
Amul MilkAmul
Condensed Milk
Real Juices Real
Juice Concentrate
Companion Product
Colgate Dental Cream
Colgate Tooth Brush
Gillette Razors Gillette
Shave Foam
Gillette After Shave
Customer Franchise
J & J
Baby
Shampoo
J & J
Baby
Talc
J & J
Baby
Oil
J & J
Baby
Diapers
Company Expertise
Honda Cars
Honda Gensets
Honda Scooters
Honda Lawnmovers
Types of Brand Extensions
Brand Distinction
Parachute
Coconut
Expertise
Parachute
Hair Oil
Parachute
Shampoo
Parachute
Cream
Parachute
Cooking Oil*
*hypothetical
Types of Brand Extensions
Distinctive Taste, Ingredient or
Component
Cartier
Jewellery
Cartier
Watches
Cartier
Purses
Cartier
Pens
The Product Brand Formula Brand Know-how Brand Interest Brand Philosophy
Brand Extendibility
Product Brand
It is a situation where there is very little difference between the brand and the product. Brand is a close approximation of the product. Passively, the brand is used to identify the product, maybe for internal purposes. The brand does not play any role from the customer’s point of view
Formula Brand
Formula means a set procedure (used to make the product). This type of brand may be find in categories like cooking oil, food, and pickles
Know-how Brand
Know-how is an expertise that a firm develops in a specialized area of activity. Sony is know to have expertise in miniaturization and robotics. Honda has know-how in engines. Amul has developed expertise in milk processing
Interest Brand It’s the centre of interest or the core spirit of the brand. Gillette brand maintains its focus on men’s grooming in all its brands. Nike’s focal point is winning. Whirlpool’s centre of interest is the home (‘homemaker’)
Philosophy The brand at this level acquires more intangible character and orientation. This generally happens in case of designers and artists. The Armani signature on the product provides a higher philosophical meaning – a meaning proudly expresses in Armani’s creatively styled products
Product dissimilarity
Philosophy BrandCartier
Interest BrandDisney (Entertainment)
Know-how BrandBajaj (Electronics)
Formula BrandMother’s Recipes
Product BrandRose Brand Flour
PicklesLemon
PicklesMango
PicklesMixed
OTGIrons
Fans
Coolers
Mixers
Toasters
ToysTheatre
Movies
ThemeParks
Music
Clothes
Acces-sories
Games
WatchesJewellery
Bags
Pens
Extendibility of a Brand
Brand Extendibility
Amul Milk
Amul MilkType I II III
AmulExpertiseIn milkprocessing:Milk,Ghee,Butter,CondensedMilk
Amul SymbolPersonality:LovableIndiannessTasteFunTrustworthyValue GoodIce CreamCheeseMil AdditiveChocoloate
“Amulishness”Drinks?Energy Bar?Energy Tabs?Mil Cakes?Biscuits?
Product Formula/ Expertise/Brand Recipe Know-how Interest Philosophy
Time / Brand’s
Evolution
Products are manifestations of BrandBrands identifies the product