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IM&BM Tutor-Led Workshop 4 Final

This document discusses brand strategies, focusing on brand extensions, which involve using an established brand to launch new products or services. It outlines the advantages and disadvantages of brand extensions, including the potential for increased sales and customer base, as well as risks such as consumer confusion and dilution of the parent brand. The document also differentiates between line and category extensions, highlighting their respective risks and benefits.

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17 views28 pages

IM&BM Tutor-Led Workshop 4 Final

This document discusses brand strategies, focusing on brand extensions, which involve using an established brand to launch new products or services. It outlines the advantages and disadvantages of brand extensions, including the potential for increased sales and customer base, as well as risks such as consumer confusion and dilution of the parent brand. The document also differentiates between line and category extensions, highlighting their respective risks and benefits.

Uploaded by

iqraaftab12
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Tutor-Led Workshop 4

Brand Extensions
MOD004152 International Marketing and Brand Management

Module Leader: Grace Famiyoro


Lecturer in Marketing and Strategy
Faculty of Business and Law
Anglia Ruskin University

emily.mace@aru.ac.uk
Basic Brand Strategies
• Brand strategy is all about brand and product portfolios
and how to manage them

• Two basic brand strategies:


• Brand stretching
• Addresses how the portfolio can be profitably expanded
• Brand retrenching
• Looks at any brands or products that need to be cut or sold to improve
company health

• Both aim to strengthen the overall product portfolio


Key Terms
Product portfolio The collection of product they market in a category

Product line The group of products in a single category that are closely related

Brand portfolio The brands marketed by a company in a category

Brand line All the products marketed under a single brand name

Brand extension Brands with a altered name (usually with an addition to the parent brand name)

Company brand Identifies the parent company

Group brand A brand name used in more than one category


Brand Stretching
Category Development Index (Level)

Low High
Brand Development Index (Level)

Assess potential for category growth High stretching potential


Low

Low incentive for stretching Anticipate change and be proactive


High
Brand Extensions
• “The use of an established brand to launch new
products or services” (Volckner and Sattler, 2006; p.18)

• Brand extensions is one of the most used strategies by


marketeers to grow the brand, increase sales, attract
new users, and clarify and enhance brand meaning
Brand Extensions
• Brand extensions can create excitement in the market, for the
customer and for trade

• Brand extensions can offer the appearance of but not the


actual consequences of positive change

• Brand extensions can help meet new market demand, and they
can also provide new competitive advantage

• Can capitalise on strong brand awareness and positive brand


equity
Brand Extensions
• Building on leveraging brand assets, brand extensions
help recoup the initial start-up costs for the brand, and
therefore improve return on investment

• Extensions can also help grow sales by appealing to


new segments, markets and uses, thereby increasing
income
Source and Endorser branding
strategies
• Source branding strategy
• A source branding strategy in brand extension is where the product
is directly named, with the company acting as a guarantee of the
product quality, providing a direct parent-product link
• When there is low involvement a source strategy should be used
because it offers a more genuine measure of quality

• Endorser branding strategy


• An endorser branding strategy is where the brand acts as an overall
guarantor of quality
• When there is high involvement the endorser strategy makes the
most sense, as people look for the associated benefits of the
endorser brand
Line Extensions

• Are a specific type of brand extension where new items


or varieties are added to an existing brand or brand set

• Line extensions are incremental forms of innovation


stretching the brand within the category through
additions or subtractions of features.
Example:
Category extensions
• Is when the brand is extending into a new category

• Represent more radical forms of innovation

• Brands may find they need to extend into lower price points or of
a fight to brands as a means of protecting themselves against
lower cost competitors
Example:
Line vs. Category Brand
Extension
• Line extensions:
• Involve exploiting the brands existing capabilities within a
category
• Viewed as less risky (although the risk is simply different)
• Are more likely to succeed
• Defend its category position
• Reinforce the brand’s expertise
• Help attract less loyal users, new users, or give existing ones a
reason to buy the brand more often
Line vs. Category Brand
Extension
• Category extensions:
• Seek to extend the brands reputation and expertise into new
categories
• More explorative for the brand as they take it in new directions
• Typically viewed as riskier
• Less chance of success
• Take the brand into new markets
• Build a broader reputation
• Help refresh the brand
Co-creation and brand
extensions
• Category extensions may also arise
from its users or programs that enable
users to provide innovative ideas

• Line extensions could involve the


strategic use of licensing with
entertainment franchises such as Star
Wars, Lord of the rings, and Harry
Potter (among others)

• Lego for example leveraged its user


community to extend its brand into
new categories
• Electronic games
• Movies
Extensions share existing
assets:
• Logos
• Names
• Advertisements
• Web related costs
• Compliance
• Social media
• Retail stores
• Salespeople
• Improve the efficiency of productive capability and operations
Advantages of brand extensions
• Reduces the cost of new product introduction

• Reduces the risk of trial

• Increases customer base

• Stronger overall brand attitude for the parent brand

• Increased extension opportunities


Advantages of brand extensions
• Help achieve strategic growth objectives

• Classify the brand meaning

• Neutralise competitors

• Maintaining brand vitality or relevance


Parent-brand identity
• Line extensions can involve greater risk to the parent-
brand equity (when they fail)

• Category extensions although more likely to fail, they


are less risky in terms of parent-brand equity

• Successful extension success involves perceptions of fit,


in terms of brand image and brand authenticity
Brand-image fit:
• “The perceived similarity (e.g., product category, usage situation) and
relevance of parent-brand associations (i.e. attributes or benefits) for
the extension category, which should positively influence consumer
attitudes towards the brand extension” (Spiggle et al., 2012; 967)

• This refers to the similarity and relevance of the extension to the parent brand

• For line extensions, similarity is the most important consideration.

• Relates to perception of image consistency

• For example, we expect Coke with over 100 years of production expertise to be
able to produce a good cola.
Brand-authenticity fit:
• “A consumers sense that a brand extension is a
legitimate, culturally consistent extension of the parent
brand” (Spiggle et al., 2012; 969)

• Brand extensions have historically been considered solely in


terms of brand image fit which is just a form of authenticity as
consistency

• In contrast, brand-authenticity fit involves perceptions of motive.


Brand-authenticity fit:
• 1. Stylistic consistency

• 2. Sustaining brand essence

• 3. Honoring brand heritage

• 4. Avoiding perception of brand exploration


Brand-extension authenticity
(BEA)
• Brand extensions are useful way of clarifying the brands
meaning

• Recent research on BEA has identified how extensions


remain true to the brand core reinforce the parent brand
identity.

• BEA is critical for consumers with a strong self


connection to a brand
Example: BEA

• These brands have struggled to maintain their


authenticity and equity over time

• Much of this has to do with the inauthentic


brand extensions into fashion lines

• This has meant consumers can appear to be


surfers even when they do not surf, which
undermined the identity value of his brands
for real surfers
Disadvantages of brand
extensions
• Potential consumer confusion

• Delete the meaning of the parent brand (when the fail)

• Threatened to eclipse the original (e.g., Diet Coke)

• Cannibalise sales from the parent company

• Limited extension opportunities


Canvas Activity
• Reflecting on the KDP’s covered in
Screencast 4 and the theory
discussed in this tutor-led
workshop, discuss the following,
using the canvas discussion thread:

Can you think of a brand or


product which was
retrenched and why do you
think this decision was
made?
Image reference: whatsonlanarkshire.co.uk (2020)
Next Step
Please participate in the canvas activity for this topic.
Once you are ready to participate with the discussion on
canvas you will find it via the discussion thread titled: “Topic
4: Brand Extensions“

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