NEW PRODUCTS AND

BRAND EXTENSIONS

By
Navneet Agrawal

Overview
New

Product & Brand

Extension
Advantages
Disadvantages
How Consumers Evaluate
Extensions?

What Is A Brand
A

BRAND is symbolic embodiment of

all the information connected to a
Company, Product or Service.
It serves to create associations and
expectations from products made by
a producer, in the mind of the
consumer.
The key objective being to create a
Relationship of TRUST with its
consumers.

New Product & Brand

Extensions

New Product Branding

Decisions
A

new brand individually chosen

for the new product.
An existing brand name applied
in some way.
A combination of a new brand
with an existing brand.

BRAND EXTENSIONS
A

Brand Extension occurs when

a firm uses an established brand
name to introduce a new product
(approaches 2 or 3)

When

a new brand is combined

with an existing brand (approach
3), the brand extension can also
be a sub-brand.

BRAND EXTENSIONS
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 extensions, then it
may also be called a family
brand.

LINE EXTENSION
The

parent brand is used to brand a

new product that targets a new
market segment with in a product
category currently served by the
parent brand.
A line extension often adds a
different flavor or ingredient
variety, a different form or size, or a
different application for the brand.

Cokes Line Extension

Head
&
Shoulders

Extension

CATEGORY EXTENSION
The

parent brand is used to enter

a different product category from
that currently served by the
parent brand.

ITCs Category
Extension

Why Brand Extensions?

Leveraging

brand equity/value by
introduction of logical & complementary
new product categories
E.g HP
Product Innovation to surpass consumer
expectations
It increases awareness of the brand name
Increases profitability from offerings in
more than one product category.(widening
the net to catch new consumers.)
Its a great way to reinforce a brand, reach
out to new customers, create a BUZZ

Advantages Of Brand
Extensions
Improve brand image
Reduce risk perceived by
Customers
Permit consume variety-seeking

Advantages Of Brand
Extensions
Clarify

brand meaning

Brand

Original
Product

Extension
Products

New
Brand
Meaning

Weight
Watchers

Fitness
Centre

Low-calorie
foods

Weight loss
&
maintenanc
e

Sunkist

Oranges

Vitamins,
juices

Good
health

Kelloggs

Cereal

Nutri-grain
bars,
Special K
bars

Health
snacking

Advantages Of Brand
Extensions

Increase the probability of gaining

distribution and trial
Increase efficiency of promotional
expenditures
Reduce costs of introductory & followup marketing programs (save 40-80%)
E.g. Apple iPods
Avoid costs of developing a new brand
Allow for packaging & labeling
efficiencies

Advantages Of Brand
Extensions
Enhance the parent brand image
Bring new customers into brand
franchise and increase market
coverage
Revitalize the brand
Permit subsequent extensions

Disadvantages Of Brand
Extensions

Can fail & hurt parent brand image

Xerox Computers-synonymous with

copiers & no one believed they could

make computers

Can succeed but cannibalize sales of

parent brand
Amul Butter-reduced salt butter
is slowly eating up Amul normal butter

Disadvantages Of Brand
Extensions

Can succeed but diminish

identification with any one
category
Can succeed but hurt the image
of parent brand

Disadvantages Of Brand
Extensions

Can confuse or frustrate

consumers
Can encounter retailer
resistance
Can dilute brand meaning
Can cause the company to
forgo the chance to develop a
new brand

When are Brand

Extensions Appropriate?
When

Prior Brand equity exists

Consumer must see some
connection between the
proposed extension and the
parent brand.
The proposed extension
contributes to and reinforces the
overall brand equity of the parent
brand.

Conditions For Evaluating

Consumers Brand
Extension
Consumers have some awareness
& positive associations about the
parent brand
At least some of these positive
associations will be evoked by the
brand extension
Negative association are not
transferred from the parent brand
Negative associations are not
created by the brand extension

Evaluating Brand
Extension Opportunities
Define actual & desired consumer knowledge
Identify possible extension candidates
Evaluate potential of the extension candidate
Evaluate potential candidate feedback effects
Consider possible competitive advantages & reactions
Design marketing campaign
Evaluate extension success & effects on parent brand
equity