The Curious Case of Brand Extensions
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Transcript of The Curious Case of Brand Extensions
• Introduction of a host of new products under their strongest brand names
What is a Brand Extension?
• Improved odds of new-product success• Positive feedback effects• Lesser cost of advertisements
Pros of a Brand Extension
• Brand dilution• Cannibalization of existing products• Loss of core customers
Cons of a Brand Extension
Chateau de Vallois
Gaspard- the owner, is dilemmatic,Whether to extend the brand, or preserve the luxury.
Preserving Luxury
Gaspard feels it is not right to upset his distributors(negociants) by introducing a new brand of wine, and sell it directly
Importance of Distribution Channels
There is a high risk of:• Brand dilution• Perceived brand value’s loss• Loss of core customers• Might annoy the distributors
Concluding…
• They don’t have enough grapes
• They don’t own a distribution channel
• The core customer base is extremely loyal
• Distributors enjoy a healthy relationship
•
Deciding factors
He must lean towards Preserving the Luxury
Any alteration to the tradition can be counter-productive
• India is a developing and densely populated country• Huge market segments• Most segments’ size increasing rapidly
The Key Factors
• Entered the Indian market in 1990• Initially positioned as a premium and fashionable menswear brand
How Van Heusen initiated?
• Launched in 2006, as a club wear brand• Offered denim collection with trendy designs• Differentiated its product from regular wear by promoting boldly
and attractively
How did it make its mark?
And again…
Introduced Van Heusen Woman with Indian celeb Nargis Fakhri named as the brand ambassador
• In early 1990s, number of women entering workforce started increasing
• No formal wear brand for office going women in India
OPPORTUNITY!!
The Key Factors
• It registered a 10% increase in sales in 2012-13• Up to 20% growth in turnover in fiscal 2013• It maintained its focus on the new categories
How did it go for Van Heusen?
•Menswear continued to be the primary growth driver
•Womenswear- small but fast growing
The current players
• Parent brand’s equity• Optimal POPs & PODs• Implications on parent brand’s profitability• Earlier scenario of the to-be-introduced product line
What judges the potential success of an extension?
Savlon introduced itself as a product which:• Had a different smell• Didn’t turn cloudy in water• Didn’t give a stinging sensation
All differing with the existing leader, DETTOL
The Case of Dettol & Savlon
A case of Optimal POD selection
Savlon advertised the superior efficacy of the product and highlighted the “no-sting” property
• Brand extension can be rewarding, but may prove to be equally fatal simultaneously.• With proper concepts, market segment knowledge, and a little
research, one can increase the odds of a successful brand extension.• A luxurious brand, though, enjoys a higher level of brand loyalty. It
must take extra care before extending. The loyal customer base must never be played with.
Summary