INTRODUCING NEW PRODUCTS

AND BRAND EXTENSION

Presented by:
Mohammad Ismail Asif

Brand Extensions
A brand extension occurs when a firm uses an
established brand name to introduce a new
product.
When a brand is combined with an existing brand
the brand extension can be also called sub-brand.
An existing brand that gives birth to a brand
extension is the parent brand.
If the parent brand is already associated with
multiple products through brand extension then
it may also be called a family brand.

Brand Extensions
Brand extension classification
Line extension
Using a new product to target a new market segment
within the same product category, the parent brand
currently serve. A line extension often adds a different
flavour, or ingredient variety, different form or size.

Brand Extensions
Category extension
Using the parent brand to enter in a different product
category from the one it currently serves.

Caterpillar Moved into Shoes and

Clothing

Ansoffs Growth Share Matrix

Current
Products

New
Products

Current
Markets

Market
penetration
strategy

Product
development
strategy

New
Markets

Market
development
strategy

Diversification
strategy

McDonalds Example
Market Penetration
- better, not bigger
Market Development
- Global expansion and adaptation of cultural
preferences and regional taste.
Product Development
- Offering healthier options, Go Active Campaign
Diversification
- McCafe,McTreat

General Strategies for Establishing a Category

Taubers FranchiseExtension
Introduce the same product in a different form.
This is where a company changes the form of the product
from the original parent product.
Example: Nestles Everyday (Powder and liquid)

General Strategies for Establishing a Category

Taubers FranchiseExtension
Introduce products that contain the brands distinctive taste,
ingredient, or component.
When a brand owns a flavor, ingredient or component, there may be
other categories where consumers want that property.

General Strategies for Establishing a Category

Taubers FranchiseExtension
Introduce companion products for the brand.
Some brand extensions are a natural companion to the products
the company already makes.

General Strategies for Establishing a Category

Taubers FranchiseExtension
Introduce products that capitalize on the firms perceived
expertise.
Over time, certain brands may gain a reputation for having an
expertise in a given area. Leverage can be achieved when extending
into areas where this special expertise is deemed important.

General Strategies for Establishing a Category

Taubers FranchiseExtension
Introduce products that reflect the brands distinctive
benefit, attribute, or feature.
Many brands own a benefit, attribute or feature that can
be extended.
Example: Dettols antiseptic or 100% Germ Protection
products

General Strategies for Establishing a Category

Taubers FranchiseExtension
Introduce products that capitalize on the
distinctive image or prestige of the brand.
Certain brands convey status and hence create an
image for the user.
Some brands promote a lifestyle and can extend
to items that people wear, as a badge of
identifying themselves with that lifestyle.
Example: Harley Davidson, their extensive
collection of licensed lifestyle items goes way
beyond any expertise inherent in the brand.

Advantages of Extensions
Facilitate new product acceptance
Improve brand image
Reduce risk perceived by customers
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

Advantages of Extensions (Cont.)

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

Disadvantages of Extensions

Can confuse or frustrate consumers

Can encounter retailer resistance
Can fail and hurt parent brand image
Can succeed but cannibalize sales of parent brand
Can succeed but diminish identification with any one
category
Can succeed but hurt the image of the parent brand
Can dilute brand meaning
Can cause the company to forgo the chance to develop
a new brand

THE END