Definition: a well known brand a new product different category Brand extension’s definition Definition: “ Brand extension is using the leverage of name in one category to launch in a .” a well known brand a new product different category In a practical term- customers in a new category would believe the new brand extension is better than the existing products on an important dimension. (Tauber, M. E. 2004)

Growth strategies Current Products New Products Market Penetration Strategy Product Development Strategy Current Market Market Development Strategy Diversification Strategy New Market

How does a firm grow? A Company/ Brand can: Focus on current products and markets Market penetration strategy Put existing products into new markets Market development strategy Put new products into existing markets Product development strategy Put new products into new markets Diversification strategy

Why Brand Extension Leveraging brand equity/ value by introduction of logical & complementary new product categories Product Innovation to surpass consumer expectations It increases awareness of the brand name Increases 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.

Brand Extensions When a firm introduces a new product, it has three choices on branding Develop a new brand Apply one of its existing brands in some way Use a combination of new and existing brand

Brand Extensions Brand extension –when a firm uses an established brand to introduce a new product When a new brand is combined with an existing brand, the brand extension can also be called a sub-brand The existing brand is called the parent brand, and if associated with multiple product is called a family brand.

Brand Extensions Brand extension can be classified as: Line extensions : when the parent brand is used to brand a new product that targets a new market segment within the same product category Category extensions: when the parent brand is used to enter a different product category

Some Terminology Brand Extension - A firm uses an established Brand name to introduce a new product. Tommy Hilfiger perfume, watches, home accessories. Sub-Brand - A new Brand is combined with an existing Brand Ralph Lauren Polo, Safari, V.Dot from Van Heusen, Dockers from Levi’s. Parent Brand – The pre-existing Brand that gives birth to the sub-Brand.

Product extension/Line Extensions Product extensions are different/ new versions of the same parent product. They serve a different segment of the target market and increase the variety of a product offering. Example: (i) Coke extends itself to Diet Coke in the same product category of soft drinks. (ii) Amul Butter extends itself to Amul “reduced salt” butter, Amul Cheese and Cheese slices in its Core area of milk product derivatives.

Brand extensions could be across different product categories Brand extensions could be across different product categories. Examples: (i)Harley Davidson Motorcycles extends to Harley Davidson Accessories. (ii) Land Rover extends itself from Tough Off Road vehicles to a line of stylish, yet functional outdoor clothing, shoes etc.

Brand Extension Assumptions In introducing a brand extension, it is typically assumed that: Consumers have some awareness of and positive associations about the brand in memory Example: (Raymond – “The complete man”) * This is why Raymond’s were able to extend from their core in manufacturing fabrics to a readymade clothing brand (Park Avenue) and from there to Accessories & Grooming even! Some of these positive associations are evoked by the brand extension. -- since Raymond was always positioned as the “The Complete Man” and “Guide to the well-dressed male”, their extension into personal care was automatically promoted as the “Guide to the well-groomed male” and viewed as such by consumers.

Brand Extension Example Proctor &Gamble “Crest” 12 different types of toothpaste Floss, Mouthwash, & Whitening strips For example, Procter & Gamble’s Crest brand has 12 different types of toothpaste, ranging from cavity protection to sensitive teeth and whitening. In this case, the line type extensions are able to leverage from the parent brand’s equity among consumers while also attempting to increase growth within the target market (people who buy toothpaste). Additionally, Proctor & Gamble’s Crest brand has developed category extensions as well. For example they sell “Crest” mouthwash and floss. In this case, the products are still able to associate with the parent brand name, however by extending into a new category, a different consumer market is the target audience (people who buy floss and mouthwash). 12

Advantages of Brand Extensions Some Enhance the parent brand image Improve strength, favorability, and uniqueness of brand associations Reinforce the brand in the minds of the target group of consumers and aspiring consumers. Help increase “buy-in” , “consumer mind-share” and slowly progress to “share of wallet”. Improve consumer perceptions of company credibility Convey broader brand meaning to consumers Clarify core benefit proposition and business definition of the company Bring new customers into the franchise and increase market coverage Facilitate new product acceptance (Nike clothing) Reduced risk perceived by customers (Sony PC, Apple iphone) Increase the probability of gaining distribution by brand’s reputation

When are Brand Extensions Appropriate? When Prior Brand Equity exists Consumers must see some “connection” between the proposed extension and the parent brand. Eg: “Jeep/ Land Rover vehicles extending to Jeep/ Land Rover Brand outdoor clothing etc”. The proposed extension contributes to and reinforces the overall brand equity of the parent brand.

Some Successful extensions Ralph Lauren

Successful Extensions - Apple Imac Ipod Iphone Brand’s Core Values of Superb Cutting Edge Design and Technology leveraged into first class consumer products!

Example of successful brand : - Yamaha is an original Japanese manufacture for motorbikes but they also moved successfully into branded hi-fi equipment, pianos and sport equipments - McDonalds extend its brand into another restaurant concepts such as Mc Café - Sony won the market by extending the brand to laptops and digital camera

Brand Extension End-to-end example 1

Brand Extension End-to-end example 2 T SHIRTS & SPORTS APPAREL LACOSTE BRAND FRAGRANCES LACOSTE BRANDED SPORTS & FASHION ACCESSORIES LACOSTE SHOES Here we see an excellent example of how a pure play sports brand extended itself into several other relevant yet lucrative categories, while at all times, retaining the essence of the mother brand. Their iconic use of the colour green signified freshness and sport-derived from the traditional Wimbledon colours.

Disadvantages of Extensions Extensions have risks, too. They can fail over time. (Example: The Virgin Megastores retail business didn’t do well and now has been sold to zavvi.co.uk. Even Virgin Cola couldn’t make a dent in the market place.)

Disadvantages of Extensions Extensions can potentially result in the following troubles/ costs: They can cannibalize sales of the parent brand (Eg; Amul Reduced Salt Butter is slowly eating into sales of Amul’s normal Butter.)

Disadvantages of Extensions Extensions can also Hurt / Erode the image of the parent brand If the extension fails; 1. Xerox Computers; because Xerox was synonymous with copiers and no one believed they could make computers too. Luckily they recovered by focussing on “core –competence” and re-invented themselves as “The Document Company”. Pierre Cardin extended too far by branding all sorts of un-related products with his name.)

Other examples that did not work in the consumer market include Frito Lay™ name is extended from potato chips into other types of snack foods and dips. An introduction of Frito Lay™ lemonade did not succeed because the fruity, sweet drink had little connection to other Frito Lay™ products. Other examples that did not work in the consumer market include Ben-Gay™ aspirin, Fruit of the Loom™ laundry detergent. However, M&M™ ice cream, Reese’s™ peanut butter, and Minute Maid™ orange soda experienced success because the brands held direct and logical connections to their new categories.

A few other Extension Failures Levi’s Tailored Classics suits did not succeed. Maggi pickles – what’s that?? Amul Instant Pizza failed to inspire the Indian public

How far is too far? Example: Maggi. Core Product = 2 minute Noodles Extension 1 = Soup cubes and Sauces/ Ketchup Extension 2 = Soup Packets Extension 3 = Pickles * The first 2 extensions did well and were accepted by consumers. In these two they created a number of “product line extensions” and introduced new flavours and variants which were accepted. However, the third (Pickles) met with a poor response because Maggi was viewed as a “westernized ready-to-cook” concept and pickles were largely viewed as home made/ traditional.

How far is too far? Example: Pierre Cardin. Core Product = Designer Apparel. Extension 1 = Fragrances and Cosmetics Further Extensions = Watches, Pens, Base ball caps, cigarettes etc etc. The first extensions did phenomenally well and were accepted by consumers because fragrances and cosmetics etc were a perfect brand fit and thus a natural extension. However, the other “wildly non-adjacent/ indiscriminate/ commoditized” extensions, met with a poor response on account of a sharp drop in quality as well as perception. There was no way the consumer would believe that these products stood for the same values as the original products and product extensions had.

Is it always too far? Would it be possible for the luxury designer jewellery brand BVLGARI to successfully extend into Boutique Hotels too? Considering the core values of BVLGARI are “design”, “craftsmanship” and “aesthetics” - YES! However, an Hotel’s core values are predominantly built around “hospitality”. Thus, the BVLGARI designed hotel in Central Milan has RITZ-CARLTON as their “hospitality partner”. A natural fit, since the RITZ-CARLTON has impeccable credentials in “luxury” and “hospitality.” To summarize this thought, the extension will most likely succeed, provided the “right” synergies exist and there is a clear “target consumer group”.

Successful Umbrella Brand Extensions There are also cases of some Super brands that never needed to re-brand or introduce sub-brands and yet created huge successes in brand/ product extensions. Examples: Godrej covers office furniture through hair dye to ready-to-cook chicken. TATA covers a whole range of products/ services from Salt to SUV’s. Mahindra covers products and services from Tractors to Holidays.