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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.