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Brand line extensions reduce the risk associated with new product
development due to the established success of the parent brand. The
consumers buying decision is already influenced by the trust they have
with the established brand. As a result, promotional costs are much
lower because there is not so much need for exposure and awareness
building.
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5.4 Generic
Porters famous Generic Strategies, although originally applied at the
corporate level, can also be useful at brand level (Porter, 1985). His
analysis suggests that some of the most basic choices faced by
companies are the choice of markets that the company should serve
and how the company should compete in those selected markets. He
then identified three generic strategies for organisations to achieve
competitive advantage: cost leadership, differentiation, and focus. The
same approach can be taken when thinking about strategies for brands.
Cost leadership companies attempt to become the lowest-cost
producers in a market segment. The company with the lowest costs will
earn the highest profits when the competing products are essentially
undifferentiated e.g. Amazon at corporate level and Tesco Value at
product level.
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5.5 Own-label
The concept of own-label brands is quite simple and has been around
for over 100 years. The manufacturer (who has a limited end user
relationship) produces goods or services for the retailer who has an
intense customer relationship and thereby a strong ability to create
brand loyalty. This plays to the strengths of both parties. Some branded
manufacturers also undertake own work in order to gain greater
market share even though the own-label will compete against their own
brand.
The leading UK and American supermarkets have expanded their ownlabel product ranges to the extent of offering a range from high quality
to value-brands and a diverse range of sub-brands from premium food
to clothing. One of the most famous own-label brands to have emerged
from the UK supermarket chains is Asdas George clothing range.
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5.6 Multi-branding
With multiple products or services a company needs to decide how it is
to brand its range. There are different approaches:
A family brand such as Heinz. The advantages are only having one
brand image and set of values to manage and promote, and the high
recognition and loyalty that can be generated. New product introduction
is simpler. The downside is that one product error or failing can damage
the entire image.
Individual product brands such as Proctor & Gambles Fairy, Ariel &
Daz (visit www.pg.com to see the huge range of brands they own). This
approach has a number of advantages. By adopting a multi-brand
strategy, an organisation can obtain greater space in the market and
leave less space for the competition. In addition, by promoting similar
products under different brand names, an organisation can fill any gaps
in the market, thereby, saturating it. In every market, there are some
customers who frequently change brands in order to experiment. This
strategy counters this threat. The obvious downside with the strategy is
cannibalisation of sales by your own products.
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Manufacturer
Resellers
(Wholesalers and
retailers)
Consumers
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Pull strategy
Manufacturer
Resellers
(Wholesalers and
retailers)
Consumers
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