brand extensions 2009
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8/14/2019 Brand Extensions 2009
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Brand Extensions
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Virgin: An extension-basedVirgin: An extension-basedbusiness modelbusiness model
Case studyCase study
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South Africa
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Johannesburg
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Hong Kong
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Virgin: An extension-basedVirgin: An extension-based
business modelbusiness model300 companiesBrand’s DNA: Seek opportunities inmarkets choked by ‘false competition’(Underdog business model)
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Virgin: An extension-basedVirgin: An extension-based
business modelbusiness modelValues: service quality, innovation, fun andvalue for money‘Way of life’ brand – enjoy life to the full – make customers happier Umbrella branding is the ‘glue’
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Virgin: An extension-basedVirgin: An extension-based
business modelbusiness modelTo finance his expansion, Branson usuallyseeks support from appropriate partners in
order to minimise his own investment, evenif this means not being the majorityshareholder (Virgin Megastores in UK)
Virgin allows start-ups to begin with a world brand as their ‘birth gift’
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Virgin: An extension-basedVirgin: An extension-based
business modelbusiness modelBranson also resells his businesses - butonly after adding value with his brand
(Virgin Atlantic)The Virgin brand remains the property of Virgin Enterprises, a company of which he
is the sole owner
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Virgin: An extension-basedVirgin: An extension-based
business modelbusiness modelWeakness: The further you get from theBritish zone of influence, the weaker and less
emotive the brand becomesMajor failures: Virgin Cola, Virgin ClothingQuestion: If Virgin = Branson then what
happens to the company after Branson?
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Leveragingthe Brand
Leveragingthe Brand
LineExtensions
LineExtensions
DownDown UpUp
Stretchingthe Brandvertically
Stretchingthe Brandvertically
BrandExtensions
BrandExtensions
Co-branding
Co-branding
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Brand ExtensionsBrand ExtensionsWhen a firm uses an established brand name tointroduce a new productBrand extension classification – Line extension
Marketers apply the parent brand to a new product that targets a new market segmentwithin a product category the parent brandcurrently serves
– Category extensionUsing the parent brand in a different productcategory
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Line Extensions: WhyLine Extensions: Why
At its beginning, there is only one form of the product (Coca-Cola)
With time, the brand acknowledges differentiatedexpectations and decides to respond with productofferings - it evolves with the consumer Therefore, the extension is an expression of the
brand that it cares - reinforces the relationship
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Line Extensions: WhyLine Extensions: Why
Growth and profitability
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Successful CategorySuccessful Category
ExtensionsExtensionsAppleKingfisher Ivory
NirmaCaterpillar
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Unsuccessful CategoryUnsuccessful Category
ExtensionsExtensionsHarley Davidson wine coolersBic perfumes
Kleenex diapersLevi’s Tailored Classics suitsBournvita biscuitsPond’s toothpaste
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Advantages of ExtensionsAdvantages of ExtensionsFacilitate new product acceptance – Improve brand image (VAIO from Sony) – Reduce risk perceived by customers
– Increase the probability of gaining distributionand trial – Increase efficiency of promotional
expenditures (Brand is already known. Focuson product in marketing communications e.g.Dettol)
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Advantages of ExtensionsAdvantages of Extensions(Cont.)(Cont.)
Facilitate new product acceptance – Reduce costs of introductory and follow-up
marketing programs (“Halo effect” – iPod) – Avoid cost of developing a new brand – Allow for packaging and labeling efficiencies (e.g.
printing and merchandising – “Billboard effect” –
Coke) – Permit consumer variety seeking
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Advantages of ExtensionsAdvantages of Extensions(Cont.)(Cont.)
Provide feedback benefits to parent brand – Clarify brand meaning (e.g. Kingfisher,
Gillette)
– Enhance the parent brand image – Bring new customers into brand franchise and
increase market coverage (Chota Coke, AllenSolly for Women, Women’s Horlicks)
– Revitalize the brand (Lifebuoy) – Permit subsequent extensions (Becomes
easier)
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Disadvantages of ExtensionsDisadvantages of Extensions
Can confuse or frustrate consumersCan encounter retailer resistanceCan fail and hurt parent brand image (Mercedes
A Class, Maruti Versa)Can succeed but cannibalize sales of parent
brand (Diet Coke, Mach 3 Turbo)
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Disadvantages of ExtensionsDisadvantages of Extensions
Can succeed but diminish identification with anyone category (Cadbury in UK – food products)Can succeed but hurt the image of the parent
brand (Evian licensed to J&J – skin care products)Can dilute brand meaning (Gucci – 22k products
– 7k)Can cause the company to forgo the chance todevelop a new brand (Levi’s & Dockers)
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Identifying potentialIdentifying potential
extensionsextensions
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Perimeters of brand extensionPerimeters of brand extension No-go area
Extension zone
Latent potential
Outer core
Spontaneousassociations
Inner coreKernel lineextension
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Building a brand throughBuilding a brand through
systematic extensionssystematic extensions
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Nivea extensions galaxyNivea extensions galaxy
No GoNo Go No Go
No Go
Bath care
Hair care
Deo
Beauty
NiveaCreme
NiveaSoft
Face
Hand
Sun
Vital
For men
Baby
Body
No Go
Lip-
care
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