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Band Extension

  1. 1. Brand Extension “ A new product or service that is related to an existing brand, but that offers a different benefit and/or appeals to a different target segment”. <ul><li>Presented By: </li></ul><ul><li>Varsha Rana PG – 06 - 095 </li></ul><ul><li>Sannoj Jaiprakash PG – 06 - 102 </li></ul><ul><li>Vishal wadekar PG – 06 - 119 </li></ul>
  2. 2. Scope of the Presentation <ul><li>New products and brand extensions </li></ul><ul><li>Advantages of extensions </li></ul><ul><li>Disadvantages of extensions </li></ul><ul><li>How consumers evaluate extension </li></ul>
  3. 3. New Products and Brand Extensions
  4. 4. Ansoff’s Growth Share Matrix Product Development Diversification New Markets Current Markets Current Products New Products Market Penetration Market Development
  5. 5. New Product – Branding Decisions <ul><li>A new brand – individually chosen for the new product </li></ul><ul><li>An existing brand name applied in some way </li></ul><ul><li>A combination of a new brand with an existing brand </li></ul>
  6. 6. Brand Extensions <ul><li>When a firm uses an established brand name to introduce a new product (Approaches 2 &3) </li></ul><ul><li>When a brand is combined with an existing brand (Approach 3)the brand extension can also be called a sub-brand </li></ul><ul><li>An existing brand that gives birth to a brand extension is referred to as the parent brand </li></ul><ul><li>If a parent brand is associated with multiple products through brand extensions then it is called a family brand </li></ul>
  7. 7. Types of Brand Extensions
  8. 8. Line Extensions <ul><li>The parent brand is used to brand a new product that targets a new market segment within a product category currently served by the parent brand </li></ul><ul><li>It often involves a different flavour or ingredient variety, a different form or size, or a different application for the brand </li></ul>
  9. 9. <ul><li>Dry Scalp Shampoo </li></ul><ul><li>Clean and Balanced Shampoo </li></ul><ul><li>Smooth and Silky Shampoo </li></ul><ul><li>Refreshing Menthol Shampoo </li></ul>
  10. 10. http://www.britsuperstore.com/acatalog/Fairy.html
  11. 11. Category Extensions <ul><ul><li>The parent brand is used to enter a different product category from that currently served by the parent brand </li></ul></ul>
  12. 12. E.g.: Swiss Army Watch Search on this ??????????????????????
  13. 13. Success of Extensions <ul><li>Most new products are line extensions </li></ul><ul><ul><li>Typically 80% – 90% in any one year </li></ul></ul><ul><li>Many of the most successful new products are rated by various sources, are extensions </li></ul><ul><li>Nevertheless, many new products are introduced every year as new brands </li></ul>
  14. 14. Strategies for Category Extensions - Tauber <ul><li>Introduce the same product in a different form </li></ul><ul><ul><li>E.g.: Liril Shower Gel </li></ul></ul><ul><li>Introduce products that contain the brands distinctive taste, ingredient or component </li></ul><ul><ul><li>E.g.: Haagen-Dazs Cream liqueur </li></ul></ul><ul><li>Introduce companion products for the brand </li></ul><ul><ul><li>E.g.: Duracell flashlights </li></ul></ul><ul><li>Introduce products relevant to the customer franchise of the brand </li></ul><ul><ul><li>E.g.: Visa travelers cheques </li></ul></ul>
  15. 15. Strategies for Category Extensions - Tauber <ul><li>Introduce products that capitalise on the firm’s perceived expertise </li></ul><ul><ul><li>E.g.: Honda lawn mowers </li></ul></ul><ul><li>Introduce products that reflect the brands distinctive benefit, attribute or feature </li></ul><ul><ul><li>E.g.: Fa ‘ freshness’ soap </li></ul></ul><ul><li>Introduce products that capitalise on the distinctive image or prestige of the brand </li></ul><ul><ul><li>E.g.: Porsche sunglasses </li></ul></ul>
  16. 16. Advantages of Extensions
  17. 17. Reasons for Failure of New Products <ul><li>The market was too small </li></ul><ul><li>The product was a poor match for the company </li></ul><ul><li>Inadequate or ignored research result </li></ul><ul><li>Failure to capitalise on a market window </li></ul><ul><li>Poor profit margins and high costs </li></ul><ul><li>The product was not new or different </li></ul><ul><li>The product did not go hand in hand with familiarity </li></ul><ul><li>Credibility was not confirmed on deliveryonsumers could not recognise the product </li></ul>
  18. 18. Advantages of Brand Extensions <ul><li>Facilitate new product acceptance </li></ul><ul><ul><li>Improve brand image </li></ul></ul><ul><ul><li>Reduce risk perceived by customers </li></ul></ul><ul><ul><li>Increase the probability of gaining distribution and trial </li></ul></ul><ul><ul><li>Increase efficiency of promotional expenditures </li></ul></ul><ul><ul><li>Reduce costs of introductory and follow up marketing programs </li></ul></ul><ul><ul><li>Avoid cost of developing a new brand </li></ul></ul><ul><ul><li>Allow for packaging and labeling efficiencies </li></ul></ul><ul><ul><li>Permit consumer variety-seeking </li></ul></ul>
  19. 19. Advantages of Brand Extensions <ul><li>Provide feedback benefits to the parent brand and company </li></ul><ul><ul><li>Clarify brand meaning </li></ul></ul><ul><ul><li>Enhance the parent brand image </li></ul></ul><ul><ul><li>Bring new customers into the market franchise and increase market coverage </li></ul></ul><ul><ul><li>Revitalise the brand </li></ul></ul><ul><ul><li>Permit subsequent extensions </li></ul></ul>
  20. 20. Disadvantages of Extensions <ul><li>Can confuse or frustrate the consumers </li></ul><ul><li>Can encounter retailer resistance </li></ul><ul><li>Can fail and hurt parent brand image </li></ul><ul><li>Can succeed and cannibalise sales of the parent brand </li></ul><ul><li>Can succeed but diminish identification with any one category </li></ul><ul><li>Can succeed but hurt the image of the parent brand </li></ul><ul><li>Can dilute the brand meaning </li></ul><ul><li>Can cause the company to forge the chance to develop a new brand </li></ul>
  21. 21. How Consumers Evaluate Extension
  22. 22. Managerial Assumptions <ul><li>In analysing potential consumer response to a brand extension, it useful to assume that consumers are evaluating the brand extension based only on </li></ul><ul><ul><li>What they already know about </li></ul></ul><ul><ul><ul><li>The parent brand </li></ul></ul></ul><ul><ul><ul><li>The extension category </li></ul></ul></ul><ul><ul><li>Before any advertising, promotion or detailed product information is made available </li></ul></ul><ul><li>This helps in determining whether the extension should be gone ahead with at all </li></ul>
  23. 23. Essential Assumptions for Extensions <ul><li>Consumers have some awareness of and positive associations about the parent brand in memory </li></ul><ul><li>At least some of these positive associations will be evoked by the brand extension </li></ul><ul><li>Negative associations are not transferred from the parent brand </li></ul><ul><li>Negative associations are not created by the brand extensions </li></ul>
  24. 24. Factors Influencing the Success of Extensions <ul><li>In creating extension equity </li></ul><ul><ul><li>How salient parent brand associations are in the minds of consumers in the extension context </li></ul></ul><ul><ul><ul><li>What information comes to the mind about the parent brand when the consumers think about the proposed extension and the strength on these associations </li></ul></ul></ul>
  25. 25. Factors Influencing the Success of Extensions <ul><ul><li>How favourable any inferred extensions are in the extension context </li></ul></ul><ul><ul><ul><li>Whether the information is seen as suggestive of the type of product or service that the brand extension would be </li></ul></ul></ul><ul><ul><ul><li>Would these associations be viewed as good or bad in the extension context </li></ul></ul></ul><ul><ul><li>How unique any inferred associations are </li></ul></ul><ul><ul><ul><li>How the perceptions compare with those of competitors </li></ul></ul></ul>
  26. 26. Factors Influencing the Success of Extensions <ul><li>In contributing to parent equity </li></ul><ul><ul><li>How compelling the evidence is concerning the corresponding attribute or benefit association in the extension context </li></ul></ul><ul><ul><ul><li>How unambiguous is the information in concerning product performance and imagery </li></ul></ul></ul><ul><ul><li>How relevant and consistent the extension evidence is concerning the attribute or benefit for the parent brand </li></ul></ul><ul><ul><li>How strong are the existing attributes and benefit associations about the parent brand in the consumer’s mind </li></ul></ul>
  27. 27. Thank You!
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