BRAND EXTENSIONS

MSc Marketing (Executive) Dr Kevina Cody October 19th 2010

Brand extension

What is Brand extension? Why extend ? Where to extend ? Risks Keys to success Fitting why NOT extend ?

SOURCES OF GROWTH FOR A FIRM

Ansoffs growth share matrix

Introduction of new product.

Three branding choices:

1)

develop a new brand, chosen for new product 2) apply, in some way, one of its existing brands 3) it can use a combination of a new brand & and existing brand

What is a brand extension?

When a firm uses an established brand name to introduce a new product

New

brand + existing brand = sub-brand Existing brand that leads to brand extension = parent brand Parent brand associated with multiple products through brand extensions = family brand

What is the brand extending ?

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It is the transfer of brand values on the new market It shows that the brand is not related directly to one sector but has values that can transcend different products categories

Categories of brand extensions

Line extension Category extension Which is more common???

Categories of brand extensions

Line Extension Vs Category Extension Key difference between line & category extension = product category Line extension product category remains constant Category product category is a variable

Brand Extension Strategies

1. Introduce the same product in a different form

2. Introduce products that contain the brands distinctive taste, ingredient or component

Tauber, E. M. (1988), Brand Leverage: Strategy for growth in a cost controlled world, Journal of Marketing Research,

3. Introduce companion products for the brand

4. Introduce products that capitalize on the firms perceived expertise

Brand Extension Strategies

5. Introduce products that reflect the brands distinctive benefit, attribute or feature 6. Introduce products that capitalize on the distinctive image or prestige of the brand

Tauber, E. M. (1988), Brand Leverage: Strategy for growth in a cost controlled world, Journal of Marketing Research,

Brand Extension Strategies

E.G. Kelloggs, Heinz, Cadbury E.G. Lexus

Corporate Brand Names House Brand Names

Family Brand Names

Mono Brand Names

E. G. Dulux Weathershield
E. G. Procter & Gamble, Unilever

Laforet, S. and Saunders, J. (1994) Managing Brand Portfolios: how the leaders do it, Journal of Advertising Research, Sep/Oct

Why Extend???

Facilitate New Product Acceptance Risks of new product launch?

Market

too small Product poor match for company Inadequate/inaccurate market research Poor profit margins & high costs Not new or different Credibility not confirmed on delivery

Law & Order Successful Brand Extension

TVs most valuable franchise

Law

& Order Law & Order: SVU Law & Order: Criminal Intent Law & Order: Trial by Jury

Self-contained episodes Extension strategy allows migration of audiences Revenues through DVD sales, books, computer game, clothing

Why Extend??

Improve Brand Image

Why Extend??

Reduce Risk perceived by customers Extensions by established parent brands communicate longevity & sustainability Credibility & trustworthiness Avonmore, Del Monte, Nivea

Why Extend??

Increase efficiency of promotional expenditures Study of 98 consumer brands in 11 markets

Successful

brand extensions spent less on advertising than did comparable new-name entries

Sullivan, M. W. (1992), Brand Extensions: When to use them, Management Science, 38 (6)

Why Extend?

Permit consumer variety seeking Can switch to different product type without having to leave brand family

Why Extend?

Clarify Brand Meaning

Brand Weight Watchers Kelloggs Original Product Fitness Centres Cereal Extension Products Low-Calorie Foods Nutri-Grain Bars, Special K Bars Frubes New Brand Meaning Weight loss & maintenance Healthy Snacking

Petit Filous

Kids yoghurts Crayons, markers, pencils, chalk

Fun, healthy, kid-centred snacks ??

Crayola

Squeeze & Squirt Foaming Hand Soap

Why Extend?

Clarify brand meaning Helps avoid marketing myopia E.G. Ocean Spray.

Why Extend?

Bring new Customers into brand franchise & increase market coverage e.g. offering product benefit whose absence inhibited trial
Strepsils..

Disprin

Direct Solpa Sinus

Why Extend?

Revitalise the brand

A

means to renew interest in & liking for the brand Habituation E.G. Old Spice E.G. Wine Gums
http://www.youtube.com/watch?v=TusJ8HSLaUs
http://www.youtube.com/watch?v=xgWNNimr0Yo

&feature=related

Risks

Can confuse or frustrate customers

16

Coke varieties 35 Crest toothpaste varieties

Can encounter retailer resistance

Goods

vs retail space.

Risks

Can fail & hurt parent brand image

FIAT

(1986) Audi 5000 sudden acceleration problem. Diet Coke Cherry

AUDI

Counter

case: Guiness Light

Guinness Light

1981- They said it couldnt be done http://www.youtube.com/watch?v=tqSvrbKwT8 M

Parent brand difficulty with younger drinkers Meticulous planning & positive market research results Did it harm the master brand? What was the effect? Pitfalls of correlating ideas with market research

Risks

Cannibalization of parent brand

Establishing
Coke

points of parity Preemptive cannibalization

Vs Diet Coke Actimel Vs Actimel 0.1% fat Light Milk Vs Supermilk

Risks

Can Succeed but hurt image of parent brand. Virgin are there any boundaries???? "I believe there is almost no limit to what a brand can do. You can ignore those who go on about brand stretching

Figure 12.13

Companies in the Virgin Group

Risks

Can Dilute Brand Meaning Gucci Expansive product line Semiotically counter-effective

What determines whether a brand extension can capitalize on these potential advantages.??
Understanding

how consumers evaluate brand extensions. Study of brand elasticity Brand Identity perspective Brand Equity & Brand Extensions

Understanding how consumers evaluate brand extensions

Baseline semiotic inferences

--------coffee makers. Bic ------disposable lighters Honda---------- lawn mowers Harley Davidson ------------ wine coolers Bic ------------ perfumes Levis --------------------- tailored suits Fruit of the loom ------------------ washing detergent
Porsche

1) Consumers must have some awareness of & positive associations about the parent brand 2) At least some of these positive associations will be evoked by the brand extension 3) Negative associations are not transferred by the parent brand 4) Negative associations are not created by the brand extension

Brand Elasticity

Consumers put limits on where a brand can go.

Kleenex

diapers

Some brands are more elastic than others

Virgin

Vs Coca-Cola

Brand strength in an existing realm of expertise does not drive brand elasticity Far in is easier to work than far out.

Page, G. & Farr, A. Do you have an elastic brand, Advertising Research Foundation Workshop (2000)

Brand Elasticity 2 cases in point

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reliable, resistant, masculine

36

The success of pen, lighter, and razors Bic

Accessible, practical, disposable

The failure of Bic perfume

37

The Bic values are not relevant to perfume

Product Expertise

Clearly defined philosophy

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Keys to success in brand extension

Brand identity
Fit
Relevance

Brand extension

Added value

Markets values

Understanding how consumers evaluate brand extensions

Baseline semiotic inferences

--------coffee makers. Bic ------disposable lighters Honda---------- lawn mowers Harley Davidson ------------ wine coolers Bic ------------ perfumes Levis --------------------- tailored suits Fruit of the loom ------------------ washing detergent
Porsche

Understanding how consumers evaluate brand extensions

Exploring brand equity of parent brand.

What

are different attributes associated with a brand? What benefit associations are connected with a brand? What is the perceived essence of the brand

Understanding how consumers evaluate brand extensions

Strength of Associations Ponds

Talc BodyCare

Feminine

Floral

Cream

Body Talc Special Occasion Talc

Nail Polish, Lipsticks, Body Lotion

Room Freshener, Soaps, Shampoos

Body Lotion, Body Oil, Exfoliater

Cleanser, toner, moisturizer, anti-cellulite

Figure 12.21

Possible extensions of Vaseline Intensive Care brand

Brand Extensions & Brand Equity

Creating Extension Equity & Contributing to Parent Brand Equity Extension equity: salience, favourability, uniqueness E.G. Dettol Easy Mop System Vs Johnson & Johnson Asprin. Parent Brand Equity: compelling benefits, relevant, consistent

Vertical Brand Extensions

Key strategy in enhancing equity through brand extensions Up to premium, down to value conscious Transferable equity. Advantages & disadvantages???
Cannibalization

= biggest risk

Marlboro Basic Vs Monarch.. Kodak Gold Vs Kodak Funtime Whats happening????

Success stories..Marriot Hotels

Successful Vertical Brand Extension Levis

1990s declining sales. CEO from PepsiCo Philip Marineau..

Segmentation

strategy.

Strauss Signature $19-23 Levi Strauss Signature Authentics - $24-25 Levis Redtab - $25-50 Levis Capital E - $70-178 Levis Vintage - $80-325
Levi

Considering Options for a Brand Extension

Nestle Findus Division Lean Cuisine Brand

Intro

of new line of frozen prepared foods positioned for lunch.

Options:
as line extension of Findus ignore Lean Cuisine? Introduce a new stand-alone single brand: Lunch Express? Lean Cuisine with Lunch Express as sub-brand?
Introduce

Brand Stretching in a postmodern world

Link between marketing & theories of postmodernism

Image

is all & more important than reality Brands provide an anchor of stability Postmodern world is ideal environment for retrospection

Retrospection used in brand extension opportunities

Brand Stretching in a postmodern world

1990s Extensions of established brands reflecting earlier versions of the brand

Identify Possible Extension Candidates

Transfer of meaning process.

How do products come to generate meaning??

Constituting signifiers in their own right Being the signified (dependent)

Blazing out as active generators of meaning act as currency for creation of a persons identity

Part 1 of process: Product as signified

Starting point.
Product/service has no meaning in its own right EG: cigarettes. Where is the meaning, the sign value to come from Borrowed from a system of meaning with which customers are already familiar EG: source of product/parent brand EG: Richard Branson???? meanings???

Case in point: Chanel

Borrowed images from the celebrity system REM: attaching meaning often implies differentiation Williamson: advertising raids cultural stores of meaning for signifiers which are then associated with brands

Catherine Deneuve = Margaux Hemingway

Chanel No. 5 =

Babe

Part 2 of process: product as signifier in its own right

One correlate becomes fused with the product so that it appears that the link between them is naturalproduct can become generator of meaning in its own right.

The product purports to become the actual referent for the sign

EG: ads tell us they can create

Williamson: products having been associated with a particular feeling for a long time, become linked to the feeling to the extent that they come to be the feeling EG: Lucozade

Pavlov dog syndrome

Baudrillard: system of products more coherent than

Identifying Brand Extensions through Transfer of Meaning

Hovis Bread Case Study.

Academic Research & Extension Guidelines

Levy & Tybout (1989) Schema Congruity as a basis for product evaluation, Journal of Consumer Research

Rodder John & Loken (1993), Diluting Brand Equity: The impact of brand extensions, Journal of Marketing
Aaker & Keller (1990) Consumer evaluations of brand extensions Journal of Marketing

Academic Research on Extension Guidelines

1) Successful brand extensions occur when the parent brand has favourable associations & consumers perceive a fit between the parent brand & the extension product.
Categorization

perspective.

2) there are many bases of fit: product-related attributes & benefits, non-product related related to common usage situations or user types
Product

feature similarity Vs brand concept

Swatch move into jewellery

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Modern, Quality/price, Variety, Innovative design

PSU - Global Brand Management - Alain Hutinel

Academic Research & Extension Guidelines

3) High-quality brands stretch farther than average-quality brands, although both types have boundaries

4) A brand that consumers see as prototypical for a product category can be difficult to extend outside the category http://www.growthink.com/content/10-famousproduct-failures-and-advertisements-did-notsell-them

5) concrete attribute associations tend to be more difficult to extend than abstract benefit associations

Lifestyle brands..

Thursdays Lecture Socio-Cultural Perspective on Brand Management Emotions & Branding