brand extensions
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BrandingTRANSCRIPT
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Chapter 12:
Introducing and naming new products and brandextensions
Kevin Lane Keller
Tuck School of Business
Dartmouth College
12.1
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Leverage the Brand
• Firms are seeking to build “power” or “mega”
brands that establ ish a broad m arket footpr int ,
appeal ing to mult ip le customer segments w ith
mult ip le products al l underneath the brand umbrella.
12.2
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Ansoff’s Growth Share Matrix
Current
Products
New
Products
Current
Markets
Market
penetration
strategy
Product
development
strategy
New
Markets
Marketdevelopment
strategy
Diversificationstrategy
12.3
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Brand Extensions
• When a firm uses an established
brand name to introduce a new
product
• Brand extension classification
– Line extension
• Using a sub-brand to target a
new market segment within
the same product category
– Category extension
• Using the parent brand in a
different product category
12.4
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Line Extens ion Strategies
Billeri1L
Bisleri1.2L
Bisleri.5 L
Bisleri1.5 L
Bisleri 5L
SunsilkPink
SunsilkBlack
SunsilkYellow
SunsilkOrange
Product
Size
Colour
RasnaOrange
RasnaMango
RasnaRose
RasnaLime
RasnaCola
RasnaPine
AppleFlavours
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Line extensions
Good Night mosquito mat anda Good Night mosquito
Liquid. They fall under the
same core benefit, which is
eradicating mosquitoes, but
are different categories
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Why Line Extensions
Customer
segmentation
Customer need for
variety
Pricing Breadth
Capacity
utilization
Quick gains
Counter competition
TradeDemands
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General Strategies for Establishing a CategoryTauber’s Franchise—Extension
• Introd uce the same produ ct in a di f ferent form .
Example: Ocean Spray Cranberry Juice Cocktail
• Introduce products that contain the brand’s
dist inct ive taste, ing redient, or com ponent. Example:
Philadelphia cream cheese salad dressing
• In t roduce companion products for the brand.
Example: Coleman camping equipment
• Introd uce products relevant to the customer
franch ise of the brand. Example: Gerber insurance
Klein clothes
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General Strategies for Establishing a Category
Tauber’s Franchise—Extension
• Introduce products that capitalize on the firm’sperceived expert ise. Example: Honda lawn mowers
• Introduce products that reflect the brand’s
dis t inct iv e benefi t , attr ibute, or feature. Example:Lysol’s “deodorizing” household cleaning products
• Introd uce produc ts that capi tal ize on the dist inct ive image or prest ige of the brand. Example: Calvin
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Advantages of Extens ions
• Facilitate new product acceptance
– Improve brand image
– Reduce risk perceived by customers
– Increase the probability of gaining distribution and trial
– Increase efficiency of promotional expenditures – Reduce costs of introductory and follow-up marketing
programs
– Avoid cost of developing a new brand
– Allow for packaging and labeling efficiencies – Permit consumer variety seeking
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Advantages o f Extens ions (Con t.)
• Provide feedback benefits to parent brand
– Clarify brand meaning
– Enhance the parent brand image
– Bring new customers into brand franchise and increase
market coverage
– Revitalize the brand
– Permit subsequent extensions
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What is a flanker brand?
• A flanker brand is a new brand introduced into the market by a
company that already has an established brand in the same product
category. The new brand is designed to compete in the category
without damaging the existing item’s market share by targeting a
different group of consumers. This strategy, also called fighter
branding or multibranding, is used to achieve a larger total market
share than one product could garner alone. Companies with multiple
brands in a single product category generally have the following
types of products in their portfolios:
• A premium brand that offers high quality at a higher price.
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Disadvantages o f Extens ions
• Can confuse or frustrate consumers• Can encounter retailer resistance
• Can fail and hurt parent brand image
• Can succeed but cannibalize sales of parent brand
• Can succeed but diminish identification with any onecategory
• Can succeed but hurt the image of the parent brand
• Can dilute brand meaning
• Can cause the company to forgo the chance to develop a
new brand
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Understanding How Customers Evaluate Brand
Extensions
• Managerial assumptions – Consumers have some awareness of and
positive associations about the brand in
memory – At least 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
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Creating Extension Equity
1. Salience of parent brand associations inthe minds of consumers in the extension
context
2. Favorability of any inferred associations inthe extension context
3. Uniqueness of any inferred associations
in the extension context
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Contributing to Parent Brand Equity
• How compelling the evidence is concerning thecorresponding attribute or benefit association inthe extension context
• How relevant or diagnostic the extensionevidence is concerning the attribute or benefit for the parent brand
• How consistent the extension evidence is withthe corresponding parent brand associations
• How strong existing attribute or benefitassociations are held in consumer memory for the parent brand
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Successful Extensions
• Must create points-of-parity and points-of-difference in extension category
– Must recognize competitive reactions
• Must enhance points-of-parity and points-of-difference of parent brand
• Must maximize the advantages and
minimize the disadvantages of brandextensions
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Successful Category Extensions
• Ivory shampoo and conditioner • Vaseline Intensive Care skin lotion• Hershey chocolate milk• Jell-O pudding pops
• Visa traveler’s checks • Sunkist orange soda• Colgate toothbrushes• Mars ice cream bars
• Arm & Hammer toothpaste• Bic disposable lighters• Aunt Jemima pancake syrup• Honda lawn mowers
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Unsuccessful Category Extensions
• Campbell’s tomato sauce • LifeSavers chewing gum• Cracker Jack cereal• Harley Davidson wine coolers
• Hidden Valley Ranch frozen entrees• Bic perfumes• Ben-Gay aspirin• Kleenex diapers
• Levi’s Tailored Classics suits • Nautilus athletic shoes• Domino’s fruit-flavored bubble gum• Smucker’s ketchup
• Fruit of the Loom laundry detergent 12.20
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Evaluating Brand Extension
Opportunities
• Define actual and desired consumer
knowledge about the brand
• Identify possible extension candidates
• Evaluate the potential of the extension
candidate
– The likelihood that the extension will realize
the advantages and avoid the disadvantages
of brand extensions. As with any new product,
analysis of consumer, corporate, and
competitive factors can be useful. 12.21
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Evaluating Brand Extension
Opportunities
• Design marketing programs to launch
extension
– Building brand equity for a brand extension
requires choosing brand elements, designingthe optimal marketing program to launch the
extension, and leveraging secondary
associations.
• Evaluate extension success and effects on
parent brand equity
12.22
Wh b d t i i t ?
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When are brand extensions appropriate?
• If they see some basis of “fit” or similaritybetween the proposed extension andparent brand
• The major mistake in evaluating extensionopportunities is failing to take all of consumers’ brand knowledge structuresinto account.
• Often, marketers mistakenly focus on onlyone brand association and ignore other potentially important brand associations inthe process.
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Evaluating Brand Extension
Opportunities
• Define actual and desired consumer knowledge about the brand
• Identify possible extension candidates
• Evaluate the potential of the extensioncandidate
• Design marketing programs to launch
extension• Evaluate extension success and effects
on parent brand equity
12.24