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Lecture 10 EXC Brand Ext S-BI S12

1) The document discusses introducing and naming new products and brand extensions. It covers leveraging existing brands, different types of extensions, advantages and disadvantages of extensions, and evaluating extension opportunities. 2) Key advantages of extensions include reducing risk for customers and marketing costs. Extensions can also provide feedback benefits like enhancing the parent brand image. 3) Successful extensions create distinct benefits in the new category while also enhancing the parent brand. Extensions must fit the brand and transfer relevant skills and assets.

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111 views27 pages

Lecture 10 EXC Brand Ext S-BI S12

1) The document discusses introducing and naming new products and brand extensions. It covers leveraging existing brands, different types of extensions, advantages and disadvantages of extensions, and evaluating extension opportunities. 2) Key advantages of extensions include reducing risk for customers and marketing costs. Extensions can also provide feedback benefits like enhancing the parent brand image. 3) Successful extensions create distinct benefits in the new category while also enhancing the parent brand. Extensions must fit the brand and transfer relevant skills and assets.

Uploaded by

piotrekjanosz
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© Attribution Non-Commercial (BY-NC)
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CHAPTER 12: INTRODUCING AND NAMING NEW PRODUCTS AND BRAND EXTENSIONS

Adrian Peretz April 16th, 2012

Leverage the Brand


Firms are seeking to build power or mega brands that establish a broad market footprint, appealing to multiple customer segments with multiple products all underneath the brand umbrella.

The Sony range

The Sony range

Ansoffs Growth Share Matrix


Current Products Current Markets
Market penetration strategy Market development strategy

New Products
Product development strategy Diversification strategy

New Markets

Brand Extensions
When a firm uses an established brand name to introduce a new product
1. 2. 3.

Use new brand name Use existing brand name Use combination of existing and new brand name

Brand extension classification


o

Line extension
Using a sub-brand to target a new market segment within the same product category

Category extension
Using the parent brand in a different product category

Advantages of Extensions
Facilitate new product acceptance
o

Reduce risk perceived by customers Improve brand image Increase the probability of gaining distribution and trial Increase efficiency of promotional expenditures Reduce costs of introductory and follow-up marketing programs Avoid cost of developing a new brand Allow for packaging and labeling efficiencies Permit consumer variety seeking

o o o

o o o

Advantages of Extensions (Cont.)


Provide feedback benefits to parent brand
o

o
o

o o

Clarify brand meaning Enhance the parent brand image Bring new customers into brand franchise and increase market coverage Revitalize the brand Permit subsequent extensions

General Strategies for Establishing a Category


Taubers FranchiseExtension
Introduce the same product in a different form. Example: Ocean Spray Cranberry Juice Cocktail Introduce products that contain the brands distinctive taste, ingredient, or component. Example: Philadelphia cream cheese salad dressing Introduce companion products for the brand. Example: Coleman camping equipment Introduce products relevant to the customer franchise of the brand. Example: Gerber insurance Introduce products that reflect the brands distinctive benefit, attribute, or feature. Example: Lysols deodorizing household cleaning products Introduce products that capitalize on the distinctive image or prestige of the brand. Example: Calvin Klein clothes Introduce products that capitalize on the firms perceived expertise. Example: Honda lawn mowers

When it works: The Good


Sunkist
o

Started with marmelade in 1905

When it doesn't work: The Bad


Poor fit
o

the extension must fit the brand: there must be a link on important associations, and no source of distraction or ridicule
Rolls Royce lawn mowers or bicycle? McDonald's theme park, maybe, but 1-hour foto processing?

Transferability of Skills and Assets


Green Giants canned vegetables no success in frozen vegetable side dishes

Complementarity
Salomon skis, ski clothes etc Pepsi soft drink, clothing, but not orange juice!

Poor quality perceptions


introducing a variety of TAB flavors (Coca-Cola's first diet entry) "flogging a dead horse"

Disadvantages of Extensions
Can fail and hurt parent brand image Can succeed but diminish identification with any one category Can succeed but hurt the image of the parent brand Can dilute brand meaning

Can confuse or frustrate consumers


Can encounter retailer resistance Can succeed but cannibalize sales of parent brand Can cause the company to forgo the chance to develop a new brand

Understanding How Customers Evaluate Brand Extensions


Managerial assumptions
o

Consumers have some awareness of and positive associations about the brand in memory At least some of these positive associations are evoked by the brand extension Negative associations are not transferred from the parent brand Negative associations are not created by the brand extension

Creating Extension Equity


1. 2. 3. Salience of parent brand associations in the minds of consumers in the extension context Favorability of any inferred associations in the extension context Uniqueness of any inferred associations in the extension context

Contributing to Parent Brand Equity


How compelling the evidence is concerning the corresponding attribute or benefit association in the extension context How relevant or diagnostic the extension evidence is concerning the attribute or benefit for the parent brand How consistent the extension evidence is with the corresponding parent brand associations How strong existing attribute or benefit associations are held in consumer memory for the parent brand

Advantages three key issues


1. What can the parent brand contribute to the extension? 2. What can the parent brand contribute to the extension category? 3. What can the extension contribute to the parent brand?

Advantages three key issues


1. What can the parent brand contribute to the extension?

What did the Apple brand contribute to the iPhone?

Advantages three key issues


2. What can the parent brand contribute to the extension category?

What did the Apple brand contribute to the mobile phone category?

Advantages three key issues


3. What can the extension contribute to the parent brand?

What did the iPhone contribute to the Apple brand?

Successful Extensions
Must create points-of-parity and points-of-difference in extension category
o

Must recognize competitive reactions

Must enhance points-of-parity and points-of-difference of parent brand Must maximize the advantages and minimize the disadvantages of brand extensions

Successful Category Extensions


Ivory shampoo and conditioner Vaseline Intensive Care skin lotion Hershey chocolate milk Jell-O pudding pops Visa travelers checks Sunkist orange soda Colgate toothbrushes Mars ice cream bars Arm & Hammer toothpaste Bic disposable lighters Aunt Jemima pancake syrup Honda lawn mowers

Unsuccessful Category Extensions


Campbells tomato sauce LifeSavers chewing gum Cracker Jack cereal Harley Davidson wine coolers Hidden Valley Ranch frozen entrees Bic perfumes Ben-Gay aspirin Kleenex diapers Levis Tailored Classics suits Nautilus athletic shoes Dominos fruit-flavored bubble gum Smuckers ketchup Fruit of the Loom laundry detergent

Evaluating Brand Extension Opportunities


Define actual and desired consumer knowledge about the brand Identify possible extension candidates Evaluate the potential of the extension candidate
o

The likelihood that the extension will realize the advantages and avoid the disadvantages of brand extensions. As with any new product, analysis of consumer, corporate, and competitive factors can be useful.

Evaluating Brand Extension Opportunities


Design marketing programs to launch extension
o

Building brand equity for a brand extension requires choosing brand elements, designing the optimal marketing program to launch the extension, and leveraging secondary associations.

Evaluate extension success and effects on parent brand equity

When are brand extensions appropriate?


If they see some basis of fit or similarity between the proposed extension and parent brand The major mistake in evaluating extension opportunities is failing to take all of consumers brand knowledge structures into account. Often, marketers mistakenly focus on only one brand association and ignore other potentially important brand associations in the process.

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

Exercise
Consider the following brand extensions
o

Apple iPhoto Gillette electric razor Starbucks espresso maker Philips sex toys Louis Vuitton backpack Louis Vuitton golf cart

1. 2. 3.

What can the parent brand contribute to the extension? What can the parent brand contribute to the extension category? What can the extension contribute to the parent brand?

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