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best
practice
Launching a brand
The principles of launching a brand or a brand extension are critical to
a business. Get it wrong and the consequences can be disastrous
By Dr Radu Dimitriu and
Professor Lynette Ryals,
Cranfield School of Management
Launching a new brand is an
expensive and risky business.
Recent US research suggests that
launching a new supermarket
product typically costs $30
million to $50 million. But, the
risks are high: around 70% of all
new brands fail within three years.
A failed brand launch not only
costs the company money, it can
also damage its reputation in the
market.
In 1985, Coca-Cola launched
New Coke, which replaced the
classic Coke and was meant to
combat Pepsi. Despite spending
$4m on (probably flawed) market
research, Coke failed to predict
customers emotional
attachment to the classic drink.
Within three months, the
company had to reintroduce the
original Coke. Coca-Cola was
lucky its sales quickly recovered
but other, less strong brands
may not be so fortunate. Because
brand launches are expensive and
risky, brand managers need careful
research and a strategic launch
plan to ensure acceptance of the
brand in the market. So, how can
a company achieve a successful
brand launch?
The first important aspect of
launching a brand successfully
is to decide whether the new
product is going to come under
an existing brand (as a brand or
line extension), or as an entirely
new brand. Wherever possible,
the preference should be to
launch a brand extension. Brand
extensions leverage a companys
existing brand equity (the halo
Best Practice
STEP 3
Building brand awareness
STEP 2 aPioneers should build
Getting brands positioning perpetual prominence
and image right by having:
aa clear frame of aFollowers should achieve
perpetual difference
reference
acredible points of parity
acompelling points of
difference deciding on
un ch
degree of differentiation d la
STEP 1 lb ran
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Deciding whether to use
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a brand extension or
an entirely new brand ay
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stai
The
effect). Because customers can allowing the company to leverage successful brand launch is to get
rely on their knowledge of a the brand into disposable lighters both brand positioning and image
previous brand, an extension and razors in the 1970s. right from the very beginning.
reduces their perceived risk in However, the same associations Brand positioning is about the
buying the new offering. led to an undesirable perception way a company intends its
Consider the Apple iPod, of being cheap and low quality, brand to be perceived in the
a hugely successful brand which led to failure when Bic marketplace; brand image is about
extension which benefited from tried to launch perfumes and how customers actually perceive
the perception of Apple as a aftershaves in the 1980s. the brand. The first things that
producer of technically-superior When the company lacks an customers learn about a brand
and well-designed products. The appropriate existing brand, of stay in their memory, such as the
halo effect reduces the risk of a course, an entirely new brand association of Volvo cars with
brand launch and also makes a launch is needed. For example, safety. Associating a brand with a
brand extension more cost- Procter & Gambles Pantene, certain benefit or quality makes
effective than a brand launch. positioned as for hair so healthy it very hard for competitors to
In fact, companies can realise it shines, could not have been claim that benefit in the future:
between 40% to 80% savings on launched under the Head & the fact that Volvo grabbed the
launching new supermarket Shoulders anti-dandruff brand. safety association prevents other
products by using extensions A new brand may be needed to car brands from occupying this
rather than new brands. build new associations and image. space. This is what research calls
That said, brand extensions For instance, drivers associated a blocking effect. The blocking
must fit the original brand and Toyotas brand with economical, effect results in increased market
must have the right associations. affordable and reliable everyday share and the ability to command
For instance, Bic Corporation cars. Going upmarket with the a considerable price premium. To
is the leading manufacturer of Toyota name would have been a exemplify, Johnson & Johnsons
disposable ballpoint pens in the very hard undertaking, so Toyota Tylenol (based on paracetamol)
US. The Bic brand became introduced its luxury car under commands a 15.3% share of the
associated with products that are the new Lexus brand. analgesics market and a 150%
disposable and affordable, The second stage of a price premium over generic
ADMAP october 2011
 B e s t P r ac t i c e
brands in the US, even though the
generics are chemically identical.
If the company gets the initial
position wrong, that too can
live on in customers minds. The
launch of Microsofts Zune MP3
player was huge launch costs
for one country alone were
estimated at $100m. Sadly, the
most salient feature of Zune
seems to have been that it was
not an iPod. Even before launch,
Microsoft had to slash the
intended price and three years
later, the Zune had achieved
market share of 2% compared
with 70% for the iPod, resulting
in a considerable financial loss.
This is why new brand launches
must be carefully researched
and tested, and why many
companies choose to launch
regionally, rather than nationally.
A brand needs three things
to achieve a strong positioning.
It needs to make it clear what
it is about and in which market
it competes (establishes a clear
frame of reference), have
associations that make it
credible in that market (points
of parity), and have associations
that successfully differentiate
it from competitors (points of
difference).
When the revolutionary
Motorola Envoy PDA was
launched in 1994, nobody could
really tell what it was about it
had no clear frame of reference.
It was too expensive to be a
pager or organiser and nobody
saw it as a laptop, even though it
was the first device of this type
capable of sending emails. Later
on, Palm Pilot was launched with
just a fraction of Envoys features,
and became a hit by associating
itself with personal organisers.
A new brand has to be
credible in the market, or have
so-called points of parity. For
instance, when Subway presented
itself as healthy fast food, it also
had to communicate that it had a
great taste, to make itself
credible in the fast-food category.
When Beiersdorf launched Nivea
deodorant, its association with
A DMAP october 2011
protection and gentleness
was not enough; it also had to
communicate an essential
characteristic, namely that the
new deodorants stopped odour.
In addition, a brand must
establish differentiation (points
of difference) in the marketplace.
This involves a crucial decision
about the degree of differen-
tiation. Too little and the brand
is seen as a me too, like the
Microsoft Zune. Too much, and
the brand becomes niche. So, a
successful launch strategy is often
about moderate rather than
radical differentiation. Consider
the Toyota Prius, whose
compelling point of difference was
its hybrid engine, although it also
shared several of the points of
parity in the car category,
including design, reliability and
speed. This positioning allowed
the Prius to be part of a wider
market, as it was perceived as
consistent with the car category.
However, electric car brands,
such as Tesla, are more strongly
differentiated, and, therefore, likely
to appeal to a niche and smaller
segment of the market. This
protects them from head-to-head
competition from the mainstream
car-makers, although it may also
limit their appeal.
Once a brand has built the
right positioning and image, the
next stage is to build brand
awareness. Market pioneers
have a unique chance to shape
consumer preferences and to
promote the pioneering brands
characteristics as being the ideal
ones. Apples iPhone was one
of the first smartphones to be
mainly controlled through its
touch-screen, and largely defined
what customers should expect
from products in this popular
market. And Wrigleys chewing
gum dominated its market long
after its introduction.
But being the first to market
does not guarantee a brands
success. Pioneer brands must
build awareness and perceptual
prominence in customers eyes,
or else they will find their first
47
FURTHER reading ON WARC .COM
Do Gaps in Marketing Theory Make New Brands Fail? Bruce Tait,
Admap, June 2001
Customising New Brand Development, Angela Pirrie, Admap,
November 2005
Risk! How to Win in the Game of Brand Extension, Helen Wing,
Admap, November 2005
Warc Briefing: Brand Launches, November 2010
OT H ER REC OMM E ND ED REA DING
Brand Portfolio Strategy, D. A. Aaker, (2004), New York: Free Press
Consumer Preference Formation and Pioneering Advantage. Journal
of Marketing Research, 26, 285-298, GS Carpenter and K Nsikamoto
(1989)*Carpenter, G. S. & Nsikamoto, K (1989)
Three Questions You Need to Ask About Your Brand, Harvard
Business Review, 80 (9), 80-86 Kevin Lane Keller, Brian Sternthal, and
Alice Tybout (2002)
New Brands Versus Brand Extensions, Attitudes Versus Choice:
Experimental Evidence for Theory and Practice, Marketing Letters, 12
(1), 75-90. Michael McCarthy, Timothy Heath, and Sandra Milberg (2001)
The Effects of Brand Extensions on Market Share and Advertising
Efficiency, Journal of Marketing Research (JMR), 29 (3), 296-313.
Daniel C Smith and C. Whan Park (1992)
entrant advantage dissolving away. essential considerations in mind
Sonys electronic Reader was when planning the launch:
launched before Amazons Kindle, l Should the launch come under
but it was Kindle that eventually an existing brand or under an
won the day with a 2010 market entirely new brand name?
share of 28% compared with Sony l Get the positioning and image
Readers 1%. By contrast, the best right by building appropriate
positioning strategy for a follower associations and establishing a
is to strive to be perceptually clear frame of reference, credible
different from the pioneer, instead points of parity and compelling
of merely imitating it. This seems points of difference.
to be the case with smartphones l Once this has been done,
based on Googles Android brand managers must build brand
platform, such as HTC Desire, awareness and gain perceptual
which successfully challenge prominence or difference in
iPhones position in the market customers minds.
based on features including the These principles should help
richness of free apps, the superior ensure a successful launch and
browsing experience and lay the groundwork for long-
increased opportunities for term competitive advantage
phone personalisation. and a strong position in the
Any brand launch must be marketplace.
planned carefully and managed
strategically. To increase their more on launching
chances of success, brand a brand at
managers should have three www.warc.com