BRAND EXTENSION

Brand extensions are an important brand growth strategy

Group – 3

NITESH TAUNK

KETAN CHOUBE

SURAJ SINGH THAKUR

PRAVIN UGHADE

Brand Extension

Brand extension or 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.

Ex- TATA- STEEL, TCS , TELECOM, TEA, WATCHES, HOTELS, POWER, MOTORS.

Caterpillar moved into shoes & clothing

reliable, resistant, masculine

Business units

Hair care

Skin care

Food division

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

Launching a new product, is not only time consuming but also needs a big budget to create awareness and to promote a product's benefits.

Brand extension is one of the new product development strategies which can reduce financial risk by using the parent brand name to enhance consumers' perception due to the core brand equity

About Brand Extension

Contd.

Poor choices for brand extension may dilute and deteriorate the core brand and damage the brand equity. Ex- Xerox

In practical cases, the failures of brand extension are at higher rate than the successes.

The failures of extension make consumers create a negative or new association relate to parent brand even brand family or to disturb and confuse the original brand identity and meaning.

Need for Brand Extension

increasing competition between less & larger players with global aspirations and ability to communicate globally.

towards saturation of markets.

decreasing brand loyalty.

Why is brand extension important to Nokia?

For existing and build new competitive advantages for continued leadership in the mobile communications market amid increased competition from rivals. Ex- Pc’s and Software.

To regain market share.

Failure No.1: In 1975, launched a computer product,

Xerox Data Systems, which had been researched at Xerox PARC.

It failed disastrously

Xerox lost US $85 million.

Why firms opt for Brand Extension?

Helps the new brand to acquire instant brand recognition

Saves cost Helps leverage the strengths of the existing brand It also helps build the brand into a ‘Super brand’

Types of Brand Extensions A Brand name can be extended in three ways:

1. Extended to other items in the same product line E.g. Sunrise Coffee This is called Line Extension.

2. Extended to items in a related product line E.g. Maggi This is called ‘related brand extension’ or ‘category

extension’

3. Extended to items in an unrelated product line

e.g. Enfield It is a case of ‘unrelated brand extension’ or ‘outside the

category extension’

Let us see some relevant details about each of these three types of brand extensions

LINE EXTENSION

Line Extension is the simplest form of ‘Brand Extension’. The idea is to make some addition to the line and cater to the different segments of users of the product. In Line Extension the key criteria are whether the core strengths of the parent brands can be leveraged for the new items.

LINE EXTENSION –COLGATE Colgate Dental Cream: The mega brand, the category volume driver. Colgate Gel: Positioned as giving long-lasting fresh breath Colgate Cibaca Top: Positioned on economy Colgate Total: With therapeutic, multi-benefits positioning.

Advantages of Line Extension

Line Extension helps strengthen brand power and keep the brand live, modern and contemporary.

Changing consumer tastes can be accommodated through Line Extensions

Reduces risk associated with new product introduction

Line extensions provide a convenient route for infusing new values into an ongoing brand and gaining presence in new market

CATEGORY EXTENSION

Here, the brand name is extended over different products, but the products are related in some way. In other words they belong to a category. The Maggi example cited earlier fits this description. Dettol can be cited as another example.

DETTOL SOAP-antiseptic soap DETTOL PLASTER-antiseptic bandage DETTOL HANDWASH-antiseptic wash

Line and Category Extension by POND’S

Ponds dreamflower talc Ponds dreamflower talc magic Ponds sandal talc Ponds cold wash Ponds face wash Ponds cold cream Ponds moisturising lotion Ponds dreamflower moisturising body lotion

OUTSIDE CATEGORY EXTENSION

Here, the brand name is extended across completely new and unrelated products, falling under altogether different categories. It is here that brand extension is put to the severest test and the value of the brand is leveraged to the maximum.

Advantages of Outside category extensions:

As compared to the strategy of introducing a product with a totally new brand name OCE is viewed as less expensive and less risky

Advertising cost will be frequently lower Encourage first time consumer trial e.g. (sun feast pasta)

Success factors for brand extension

Characteristics of the parent brand (brand strength, uniqueness of knowledge structure, history of previous brand extension)

Experience with Parent Brand Characteristic of Extension Product. Characteristics of the firm. Relationship between parent brand and extension.

Problems with brand extension Creates confusion regarding core values of

brand.

Unsuccessful extension may tarnish the image of parent brand.

Brand cannibalism

BRAND RELATIONSHIP SPECTRUMBrand Relationship spectrum

Branded House House of BrandsSub Brand

Endorsed Brand

Same Identity

Different Identity

Master Brand as

Driver

Co-driver

Descriptor

Strong Endorsement

Connected Name

Token Endorser

Not Connected

Endorser Brand

Endorsement by a strong brand gives credibility and support supply.

Endorser brands usually represents company more than a single product.

Token Endorser: Logo, phrase etc.

Branded House

The master brand contributes to supply by adding:

Value proposition Credibility Visibility

House of Brand

There is strong need for a separate brand because:

Own an association Represent a new and different offering Retain/capture customer bond.