Q.2- Explain various categories of brand sponsorship with example.

Ans.2- Brand sponsorship

Brand manager have four options of sponsoring the brand. They are

1. Manufacturer brand
2. Private brand
3. Licensing
4. Co- branding

Manufacturer brand: The brand owned by manufacturer and promoted either directly
or indirectly. This type of strategy is followed from years. Pillsbury atta is the
manufacturer brand. In the below image you can see the Pillsbury is launching the
Punjabi atta in the market. ( figure 9.4)

Private Brand:

Figure 9.3 Figure 9.4

Private brands are also called as store brands. These brands bearing the store name or
store selected vendor name. Basic ingredients of private labels are

1. It must be a unit package: It is difficult to assign a Private Label character to, say rice
sold loose from a 100 kg bag. Even though it may enhance consumer loyalty for whatever

reason, it does not qualify as a Private Label product.

2. Relabeling: The unit pack must bear only the brand name of the particular store or any
other party the store may choose for its Private Label programme.

Private labels will enhance the category profitability; increase the negotiation power of
the retailer and better value creates better consumer loyalty. All retailers cannot go for the
private labeling. Private labels can be introduced if and only if

1. The consumer is not getting the tangible value.

2. The retailer is not making the enough returns from the sale of the branded
goods.

Emerging issues in private labeling:

1. The private label strategy is effective, profitable and reality.

2. The retailer must understand the price, quality and willingness to pay.
3. The retailer must have a sufficiently large base of loyal customers in the
store before introducing the private label.
4. The focus must be on consumer need and not any private agenda of the
retailers
5. There must be stringent system for the private label production. Quality
control is a must since there is no else to blame.
6. Private label must work to fill- in gaps in the category and not target the
brand leader
7. Smart manufacturers may take a private label initiative of the retailer
seriously and avoid value gaps in the categories as an impediment to growing
private labels.

(Source: Praxis- Business line)

Brand licensing: It is the legal authorization by the trade marked brand owner to allow
another company to use its brand for a fee. For example, Hugo boss, Tommy Hilfiger,
Lovable, Lacoste, and Nike are some of the textile brands those licensed their brands in
the Indian market. The major benefits of brand licensing are low cost, free publicity and
revenue from royalty fees. Brand licensing also suffers from serious limitations like lack
of manufacturing control, and licensing arrangements may fail.

Co- Branding: According to Kotler co- branding is ‘the practice of using the established
brand names of two different companies on the same product’. For example, ICICI and
HPCL came together to sell ICICI-HPCL petro cards to the customer. Here card is the co-
branding between the two companies. Co- branding helps ICICI to utilize their financial
resources well. It adds another banking facility to the bank while HPCL can lock the
customer from buying the petroleum products from competitors. HPCL also gets the
benefit of financial power which it doesn’t have. Both companies promote these products.
Hence they can leverage brand image and can reduce the cost. All companies will not get
benefit from co-branding. Some times company may loose the brand image if the product
fails.
Brand Development
Company can develop the brand on the basis of product category and brand name. Now
we will discuss the different strategies adopted by companies to develop the brands.

Product category
Brand Name Existing New
Existing
Line extension Brand extension
New
Multi brands New brands

Figure 9.5

1. Line extension: Company uses its well known brand name to introduce
additional items in a given product category such as new forms, flavors,
ingredients or package sizes.

For example, Karnataka Milk federation, Uses its top brand name Nandini to introduce
new items like toned milk, full cream milk , curd and milk powder.

Figure 9.6

It is less risky and requires fewer investments to introduce the product. In the above
example nandini used the extension to meet the excess capacity that it has. The milk
procurement was more than the demand from the customer. Hence it started producing
the milk powder. But all the products introduced need not to be successful in the market.
In case of KMF nandini Ice creams didn’t click in the market. Another risk of line
extension is brand cannibalization i.e. company’s brand/items compete each other.
2. Brand extension: A strategy in which company uses one of its familiar brand names
to new product category’s items. For example, United breweries (UB) limited group used
its flagship brand kingfisher to different categories. Kingfisher was originally a beer
brand extended to airlines. Figure 9.7

Brand extension gives instant recognition to the brand. In the above example people
required very less time to know kingfisher airline brand because parent brand was very
well known. Brand extension if it fails then it may hurt the parent brand reputation in the
market.

1. Multi brands: The techniques of introducing the product or items in

existing product category with a new brand name.
Figure 9.8

For example, Hindustan Unilever uses different brand names for their home and personal
care category. The above example shows us that HUL have breeze, Dove, Liril Lux,
Lifebuoy and Pears in the bath soap segment itself.

It helps company to come out with new features in the product or product category.
Organizations adopt this strategy to avoid brand cannibalization in the given category.
The major disadvantage of this strategy is none of the brands will enjoy major market
share and result in lesser profitability. In case of Hindustan Unilever company had more
than 100 brands and was forced to reduce it to 30 power brands. Other brands were not
adding enough profit for the company.

New brands: The strategy of coming out with new brand for new category products. In
this strategy, company believes that existing brands can not be extended to the new
category. The new brand strategy requires huge resources to build it. The new category if
it already had some brands of other companies, investment requirement will go up. For
example, Hindustan Unilever launched Pure it in the water purifier category. The
category and brand is new to the company