MG412 Principles of Marketing

CW2 Brand extension report

A business idea of the Haagen-Dazs energy drink

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Executive summary

Aim

This study aims to evaluate the concept and strategies of brand extension with the help of a

US-based ice cream company known as Haagen-Dazs, which will launch its energy drink in

the market.

Methodology

Secondary research methodology has been followed in order to provide authentic market

related and company-related information in the study.

Result

Haagen-Dazs has been focused on health-conscious and gym involved customers by its

organic and healthy energy drinks in the market. In addition, the study has also found that the

product development strategy of the company will eventually help to make growth with the

new category of product.

Conclusion

The financial strength of Red Bull and Lucozade is to be tackled by Haagen-Dazs with the

help of marketing activities and an effective pricing strategy in order to increase the

competitive advantage of the company.

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Table of Contents
Introduction................................................................................................................................4

Methodology..............................................................................................................................4

Findings......................................................................................................................................5

Existing brand and the brand values......................................................................................5

Target market description......................................................................................................6

Evaluation of the new market segment..................................................................................7

Description of the new product category...............................................................................8

Competition in the market......................................................................................................8

Conclusion..................................................................................................................................9

References................................................................................................................................10

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Introduction

Brand extension is an effective kind of profit-generating strategy, which refers to introducing

a new product in the market with the help of the existing brand reputation and value of the

company. This report aims to evaluate the brand extension strategy of a reputed US-based

frozen food and beverage providing company known as Haagen-Dazs in the market of energy

drinks. In the process of analysing the strategic implementations of the company, existing

brand value, target market, and customer segmentation will be described for the company in

the industry of food products. The report will also include external environmental analysis

using PESTLE analysis, which is an effective strategic tool, and Ansoff matrix will also be

described in order to determine the type of strategy that the company needs to follow in

introducing energy drinks in the market of the UK.

Company overview

Haagen-Dazs is a frozen dessert providing US-based multinational company that delivers its

wide range of products, including premium-quality ice creams and sorbets of different

flavours in 48 countries across the world since 1960 (Haagen-Dazs, 2022). Luxury ice creams

made of organic and premium ingredients are the significance of the company, which make

Haagen-Dazs different from other brands in the market of food and beverage products. 221.9

million dollars of revenue in a year represents the reputation of the company in the market,

which has helped in introducing a new product category of energy drinks by following the

brand extension strategy (D&B, 2022).

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Methodology

In order to maintain the authenticity of the information provided in this study, secondary

research has been selected, which includes company websites, journal articles, and e-

newspaper articles that provides effective and verified information. The journal articles play

the role of verifying the brand extension strategies described in the study, and the annual

report of Haagen-Dazs and other companies help in external business analysis effectively.

Findings

Existing brand and the brand values

Brand value is defined as the economic worth of an organisation, which helps to identify the

opportunities related to brand extension with a new product category in the market along with

the chances of making a profit (Leitão & Baptista, 2019). Haagen-Dazs is a reputed frozen

dessert brand that has captured 8.4% of the market share in the US, and 22% of global market

shares is acquired by the ice cream company significantly (Statista, 2022). In order to

determine the identity of the brand in the new product category, Kapferer's brand identity

prism model has been selected for Haagen-Dazs in the segment of energy drink.

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 Figure 1: Kapferer's Brand Identity Prism; Source: (Tőkés, 2020)

Kapferer's brand identity prism includes externalisation and internalisation factors in terms of

physique, personality, culture, relationship, and other various factors, which are to be

identified for a brand (Tőkés, 2020). It has been found that Haagen-Dazs energy will change

the relationship with the customers and culture of the company in the market with its new

product category launch.

Target market description

Target market refers to the evaluation of the group of customers in the market with the help

of customer segmentation and targeting the customers who will be attracted by the launch of

a new product category in the brand extension strategy. In the process of the target market of

Haagen-Dazs, patents and attractive logo has have helped to establish the brand value and

target the customers by attracting them (del Barrio-García & Prados-Peña, 2019).

Customer demographics are selected as the optimum way of targeting the customers in the

market, which includes identifying the customer requirements in terms of taste, health

consciousness, and focus on fitness. It has been found that around 54% of men and women in

the UK are attracted towards physical health along with doing gym activities, which are to be

targeted by Haagen-Dazs energy drink (Ukactive, 2022). In terms of positioning of the

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brand, the energy drink of Haagen-Dazs will be selecting high quality and lower pricing in

the market to attract customers.

Figure 2: Brand positioning; Source: Author

Evaluation of the new market segment

PESTLE analysis

Factor Description

Political The free trade agreement of the government of the UK helps to support

the international import and export of the products by Haagen-Dazs.

Economic Lack of consumer buying power due to the reduction of GDO by 9.8%

in the UK will prevent from getting the desired amount of revenue

(Worldbank, 2022).

Social 50-55% of the people are gym oriented in the UK, who is attracted

towards organic and healthy energy drinks.

Technological The trend of e-commerce technology will be beneficial for Haagen-Dazs

to efficiently distribute the products to the doorstep of the customers

Legal The Consumer Rights Act (2015) monitors the quality of the ingredients

used in food products, which should be maintained by Haagen-Dazs

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 (Gov, 2022).

Environmental The environmental protection act (1990) refers to reducing and

monitoring the waste materials of an organisation, which should also be

followed by the company in brand extension strategy (GOV, 2022).

Ansoff matrix

Ansoff matrix is an effective kind of strategic tool used in brand extension strategy that helps

to identify the category of brand extension, including four different categories, such as

market penetration, market development, product development, and diversification (Eckardt,

2018).

Figure 3: Ansoff Matrix; Source: (Eckardt, 2018)

According to the Ansoff matrix, the energy drink of Haagen-Dazs falls under the category of

product development as it refers to launching a new product category in the existing market

of food and beverages in the UK by the company.

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Description of the new product category

The energy drink provided by Haagen-Dazs will be made of organic ingredients, less

chemical regarding artificial sugar and flavour, and no added colours. These factors will help

to attract health-conscious customers in the market with attractive eco-friendly packaging

associated with attractive colours of the cans.

Competition in the market

The major competitors of Haagen-Dazs in the product segment of energy drinks will be Red

Bull and Lucozade, which are the reputed companies in the UK as well as other countries

across the world. Branding strength of 256 million dollars and 361 million dollars

respectively represent the strength of the competitors in the market that should be concerned

by Haagen-Dazs.

Conclusion

It is concluded that having a marginal competitive advantage against Red Bull and Lucozade

might create a threat for Haagen-Dazs, which allows the company to focus on marketing

activities, pricing, and promotional activities in order to increase its strength. However, the

large group of targeted customers will help the company to gain profit by gradually satisfying

the customers with its organic and healthy energy drinks in the market significantly.

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References

D&B, 2022. Haagen-Dazs Ice Cream Company Profile | Miami Beach, FL. [Online]

Available at: https://www.dnb.com/business-directory/company-profiles.haagen-

dazs_ice_cream.a8ac094cd369dcc6628e8c734b516deb.html

[Accessed 12 January 2022].

del Barrio-García, S. & Prados-Peña, M., 2019. Do brand authenticity and brand credibility

facilitate brand equity? The case of heritage destination brand extension. Journal of

Destination Marketing & Management, 13(2), pp. 10-23,DOI-10.1016/j.jdmm.2019.05.002.

Eckardt, O., 2018. Company Maturity Matrix. EMAJ: Emerging Markets Journal, 8(1), pp.

28-30.

Haagen-Dazs, 2022. About Us. [Online]

Available at: https://www.icecream.com/us/en/brands/haagen-dazs/about/our-history

[Accessed 12 January 2022].

Leitão, J. & Baptista, J., 2019. Intellectual capital assets and brand value of English football

clubs. International Journal of Sport Management and Marketing, 19(1-2), pp. 8-34; DOI:

10.1504/IJSMM.2019.097002.

Statista, 2022. Market share leading ice cream brands U.S., 2017 | Statista. [Online]

Available at: https://www.statista.com/statistics/255060/market-share-of-the-leading-ice-

cream-brands-in-the-united-states/

[Accessed 12 January 2022].

Tőkés, G., 2020. Methodological Framework for the Analysis of Brand Identity Construction.

Journal of Media Research-Revista de Studii Media, 13(36), pp. 22-40.

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Ukactive, 2022. How lockdown has affected the gender gap in activity levels. [Online]

Available at: https://www.ukactive.com/news/how-lockdown-has-affected-the-gender-gap-in-

activity-levels/#:~:text=Women%20make%20up%2054%25%20of,yoga%20(ukactive%2C

%202020).

[Accessed 12 January 2022].

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