lecture 4 brand extentions

BRAND EXTENSIONSMSc Marketing (Executive)Dr Kevina CodyOctober 19th 2010

Brand extension

What is Brand extension?What is Brand extension? Why extend ?Why extend ? Where to extend ?Where to extend ? RisksRisks Keys to successKeys to success FittingFitting … … why NOT extend ? why NOT extend ?

SOURCES OF GROWTH FOR A FIRM

Ansoff’s growth share matrix

Introduction of new product….

Three branding choices:

1) develop a new brand, chosen for new product

2) apply, in some way, one of its existing brands

3) it can use a combination of a new brand & and existing brand

What is a brand extension?

When a firm uses an established brand name to introduce a new product

New brand + existing brand = sub-brand Existing brand that leads to brand

extension = parent brand Parent brand associated with multiple

products through brand extensions = family brand

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What is the brand extending ?

It is the transfer of brand values on the new market

It shows that the brand is not related directly to one sector but has values that can transcend different products categories

Categories of brand extensions

Line extension

Category extension

Which is more common???

Categories of brand extensions

Line Extension Vs Category Extension

Key difference between line & category extension = product category

Line extension – product category remains constant

Category – product category is a variable

Brand Extension Strategies

1. Introduce the same product in a different form

2. Introduce products that contain the brand’s distinctive taste, ingredient or component

Tauber, E. M. (1988), ‘Brand Leverage: Strategy for growth in a cost controlled world’, Journal of Marketing Research,

3. Introduce companion products for the brand

4. Introduce products that capitalize on the firm’s perceived expertise

Brand Extension Strategies

5. Introduce products that reflect the brand’s distinctive benefit, attribute or feature

6. Introduce products that capitalize on the distinctive image or prestige of the brand

Tauber, E. M. (1988), ‘Brand Leverage: Strategy for growth in a cost controlled world’, Journal of Marketing Research,

Brand Extension Strategies

Corporate Brand Names E.G. Kellogg’s, Heinz, Cadbury

House Brand Names E.G. Lexus

Family Brand Names E. G. Dulux Weathershield

Mono Brand Names E. G. Procter & Gamble, Unilever

Laforet, S. and Saunders, J. (1994) ‘Managing Brand Portfolios: how the leaders do it’, Journal of Advertising Research, Sep/Oct

Why Extend???

Facilitate New Product Acceptance

Risks of new product launch? Market too small Product poor match for company Inadequate/inaccurate market research Poor profit margins & high costs Not new or different Credibility not confirmed on delivery

Law & Order – Successful Brand Extension

TVs most valuable franchise… Law & Order Law & Order: SVU Law & Order: Criminal Intent Law & Order: Trial by Jury

Self-contained episodes… Extension strategy allows

migration of audiences Revenues through DVD sales,

books, computer game, clothing

Why Extend??

Improve Brand Image

Why Extend??

Reduce Risk perceived by customers

Extensions by established parent brands communicate longevity & sustainability

Credibility & trustworthiness

Avonmore, Del Monte, Nivea

Why Extend??

Increase efficiency of promotional expenditures

Study of 98 consumer brands in 11 markets Successful brand extensions spent less on

advertising than did comparable new-name entries

Sullivan, M. W. (1992), ‘Brand Extensions: When to use them’, Management Science, 38 (6)

Why Extend?

Permit consumer variety seeking

Can switch to different product type without having to leave brand family

Why Extend? Clarify Brand Meaning

Brand Original Product

Extension Products

New Brand Meaning

Weight Watchers

Fitness Centres

Low-Calorie Foods

Weight loss & maintenance

Kelloggs Cereal Nutri-Grain Bars, Special K Bars

Healthy Snacking

Petit Filous Kids’ yoghurts

Frubes Fun, healthy, kid-centred snacks

Crayola Crayons, markers, pencils, chalk

Squeeze & Squirt Foaming Hand Soap

??

Why Extend?

Clarify brand meaning

Helps avoid ‘marketing myopia’

E.G. Ocean Spray….

Why Extend?

Bring new Customers into brand franchise & increase market coverage

e.g. offering product benefit whose absence inhibited trial

Strepsils….. Disprin Direct… Solpa Sinus…

Why Extend?

Revitalise the brand

A means to renew interest in & liking for the brand

Habituation… E.G. Old Spice E.G. Wine Gums…

http://www.youtube.com/watch?v=TusJ8HSLaUs

http://www.youtube.com/watch?v=xgWNNimr0Yo&feature=related

Risks

Can confuse or frustrate customers

16 Coke varieties 35 Crest toothpaste varieties…

Can encounter retailer resistance Goods vs retail space….

Risks

Can fail & hurt parent brand image

FIAT… AUDI (1986) – Audi 5000 – sudden

acceleration problem…. Diet Coke Cherry…

Counter –case: Guiness Light

Guinness Light 1981- ‘They said it couldn’t be done’ http://www.youtube.com/watch?v=tqSvrbKwT

8M

Parent brand difficulty with younger drinkers… Meticulous planning & positive market

research results Did it harm the master brand? What was the

effect? Pitfalls of correlating ideas with market

research…

Risks

Cannibalization of parent brand

Establishing points of parity… Preemptive cannibalization…

Coke Vs Diet Coke… Actimel Vs Actimel 0.1% fat Light Milk Vs Supermilk

Risks

Can Succeed but hurt image of parent brand….

Virgin – are there any boundaries????

"I believe there is almost no limit to what a brand can do. You can ignore those who go on about brand stretching

Figure 12.13 Companies in the Virgin Group

Risks

Can Dilute Brand Meaning

Gucci… Expansive product line Semiotically counter-effective…

What determines whether a brand extension can capitalize on these potential advantages….??

Understanding how consumers evaluate brand extensions….

Study of brand elasticity Brand Identity perspective Brand Equity & Brand Extensions

Understanding how consumers evaluate brand

extensions Baseline semiotic inferences

Porsche --------coffee makers…. Bic ------disposable lighters… Honda---------- lawn mowers Harley Davidson ------------ wine coolers Bic ------------ perfumes Levis --------------------- tailored suits Fruit of the loom ------------------ washing

detergent

1) Consumers must have some awareness of & positive associations about the parent brand

2) At least some of these positive associations will be evoked by the brand extension

3) Negative associations are not transferred by the parent brand

4) Negative associations are not created by the brand extension

Brand Elasticity

Consumers put limits on where a brand can go…. Kleenex diapers

Some brands are more elastic than others Virgin Vs Coca-Cola

Brand strength in an existing realm of expertise does not drive brand elasticity

“Far in” is easier to work than “far out”….

Page, G. & Farr, A. ‘Do you have an elastic brand’, Advertising Research Foundation Workshop (2000)

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Brand Elasticity – 2 cases in point

reliable, resistant, masculine

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The success of pen, lighter, and razors Bic

Accessible, practical, disposable

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The failure of Bic perfume

The Bic values are not relevant to perfume

Product Expertise

Clearly defined philosophy

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Keys to success in brand extension

Brand

identity

Brand extension Market’s values

RelevanceFit

Added value

Understanding how consumers evaluate brand

extensions Baseline semiotic inferences

Porsche --------coffee makers…. Bic ------disposable lighters… Honda---------- lawn mowers Harley Davidson ------------ wine coolers Bic ------------ perfumes Levis --------------------- tailored suits Fruit of the loom ------------------ washing

detergent

Understanding how consumers evaluate brand

extensions Exploring brand equity of parent

brand…. What are different attributes associated

with a brand? What benefit associations are connected

with a brand? What is the perceived essence of the brand

Understanding how consumers evaluate brand

extensions Strength of Associations – Ponds

Talc Feminine

FloralBody

-Care

Cream

Body TalcSpecial

Occasion Talc

Nail Polish, Lipsticks,

Body Lotion

Room Freshener,

Soaps, Shampoos

Body Lotion,

Body Oil, Exfoliater

Cleanser, toner,

moisturizer, anti-

cellulite

Figure 12.21 Possible extensions of Vaseline Intensive Care brand

Brand Extensions & Brand Equity

Creating Extension Equity & Contributing to Parent Brand Equity

Extension equity: salience, favourability, uniqueness

E.G. Dettol Easy Mop System Vs Johnson & Johnson Asprin….

Parent Brand Equity: compelling benefits, relevant, consistent

Vertical Brand Extensions

Key strategy in enhancing equity through brand extensions

Up to premium, down to value conscious

Transferable equity….

Advantages & disadvantages??? Cannibalization = biggest risk

Marlboro Basic Vs Monarch…..

Kodak Gold Vs Kodak Funtime

What’s happening????

Success stories…..Marriot Hotels…

Successful Vertical Brand Extension – Levi’s

1990s – declining sales…. CEO from PepsiCo – Philip Marineau…..

Segmentation strategy….

Levi Strauss Signature – $19-23 Levi Strauss Signature Authentics - $24-25 Levi’s Redtab - $25-50 Levi’s Capital E - $70-178 Levi’s Vintage - $80-325

Considering Options for a Brand Extension

Nestle – Findus Division – Lean Cuisine Brand Intro of new line of frozen prepared foods

positioned for lunch….

Options: Introduce as line extension of Findus – ignore

Lean Cuisine? Introduce a new stand-alone single brand: Lunch

Express? Lean Cuisine with Lunch Express as sub-brand?

Brand Stretching in a postmodern world

Link between marketing & theories of postmodernism Image is all & more important than reality Brands provide an anchor of stability Postmodern world is ideal environment for

‘retrospection’

Retrospection used in brand extension opportunities

Brand Stretching in a postmodern world

1990s Extensions of established brands reflecting earlier versions of the brand

Identify Possible Extension Candidates

Transfer of meaning process….

How do products come to generate meaning??

Part 1 of process: Product as signified

Starting point….

Product/service has no ‘meaning’ in its own right EG: cigarettes….

Where is the meaning, the sign value to come from

Borrowed from a system of meaning with which customers are already familiar… EG: source of product/parent brand EG: Richard Branson???? – meanings???

Case in point: Chanel

Borrowed images from the celebrity system… REM: attaching meaning often implies

differentiation… Williamson: ‘advertising raids cultural stores

of meaning for signifiers which are then associated with brands’

Catherine Deneuve = Margaux Hemingway

Chanel No. 5 = Babe

Part 2 of process: product as signifier in its own right

One correlate becomes fused with the product so that it appears that the link between them is ‘natural’…product can become generator of meaning in its own right….

The product purports to becomethe actual referent for the sign

EG: ads tell us they can createthe feelings which they represent

Williamson: ‘products having been associated with a particular feeling for a long time, become linked to the feeling to the extent that they come to “be” the feeling’

EG: Lucozade…

‘Pavlov dog syndrome’…

Baudrillard: ‘system of products more coherent thansystem of needs’

Identifying Brand Extensions through Transfer

of Meaning

Hovis Bread Case Study….

Academic Research & Extension Guidelines

Levy & Tybout (1989) ‘Schema Congruity as a basis for product evaluation’, Journal of Consumer Research

Rodder John & Loken (1993), ‘Diluting Brand Equity: The impact of brand extensions’, Journal of Marketing

Aaker & Keller (1990)’ Consumer evaluations of brand extensions’ Journal of Marketing

Academic Research on Extension Guidelines

1) Successful brand extensions occur when the parent brand has favourable associations & consumers perceive a fit between the parent brand & the extension product…. Categorization perspective….

2) there are many bases of fit: product-related attributes & benefits, non-product related related to common usage situations or user types Product feature similarity Vs brand concept

consistency

PSU - Global Brand Management - Alain Hutinel

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Swatch move into jewellery

Modern, Quality/price, Variety, Innovative design

Academic Research & Extension Guidelines

3) High-quality brands stretch farther than average-quality brands, although both types have boundaries…

4) A brand that consumers see as prototypical for a product category can be difficult to extend outside the category

http://www.growthink.com/content/10-famous-product-failures-and-advertisements-did-not-sell-them

5) concrete attribute associations tend to be more difficult to extend than abstract benefit associations

Lifestyle brands…..

Thursday’s Lecture

Socio-Cultural Perspective on Brand Management

Emotions & Branding