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Brand Extension Assignment (1)

Brand Extension Assignment (1)

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Published by: Alka Dubey on Nov 30, 2010
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08/03/2013

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DAYANAND SAGAR BUSINESS SCHOOLBANGALOREASSIGNMENTOFPRODUCT & BRAND MANAGEMENTONSUCCESSFUL AND UNSUCCESSFUL BRAND EXTENSIONS
SUBMITTED TO- Mr. Sai GaneshSUBMITTED BY ±Khushbu RoyDSBSPGDM09022
 
 
BRAND EXTENSION
³Brand extension is using the leverage of a well known brand name in onecategory to launch a new product in a different category.´
 
Brand Extension
is the use of an established brand name in new product categories. This newcategory to which the brand is extended can be related or unrelated to the existing productcategories. A renowned/successful brand helps an organization to launch products in newcategories more easily. For instance, Nike¶s brand core product is shoes. But it is now extendedto sunglasses, soccer balls, basketballs, and golf equipments. An existing brand that gives rise toa brand extension is referred to as
parent brand
. If the customers of the new business havevalues and aspirations synchronizing/matching those of the core business, and if these values andaspirations are embodied in the brand, it is likely to be accepted by customers in the new business.Extending a brand outside its core product category can be beneficial in a sense thatit helps evaluating product category opportunities, identifies resource requirements, and lowersrisk, and measures brand¶s relevance and appeal.
There are several aspects of considering brand extensions:
1 Product line extension without a sub-brand as (Rasna) has various variants.2. Extending the brand with sub-brands (junior horlicks)3. Extending the brand to related categories (Liril to Liril talcum powder)4. Extending the brand to more related categories (Wipro in computers, finance, edible oil,medical equipments, soaps and baby powder)
 
Advantages of brand extension strategy are:-
 
1)
 
It makes
acceptance of new product easy.
a.
 
It increases brand image. b.
 
The risk perceived by the customers reduces.c.
 
The efficiency of promotional expenditure increases. Advertising, selling and promotional costs are reduced. There are economies of scale as advertising for core brand and its extension reinforces each other.d.
 
Cost of developing new brand is saved.e.
 
Consumers can now seek for a variety.f.
 
The expense of introductory and follow up marketing programs is reduced.
 
2)
Consumer knowledge:
The remaining strong brand used to ³promote a new product´ makes
 
it less critical to create ³awareness and imagery´.
 
3)
Consumer trust:
The existing well-known-strong brands represent a promise ±of quality,useful features etc. - for the consumer. A satisfied customer by an extension will be more willingto repurchase the same brand.4)
Defensive strategy:
An extension can prevent competitors from gaining or exploiting a
 
foothold in the market and can be ³worthwhile even though it might struggle´. For e.g. ± Microsoft for instance has decided to operate in different areas with the aimof limiting the ³ability of competitors to encroach on core business areas´.
Disadvantages of brand extension strategy are:-
1.
 
Brand extension in unrelated markets may lead to
loss of reliability
if a brand name isextended too far. An organization must research the product categories in which theestablished brand name will work.2.
 
There is a risk that the new product may generate implications that
damage the image
of the core/original brand.3.
 
There are chances of 
less awareness
and trial because the management may not provideenough investment for the introduction of new product assuming that the spin-off effectsfrom the original brand name will compensate.4.
 
If the brand extensions have no advantage over competitive brands in the new category,then it will
fail.
 5.
 
Cannibalization:
Aaker states that the extensions can cannibalize the existing productsof the brand when there are positioned in a close market. It means the extensions sales areincreasing while those of the existing brand¶s products are following the Oppositecurved. Aaker underlines that these good sales figures for the extensions can not compensatethe damage produced to the original brand¶s equity.
 
Brand extension may be successful or unsuccessful.
 Successful brand extensions are not entirely new products in new categories; rather they are³children´ of the same brand family²nuts that have fallen very close to the family tree.
Successful brand extensions have few characteristics like:
 1. Perceptual Fit: the consumer must perceive the new item to be consistent with the parent brand.2. Benefit Transfer: a benefit offered by the parent brand must be desired by consumers of  products in the new category.3. Competitive Leverage: the new items must stack up favorably to established items in the newcategory.
4.
Is the new product or service differentiated not only from the competition, but from the parent brand as well?
5.
Do the characteristics of the new product resonate in the marketplace and are they believable?
6.
Will the combined sales of both products actually add net revenue to the bottom line, or iscannibalization possible, eroding sales of the core brand?

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