NEW PRODUCTS AND BRAND EXTENSIONS

By Navneet Agrawal

Overview
New Product & Brand Extension y Advantages y Disadvantages y How Consumers Evaluate Extensions?
y

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

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
y

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
y

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. y A line extension often adds a different flavor or ingredient variety, a different form or size, or a different application for the brand.
y

Cokes Line Extension

Head & Shoulders Extension

CATEGORY EXTENSION
y

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?

y  y y y

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

y

Clarify brand meaning

Brand Original Product Fitness Centre Oranges Cereal Extension Products Low-calorie foods Vitamins, juices Nutri-grain bars, Special K bars New Brand Meaning Weight loss & maintenance Good health Health snacking Breakfast foods

Weight Watchers Sunkist Kelloggs

Aunt Jemima

Pancake mixes Syrups, frozen waffles

Advantages Of Brand Extensions

     

Increase the probability of gaining distribution and trial Increase efficiency of promotional expenditures Reduce costs of introductory & follow-up 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

 y

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

Conditions For Evaluating Consumers Brand Extension

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

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