brandextensionsppt0111 100120101005-phpapp02
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NEW PRODUCTS AND BRAND EXTENSIONS
ByNavneet Agrawal
OverviewNew Product & Brand Extension
AdvantagesDisadvantagesHow Consumers Evaluate Extensions?
THE FASCINATING WORLD OF BRANDS
What Is A “Brand”A BRAND is symbolic
embodiment of all the information connected to a Company, Product or Service.
It serves to create associations and expectations from products made by a producer, in the mind of the consumer.
The key objective being “to create a Relationship of TRUST with its consumers”.
New Product & Brand Extensions
New Product –Branding Decisions
A new brand – individually chosen for the new product.
An existing brand name applied in some way.
A combination of a new brand with an existing brand.
BRAND EXTENSIONSA Brand Extension occurs when
a firm uses an established brand name to introduce a new product (approaches 2 or 3)
When a new brand is combined with an existing brand (approach 3), the brand extension can also be a sub-brand.
BRAND EXTENSIONSAn existing brand that gives birth
to a brand extension is the parent brand.
If the parent brand is already associated with multiple products through brand extensions, then it may also be called a family brand.
Types of Brand Extension
LINE EXTENSIONThe parent brand is used to
brand a new product that targets a new market segment with in a product category currently served by the parent brand.
A line extension often adds a different flavor or ingredient variety, a different form or size, or a different application for the brand.
Coke’s Line Extension
Head
&Shoulder’s
Extension
CATEGORY EXTENSIONThe parent brand is used to enter
a different product category from that currently served by the parent brand.
ITC’s Category Extension
Why Brand Extensions?Leveraging brand equity/value by introduction of
logical & complementary new product categories E.g HPProduct Innovation to surpass consumer
expectationsIt increases awareness of the brand nameIncreases profitability from offerings in more
than one product category.(widening the net to catch new consumers.)
It’s a great way to reinforce a brand, reach out to new customers, create a BUZZ
ADVANTAGES OFBRAND EXTENSIONS
Advantages Of Brand Extensions
Improve brand image Reduce risk perceived by Customers Permit consume variety-seeking
Advantages Of Brand ExtensionsClarify brand meaning
Brand Original Product
Extension Products
New Brand
Meaning
Weight Watchers
Fitness Centre
Low-calorie foods
Weight loss &
maintenance
Sunkist Oranges Vitamins, juices
Good health
Kellogg’s Cereal Nutri-grain bars,
Special K bars
Health snacking
Aunt Jemima
Pancake mixes
Syrups, frozen waffles
Breakfast foods
Advantages Of Brand Extensions Increase the probability of gaining
distribution and trial Increase efficiency of promotional
expenditures Reduce costs of introductory &
follow-up marketing programs (save 40-80%)
E.g. Apple iPods Avoid costs of developing a new
brand Allow for packaging & labeling
efficiencies
Advantages Of Brand Extensions
Enhance the parent brand image Bring new customers into brand
franchise and increase market coverage
Revitalize the brand Permit subsequent extensions
DISADVANTAGES OFBRAND EXTENSIONS
Disadvantages Of Brand Extensions
Can fail & hurt parent brand image Xerox Computers-synonymous with
copiers & no one believed they could make computers
Can succeed but cannibalize sales of parent brand
Amul Butter-”reduced salt butter” is slowly eating up Amul normal butter
Disadvantages Of Brand Extensions Can succeed but diminish
identification with any one category
Can succeed but hurt the image of parent brand
Disadvantages Of Brand Extensions Can confuse or frustrate consumers
Can encounter retailer resistance
Can dilute brand meaning Can cause the company to forgo the chance to develop a new brand
When are Brand Extensions Appropriate?When Prior Brand equity existsConsumer must see some
“connection” between the proposed extension and the parent brand.
The proposed extension contributes to and reinforces the overall brand equity of the parent brand.
How Consumers Evaluate Extensions
Conditions For Evaluating Consumer’s Brand Extension
Consumers have some awareness & positive associations about the parent brand
At least some of these positive associations will be evoked by the brand extension
Negative association are not transferred from the parent brand
Negative associations are not created by the brand extension
Evaluating Brand Extension Opportunities
Define actual & desired consumer knowledge
Identify possible extension candidates
Evaluate potential of the extension candidate
Evaluate potential candidate feedback effects
Consider possible competitive advantages & reactions
Design marketing campaign
Evaluate extension success & effects on parent brand equity
Thank You