INTRODUCING AND NAMING NEW PRODUCTS AND BRAND EXTENSIONS PRESENTED BY Claudia

PREVIEW So far... Identified and established brand positioning and values: chapters 1, 2 & 3. Planed and implemented brand marketing programs: chapters 4, 5, 6, & 7. Measured and interpreted brand performance: chapters 8, 9, & 10. Now we are looking at how to grow and sustain brand equity.

OUTLINE New products and brand extensions strategies for establishing a category extension Advantages of extensions Disadvantages of brand extensions Understanding how consumers evaluate brand extensions Brand extensions and brand equity Evaluating brand extension opportunities Steps in successfully introducing brand extensions Extension guidelines based on academic research

New products and brand extensions Sub-brands Parent brand Family brand Current products New products Market penetration strategy Product development strategy Market development strategy Diversification strategy Current markets New markets

Two categories of brand extensions Line extension: e.g. Fanta strawberry, orange, pineapple, grape... Category extension: e.g. virgin mobile and airline

Strategies for establishing a category extension Introduce the same product in a different form. E.g: Snickers Ice Cream Bars (frozen). The original Snickers bar is a shelf stable candy. The brand extension is a similar product, but in a different form.

Introduce products that contain the brand’s distinctive taste, ingredient, or component. E.g: Chocolate is a characteristic ingredient of Hershey. Brand Extension Research identified Hershey chocolate milk as a logical extension that capitalizes on this association.

Introduce companion products for the band. E.g: Contadina was a tomato paste and sauce brand. In brand extension research, consumers thought Contadina pasta was a logical companion product that would have the leverage of the Italian heritage of the parent. Introduce products that capitalize on the distinctive image or prestige of the brand. E.g: Tommy Bahama extended their brand from clothing into furniture.

Introduce products relevant to the customer franchise of the brand E.g: VISA launched travelers checks directed to its credit card customers. Introduce products that capitalize on the firm’s perceived expertise E.g: Sara Lee is known for baked desserts, so why not other baked goods like bread.

Introduce products that reflect the brand’s distinctive benefit, attribute, or feature. E.g: Arm & Hammer “owns” a benefit of deodorizing. Their baking soda product has claimed that it removes odours from refrigerators, etc. As a result, they extended the brand into other products such as Arm & Hammer underarm deodorant and cat litter deodorizer.

Advantages of extensions The question for marketers is to know when, where, and how to extend a brand. The following are the advantages of brand extensions: Improve brand image. Reduce risk perceived by customers. Enhance the parent brand image. Bring new customers into brand franchise and increase market coverage.

Caterpillar moved into shoes and clothing reliable, resistant, masculine

Advantages (cont...) Clarify brand meaning. Permit subsequent extensions. Increase efficiency of promotional expenditures. Avoid cost of developing a new brand. Increase the probability of gaining distribution and trial.

Low cost in launching Danone Activ and Talians

Disadvantages of brand extensions Can confuse or frustrate consumers. Can encounter retailer resistance. Can succeed but cannibalise sales of parent brand. Extensions of Tropicana

Disadvantages (cont…) Can fail and hurt parent brand image. 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.

Pierre Cardin brand dilution

Understanding how consumers evaluate brand extensions In order for consumers to make favourable inferences about the extension (based on what they know of the parent brand), four basic conditions must hold: Consumers have some awareness of and positive associations about the parent brand in memory.

Understanding how consumers (cont...) At least some of these positive associations will be evoked by the brand extension. Negative associations are not transferred from the parent brand. Negative associations are not created by the brand extension.

Brand extensions and brand equity Creating extension equity: to create equity the brand extension must have sufficiently high levels of awareness and achieve necessary and desired POP (for positioning purposes) and POD (to avoid being an undistinguished “me too” entry). Contributing to parent brand equity: an extension must strengthen or add favourable or unique associations to the parent brand,

Brand extensions (cont...) and not diminish the strength, favourability, or uniqueness of any existing associations for the parent brand. Vertical brand extensions - when the brand is extended up into more premium market segments or down into more value-conscious segments. E.g: Toyota with Lexus and Scion

Brand extensions (cont...) Advantages: can improve brand image, can permit consumer variety seeking, revitalize the parent brand. Disadvantages: risk of rejection; cannibalization; can confuse or frustrate consumers.

Evaluating brand extension opportunities Five steps for successful introduction of brand extensions: Define actual and desired consumer knowledge about the brand: for e.g., create mental maps and identify key sources of equity. Identify possible extension candidates: parent brand associations and overall similarity or fit of extension to the parent brand.

Evaluating brand (cont...) Ask consumers what products the brand should consider offering if it were to introduce a new product. Brainstorming. Evaluate the potential of the extension candidate: a major pitfall in evaluating brand extensions is overlooking how literal consumers can be in evaluating brand extensions.

Evaluating brand (cont...) Design marketing programs to launch extension: involves choosing brand elements; designing the optimal marketing program to launch the extension; and leveraging secondary associations. Evaluate extension success and effect on parent brand equity: assess the extent to which an extension is able to achieve its own equity and contribute to the equity of the parent brand.

Extension guidelines based on academic research Successful brand extensions occur when the parent brand has favourable associations and consumers perceive a fit between the parent brand and the extension product. There are many bases of fit: product-related attributes and benefits, as well as non-product-related attributes and benefits related to common usage situations or user type.

Extension guidelines (cont...) High-quality brands stretch farther than average- quality brands, although both types of brands have boundaries. A successful extension can not only contribute to the parent brand image but also enable a brand to be extended even farther.

Depending on consumer knowledge of the product categories, perceptions of fit may be based on technical or manufacturing commonalities or more surface considerations such as necessary or situational complementarity. E.g. Bic’s perceived expertise in making small disposable products Accessible, practical, disposable

Extension guidelines (cont...) Concrete attribute associations tend to be more difficult to extend than abstract benefit associations. Consumers may transfer associations that are positive in the original product class but become negative in the extension context. It can be difficult to extend into a product class that is seen as easy to make.

Extension guidelines (cont...) Vertical extensions can be difficult and often requires sub-branding strategies. E.g. Gillette introduced the Good News brand as line of inexpensive personal care products such as disposable razors. A brand that is seen as prototypical of a product category can be difficult to extend outside the category. E.g. Kleenex, Thermos.

CATEGORY EXTENSIONS Failed Succeeded Campbell ketchup Adidas cosmetics Bic parfumes Levi’s suits Xerox computers Clorox washing powder Calgon washing powder Crystal Pepsi un-cola Succeeded Adidas cosmetics Harley Davidson cosmetics Colgate toothbrush CAT clothing and men accessories