CHAPTER:12

INTRODUCING AND
NAMING NEW PRODUCTS
AND BRAND EXTENSIONS

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Learning Objectives
◻ Define the different types of brand extensions
◻ List the main advantages and disadvantages of
brand extensions
◻ Summarize how consumers evaluate extensions and
how extensions contribute to parent brand equity
◻ Outline the key assumptions and success criteria for
brand extensions

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New Products and Brand Extensions
◻ Brand extension: When a firm uses an established
brand name to introduce a new product
Line extension - Adds a different variety, a different
form or size, or a different application for the brand
Category extension - Marketers apply the parent
brand to enter a different product category from the
one it currently serves

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Advantages of Extensions

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Facilitate New-Product Acceptance

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Provide Feedback Benefits to the Parent
Brand

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advantages of Brand Extensions
Featuring orange juice as their flagship
product, Sunkist’s brand has
associations with oranges, health, and
energy. To both bolster and leverage
this association at the same time,
Sunkist produced vitamin c tablets that
spawned an entire arm of business
dedicated to vitamins and supplements.

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advantages of Brand Extensions
Honda’s line of lawn mowers
might not elicit the most
enjoyable memories of my
childhood, but their entrance and
success in a saturated market
speaks volumes for a company
who is mostly known for selling
cars.
By leveraging their expertise in
small motors to enter the lawn
mower market in 1978, they now
boast the seventh largest slice of
market share in the global lawn
mower industry.

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advantages of Brand Extensions
Just like Aunt Jemima’s pancake mix
and syrup, Colgate’s toothpaste and
toothbrush are complementary goods.
But unlike the former example, you
literally need a toothbrush to use
toothpaste. Otherwise, you can’t brush
your teeth.
In my opinion, Colgate’s decision to
enter the toothbrush market was a
necessity and one of their best moves,
helping them secure the third largest
slice of the oral care market.

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Disadvantages of Brand Extensions

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Disadvantages of Brand Extensions
Levi’s introduced their Tailored Classics
in the early 1980s, they already
owned a large share of their target
market, so they wanted to enter some
new markets to sustain their high
growth rate.
One of these markets was men’s suits,
but since their brand was heavily
associated with a casual, rugged, and
outdoorsy lifestyle, Levi’s new product
line conflicted with their core identity
and failed to catch on.

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Disadvantages of Brand Extensions
While Samsonite’s outwear is more
fashionable than Levi’s Tailored
Classics, it still suffers from the same
exact problem as Levi’s failed product
line
Samsonite is known for making
high-end luggage, suitcases, and
business bags.

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Disadvantages of Brand Extensions
Arm & Hammer has successfully
extended its brand from a
odor-neutralizing baking soda to
laundry detergent, carpet deodorizer,
and even cat litter

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Disadvantages of Brand Extensions
Cadbury is known for making
high-end chocolate and candy, so
when they started producing
low-end food products, like instant
mashed potatoes, it’s not
surprising to learn that their
association with the finest
chocolates weakened.
Smash, their instant mashed potato
brand, actually reached
mainstream success, but it was at
the expense of lowering their
flagship product’s perceived
quality. Cadbury eventually sold
Smash in 1986, over 20 years
after they introduced their instant
mashed potatoes to the world.
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Understanding How Consumers Evaluate
Brand Extensions
◻ Managerial assumptions
◻ Brand extensions and brand equity
◻ Vertical brand extensions

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Managerial Assumptions
◻ Consumers have some awareness of and positive
associations about the parent brand in memory
◻ 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

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Brand Extensions and Brand Equity
◻ Creating extension equity
◻ Contributing to parent brand equity

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Vertical Brand Extensions
◻ Pros and cons
◻ Examples
◻ Naming strategies

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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
◻ Design marketing programs to launch extension
◻ Evaluate extension success and effects on parent
brand equity

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Figure 12.7 - Brand Extension Guidelines
Based on Academic Research

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Figure 12.7 - Brand Extension Guidelines
Based on Academic Research

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To Sum Up…
◻ Brand extensions occur when a firm uses an
established brand name to introduce a new product
◻ The basic assumption behind brand extension
Consumers have some awareness of and positive
associations about the parent brand in memory
■ Brand extension will evoke at least some of these
associations

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To Sum Up...
◻ The extension’s ability to establish its own equity will
depend on:
Salience of consumers’ associations with the parent
brand
How compelling and relevant is the evidence about the
corresponding attribute
How strong consumers’ existing attribute or benefit
associations are for the parent brand
◻ To evaluate brand extension opportunities,
marketers need to consider strategies by applying
managerial judgment and consumer research
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