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TERM PAPER OF PRODUCT AND BRAND MANAGEMENT

TOPIC: BRAND EXTENSION OPPORTUNITIES AND EXPLORATION INCLUDING MARKETING PAROGRAM AND ITS EFFECT ON PARENT BRAND EQUITY OF PONDS
Submitted to: (LOVELY INSTITUTE OF MANAGEMENT) (Session 2009-2011) Date- 12 Nov 2010 Submitted to: Mr. Krishan Gopal 22 Reg. No.10904478 Submitted By: Suman Tiwari Roll No. RT1902A-

Contents
Contents..................................................................................................................... 2 ACKNOWLEDGEMENT.................................................................................................3 INTRODUCTION TO THE BRAND:................................................................................4 GROWTH STRATEGY...................................................................................................6 COMPETITORS............................................................................................................ 7 BRAND EXTENSION.....................................................................................................8 ESSENTIAL FACTORS THAT IMPACT BRAND EXTENSION SUCCESS...........................10 10 PRINCIPLES OF BRAND EXTENSIONS...................................................................11 TYPES OF BRAND EXTENSIONS.................................................................................12 ADVANTAGES AND DISADVANTAGES OF BRAND EXTENSION STRATEGY.................14 LINE EXTENSION.......................................................................................................18 BRAND EXTENSION OPPORTUNITIES FOR PONDS....................................................19 MARKETING PROGRAM PROCESS FOR EXTENSION...................................................20 EFFECTS OF BRAND EXTENSION ON PARENT BRAND...............................................27 CONCLUSION ................................................................................................................................. 28 REFERENCES............................................................................................................ 29

ACKNOWLEDGEMENT
I would like to confer my heartiest thanks to my coordinator of Product and Brand Management Mr. Krishan Gopal for giving me the opportunity to excel and work in the field of Product and Brand, and especially its practical applications like Brand Extension. While preparing my term paper I got to have an in depth knowledge of practical applications of the theoretical concepts and definitely the things which I have learned will undoubtedly help me in future, to analyze many processes going on in our economy. I would also like to thank all those people who directly or indirectly helped me in accomplishing this project.

Suman Tiwari

INTRODUCTION TO THE BRAND:

HISTORY OF PONDS
Pond's Cream is a brand of beauty and health care products that is produced by the multinational company Unilever. Pond's Cream was invented in the U.S.A as a medicine by scientist Thereon T. Pond (1852) in 1846. He discovered he could heal small cuts and other ailments. Soon after, the product would be known as Pond's Extract. In 1849, the "T.T. Pond Company" was formed, with Pond and other business people as investors. Theron Pond's health was failing, however, so he sold his portion of the company soon after, and he died in 1852. The company then moved to Connecticut and later to New York City. In 1886, Pond's began to advertise nationally. They would, however, advertise under the name of Pond's Healing until 1910. By the twentieth century, the company's main strategy was geared towards selling cosmetics products, and so the "Pond's Vanishing Cream" and the "Pond's Cold Cream" were created, marking the entrance of Pond's products into the facial care industry. Today Ponds is sold around the world. Its strengths are in Spain, Japan and Thailand.

PORTFOLIO OF PRODUCTS OF THE BRAND


Original Clean Micro dermabrasion
Cold cream Dry skin cream Fresh start

Pinkish-White Glow - Lightening Cream Pinkish-White Glow Lightening Lotion Ponds White Beauty Skin Lightening Facial Foam Ponds white Beauty detox Toner Anti - Spot Intensive Whitening Serum
Ponds Flawless White Anti-Spot Intensive Whitening Serum

Ponds Flawless White Visible Lightening Daily Cream Ponds Flawless White Vitamin Soak Lightening Mask

Ponds Flawless White Visible Lightening Daily Lotion

GROWTH STRATEGY

The Company is operating in premium product segment so it is targeting particularly premium customers who are ready to pay for quality.

The Company is widening its product range under Ponds brand. The Company has been engaging in building brand loyalty by various promotional programmes.
The company has good research and development centre in place which is constantly

trying to innovate new products.


The company has developed new products under the brand for anti-ageing, moisturizing,

and skin lightning.

MARKET SHARE

From the above graph, it is clearly visible that ponds Market share is considerably higher than its nearest competitors.brand commands market leadership which is an advantage for company in Fixing price of the different product under this brand.

COMPETITORS
PARTICULAR PONDS LOREAL AMWAY

BRAND LOYALITY

Very high

high

High

PRODUCTLINE

Broad

broad

Broad

TARGET CUSTOMERS

Vast

concentrated

concentrated

PRESENCE

Vast

concentrated

concentrated

BRAND SEGAMENT

Premium

premium

Premium

SATISFACTION

Very high

Moderate to high

moderate

BRAND EXTENSION
INTRODUCTION TO BRAND EXTENSION
Brand extension strategies are used largely by companies because they believed that the brand extension strengthens the brand positioning improves the brand awareness and enhances the quality associations and increases the trial rate by reducing the perceived risk involved in the new product. In India it is reported that more than 80% of new products additions are using brand extensions strategies. A brand extension into same product and new product category enhances and improves their market share and brand equity in the long run (Lane Jacobson 1995). New products are getting relatively easy acceptance among the target audience. A good brand association reduces the chances of failure of new product launch. Though, brand extension strategies tasted success in the past, still brand extension success is uncertain. According to a research carried out by Ernest &Young and Nielsen (1999) in the field of FMCG brand extensions in European countries, reveal that there is a failure rate of around 80%. Moreover, unsuccessful brand extensions can harm the parent brand, which can result in substantial, loses of brand equity.
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The success or failure of brand extensions is vastly dependent on how the customers evaluate the brand extensions (Klink and Smith 2001). Companies are taking hard steps to improve the success rate of brand extensions. Theoretical and managerial understanding of how a consumer evaluates the brand extensions is given substantial importance. In order to improve the success rate of brand extensions it is imperative to understand the parameters or factors affecting the brand extensions evaluations. Moreover, companies need to understand the significance of these factors and their relative importance to develop a right brand extensions strategy. Product extensions are versions of the same parent product that serve a segment of the target market and increase the variety of an offering. An example of a product extension is Coke vs. Diet Coke in same product category of soft drinks. This tactic is undertaken due to the brand loyalty and brand awareness they enjoy consumers are more likely to buy a new product that has a tried and trusted brand name on it. This means the market is catered for as they are receiving a product from a brand they trust and Coca Cola is catered for as they can increase their product portfolio and they have a larger hold over the market in which they are performing in.

MEANING OF BRAND EXTENSION


Brand extension is using the leverage of a well known brand name in one category to launch a new product in a different category. Brand extension is a marketing strategy in which a firm that markets a product with a welldeveloped image uses the same brand name but in a different product category. Brands use this as a strategy to increase and leverage equity. o It is a new product. o It should use a well known brand. o The brand should have leverage with customers of the new category. A successful brand helps a company enter new product categories more easily. Brand extension refers to the corporate activity whereby companies introduce new products, new product variants or product improvements by leveraging the brand equity of the existing parent brand. Brand extension or brand stretching is a marketing strategy in which a firm marketing a product with a well-developed image uses the same brand name in a different product category. FOR EXAMPLE When Starbucks decided to launch its line of bottled cold coffee called Frappucino (a mixture of coffee, water, milk and different syrups), the logic used was to leverage the very strong equity of the Starbucks brand in gaining wide spread acceptance for the new product line.

As such, brand extension is a type of short cut that companies resort to, to minimize risk and maximize their investment in the brand. But more often than not, brand extensions fail. The simple reason for such failure is that the equity of the parent brand is one of the many factors that impact the success of brand extensions. Much has been researched on the success factors of brand extensions in the industry and in academia. Knowledge from the collective wisdom of the industry, best practices of some of the biggest brands and empirical evidence from research is used to present some guidelines on brand extensions to companies. 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).

ESSENTIAL FACTORS THAT IMPACT BRAND EXTENSION SUCCESS


1. Fit between parent brand and brand extension The fit between the parent brand and the brand extension is probably the most important factor that impacts the success of the brand extension. Fit can be analyzed from multiple perspectives. But generally fit refers to the compatibility of the brand extensions product category, product attributes and associations to the parent brands product category, product attributes and associations. Greater the fit between the parent brand and the brand extensions, higher is the probability of the success of the brand extension. 2. Parent brand conviction and parent-brand experience The other important factor the influences the success of the brand extension is the quality of experience that consumers would have had with the parent brand. Such brand experience can include the physical quality of the product, the service encounters, the price and value perceptions, the post purchase service, the retail atmosphere and such. Also, the parent brand conviction, which refers to the extent of support and commitment the parent brand has towards the brand extension, also impacts the
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success of the brand extension. 3. Retailer experience In spite of the ever increasing influence of the Internet on shopping of even the branded products, retail spaces in the physical world still continues to have a stranglehold on distribution. As such, the successful- Brand Extension Success New profit growth Martin cess of many brands is contingent on securing shelf space and the marketing push provided by the retail establishment. Similar is the case with brand extensions. If companies that extend their brands are not welcomed by retail stores and are not offered marketing support and push by the retail stores, then the success of such products are limited.

4. Marketing support This is one of the important factors that determine the success of brand extension that is under the control of the company. Given the proliferation of brands in the market, it is only natural that the company that invests highly in promoting its brand extension eventually ends up in a better position. Such support will help achieve two objectives one, it will facilitate a very aggressive push and pull demand for the brand extension and two, it will help create positive perceptions about the company in the minds of the consumers.

10 PRINCIPLES OF BRAND EXTENSIONS


1. Brands should not be extended unless they are well-known, have high awareness and a good reputation among the new target market. 2. Brand extensions must be a logical fit with consumers expectations. 3. Brand extensions must have leverage in the new category a transfer to the new product of a distinctive property associated with the parent brand that gives the brand extension an edge in the new category. The test: Just knowing the brand name, customers of the new category should be able to identify a reason why they might prefer the new brand extension to existing competition. 4. Brand extensions that could create confusion or a negative image for the parent should not be undertaken. 5. Brands that consumers use synonymously with a category (generic) should not be extended to other categories 6. Brands should not be stretched to too many diverse categories risking dilution in the long run.
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7. Brand extensions that will not create positive synergy for the parent brand should not be pursued. 8. Brand extensions must make business sense. 9. Every brand extension should open a category for the firm. The whole point of brand extension is to efficiently and successfully enter a new category. 10. A critical part of every brand extension research study is developing a brand plan. Short and long term possibilities should be identified up-front.

TYPES OF BRAND EXTENSIONS


1. Similar product in a different form from the original parent product: This is where a company changes the form of the product from the original parent product. An example is (frozen) Snickers Ice Cream Bars. The original Snickers bar is a shelf stable candy. The brand extension is a similar product, but in a different form. Jell-O Portable Pudding and Pudding Cups is Jell-O pudding in a different form and section of the store. 2. Distinctive flavor/ingredient/component in the new item: When a brand owns a flavor, ingredient or component, there may be other categories where consumers want that property. 3. Benefit/attribute/feature owned: Many brands own a benefit, attribute or feature that can be extended. Brand Extension Research showed Armor All that that brand was defined by automotive surface protection which can go beyond vinyl dressing. Paint needs protecting also. Arm & Hammer owns a benefit of deodorizing. Their baking soda product has claimed that it removes odors from refrigerators, etc. As a result, they extended the brand into other products such as Arm & Hammer underarm deodorant and cat litter deodorizer. 4. Expertise: Over time, certain brands may gain a reputation for having an expertise in a given area. Leverage can be achieved when extending into areas where this special expertise is deemed important. Hondas expertise in reliable engines led to lawn mowers, gas powered generators and a variety of other gasoline engine powered devices. 5. Companion product: Some brand extensions are a natural companion to the products the company already makes. Colgate Dental Cream and Colgate Tooth Brush.
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Gillette Razors, Shave Foams, after shaves. 6. Vertical extension: Some brand extensions are vertical extensions of what they currently offer. A brand can use their ingredient/component heritage to launch products in a more (or sometimes less) finished form. 7. Same customer base: Many brand extensions represent a marketers effort to sell something else to its customer base. This works particularly well when that customer base is large and to some extent captive. VISA launched travelers checks directed to its credit card customers. 8. Designer image/status: Certain brands convey status and hence create an image for the user. A notable success is Harley Davidson. Their extensive collection of licensed lifestyle items goes way beyond any expertise inherent in the brand.

BRAND EXTENSION BENEFITS:


Brand extensions let a marketer take a brand with well-known quality perceptions and associations and put it on a brand in a new category. Consumers who favorably evaluate a parent brand are more willing to try and adopt the brand extension than an unfamiliar brand in the same category. Identify logical new product possibilities. Capitalize on the paid-for equity in established brand names. Enable a company to enter new categories at significantly lower cost. Reduce the risk of failure given the already established awareness and trust Create a positive synergistic effect with the efficiencies of umbrella branding and advertising. Reinforce the consumers perceptions of the parent brand name. Bring news to existing brands when there is otherwise nothing new to say about them. Brand extensions can also help consumers understand the core meaning of the brand name.

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ADVANTAGES AND DISADVANTAGES OF BRAND EXTENSION STRATEGY


According to David Taylor, this strategy of brand extension is popular because it is less risky and cheaper compared to the creation of a new brand (Leslie de Chaternatony and Malcolm McDonald point the same economical advantage by indicating that .The economics of establishing new brands are pushing companies more towards stretching their existing name into new markets. ADVANTAGES OF BRAND EXTENSION STRATEGY ARE:1. Consumer knowledge: The remaining strong brand used to promote a new product makes it less critical to create awareness and imagery. The association with the main brand is already done and the main task is communicating the specific benefits of the new Innovation Taylor. 2. Consumer trust: The existing well-known-strong brands represent a promise of quality, useful features etc. - for the consumer. Thus, the extension will benefit from this fame and this good opinion about the brand to create a compelling value proposition in a new segment or markets Taylor. A satisfied customer by an extension will be more willing to repurchase the same brand. For example in the sport field, a customer will more likely prefer a brand offering a complete equipment-shoes, outfit and accessories. 3. Lower cost : compared to launching a new brand, brand extension strategy is cheaper especially because the new product use the name of an already well-known brand, the advertisement budget for brand extension are smaller than for new brands. 4. Enhancement of brand visibility: when a brand appears in another field it can be a more effective and efficient brand-building approach than spending money on advertising. The relationship with loyal customers will be strengthen because they will use the brand in another context and it is expected as well that they will prefer this brand to the competitors one. 5. Provide a source of energy for a brand: The brand image-especially when the brand is a bit tired- is expected to be reinforced by the extension. Indeed, this latter gives energy to the brand because it increases the frequency with which the brand is associated with good quality, innovations and large range of products. In addition, the customer sees the brand name more often and it can strengthen his idea that it is a good one. 6. Defensive strategy: An extension can prevent competitors from gaining or exploiting a foothold in the market and can be worthwhile even though it might struggle.

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For e.g. - Microsoft for instance has decided to operate in different areas with the aim of limiting the ability of competitors to encroach on core business areas.

DISADVANTAGES OF BRAND EXTENSION STRATEGY ARE:1. Dilution of the existing brand image: The extensions are using the most important asset of the company that i.e. its brand name. It can be a major advantage for the extension but it represents as well a huge risk for the existing brand because the brand image can be diluted. Park, McCarthy & Milberg, that those positive and negative consequences are reciprocity effects and defined as a change in the initial customers behaviour regarding the brand, after an extension. A brand extension can damage the brand. A dilution of the brand capital can happen by the occurrence of undesirable associations or by the weakening of the existing associations. Indeed, an accident occurring with a product can lead to tarnish the image of the brand. In addition, it is sometimes difficult to associate one brand to two products without weakening the brand position in the customers mind. Aaker said that when a brand benefits are ensure by the fact that it is not for or available to everyone, doing too much extensions could reduce this image of brand selectivity. He takes the example of the overuse of the name Gucci at one moment there were 14,000 products Gucci- was a part of the factors leading to the fall of that brand. 2. Cannibalization: Aaker states that the extensions can cannibalize the existing products of the brand when there are positioned in a close market. It means the extensions sales are increasing while those of the existing brands products are following the Opposite curved. Aaker underlines that these good sales figures for the extensions cannot compensate the damage produced to the original brands equity.

How to pick the Right Brand Extensions:


A 4 Step Process Step 1: Develop the Brand Extension Strategy Step 2: Explore the Problem and Opportunity Areas Step 3: Generate Brand Based New Product Ideas Step 4: Develop Brand-Based Concepts and conduct Business Analysis

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STRESS ON THE BRAND THROUGH EXTENSIONS 1. Type of the brand and ability to extend.

2. Under and over exploitation of a brand capital.

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3. Perimeters of the brand extension using Ponds example

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LINE EXTENSION
Line Extension is the simplest form of Brand Extension. The idea is to make some addition to the line and cater to the different segments of users of the product. In Line Extension the key criteria are whether the core strengths of the parent brands can be leveraged for the new items.

Advantages of Line Extension


Line Extension helps strengthen brand power and keep the brand live, modern and contemporary.
Changing consumer tastes can be accommodated through Line Extensions. Reduces risk associated with new product introduction. Line extensions provide a convenient route for infusing new values into an ongoing

brand and gaining presence in new market. CATEGORY EXTENSION Here, the brand name is extended over different products, but the products are related in some way. In other words they belong to a category. The Maggi example cited earlier fits this description. Dettol can be cited as another example.

LINE AND CATEGORY EXTENSION BY PONDS


Ponds dream flower talc Ponds dream flower talc magic

Ponds sandal talc Ponds cold wash Ponds face wash Ponds cold cream
Ponds moisturizing lotion Ponds dream flower moisturizing body lotion.

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BRAND EXTENSION OPPORTUNITIES FOR PONDS


Started off with creams The evolution of skin care market gave them an opportunity to stretch into: Talcum powder Lotion Face wash Black head remover strips

All in line with USP- skin care Fair and Lovely could not so easily extend the brand

EXTENSIONS

Lotion greatest potential with 15-20% growth Face wash 40% penetration Talcum Powder- high growth because of climate Black head removing strips

FUTURE BRAND EXTENSION OPPORTUNITIES OF PONDS


1. Beauty Soaps: Ponds as an established skin care brand have an opportunity to expand

itself in the field of beauty soaps. Many other established brands like Dove, Emami, have been successful with such extension in their product portfolio. Ponds also have a benefit of its umbrella brand of Hindustan Unilever Limited for marketing their products.

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2. Perfumes/ Deodorants: Ponds can also enter into the category of body sprays like

perfumes and deodorants. Pond products are well known for its fragrance. They have a nice opportunity to establish as a brand through extension into the category of body sprays.
3. Hair Care: Brands like Emami, godrej; Bajaj, Dove, LOreal, Lakme, etc are some

examples of brands that have been successful in extension of their brand in the category of hair care products.

4. Mens Skin Care: Brands like Emami, Fair and Lovely, Zirh, Neveia, garnier, etc are

some examples of brands that have succeeded in extension of their brand in the category of mens skin care. It is a new concept in the market with limited number of established competitors. So, Ponds have a great opportunity to target this new segment of market by focusing on mens skin care products.

MARKETING PROGRAM PROCESS FOR EXTENSION


The marketing strategy analysis, planning, implementation and management process is described in Figure 1.1. The strategic situation analysis considers market and competitor analysis, market segmentation, and continuous learning about markets. Designing marketing strategy examines customer targeting and positioning strategies, marketing relationship strategies and planning for new products. Marketing program development consists of product, distribution, price, and promotion strategies designed and implemented to meet the value requirements of targeted buyers. Strategy implementation and management consider organizational design and marketing strategy implementation and control.

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Strategic situation analysis Implementing and managing marketing strategy

Designing marketing strategy

Marketing program developme nt

Figure 1.1 Marketing Strategy Process

STRATEGIC SITUATION ANALYSIS

Marketing management uses the information provided by the situation analysis to guide the design of a new strategy or change an existing strategy. The situation analysis is conducted on a regular basis after the strategy is under way to evaluate strategy performance and identify needed strategy changes.

Market Vision, Structure, and Analysis: Markets need to be defined so that


buyers and competition can be analyzed.

For a market to exist there must be

(1) People with particular needs and wants and one or more products that can satisfy buyers needs, and (2) Buyers willing and able to purchase a product that satisfies their needs and wants.

A product-market consists of a specific product (or line of related products) that can satisfy a set of needs and wants for the people (or organizations) willing and able to

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purchase it. The term product is used to indicate either a physical good or an intangible service. Analyzing product-markets and forecasting how they will change in the future are vital to business and marketing planning. Decisions to enter new product-markets, how to serve existing product-markets, and when to exist in unattractive product-markets are critical strategic choices. The objective is to identify and describe the buyers, understand their preferences for products, estimate the size and rate of growth of the market, and find out what companies and products are competing in the market. Evaluation of competitors strategies, strengths, limitations and plans is also a key aspect of the situation analysis. It is important to identify both existing and potential competitors. Competitor analysis includes evaluating each key competitor. The analyses highlight the competitions important strengths and weaknesses. A key issue is trying to figure out what each competitor is likely to do in future.

Segmenting Markets: Market segmentation looks at the nature and extent of diversity
of buyers needs and wants in a market. It offers an opportunity for an organization to focus in business capabilities on the requirements of one or more groups of buyers. The objective of segmentation is to examine differences in needs and wants and to identify the segments (sub-groups) within the product-market of interest. Each segment contains buyers with similar needs and wants for the product category of interest to management. The segments are described using the various characteristics of people, the reasons that they buy or use certain products, and their preferences for certain brands of products. Likewise, segments of industrial product-markets may be formed according to the type of industry, the uses for the product, frequency of product purchase, and various other factors.

Each segment may vary quite a bit from the average characteristics of the entire productmarket. The similarities of buyers needs within a segment enable better targeting of the organizations capabilities to buyers with corresponding value requirements.

Continuous Learning about Markets: One of the major realities of achieving


business success today is the necessity of understanding markets and competition. Sensing what is happening and is likely to occur in the future is complicated by competitive threats that may exist beyond traditional industry boundaries. For example, CD-ROMs compete with books.

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DESIGNING MARKET- DRIVEN STRATEGIES


The strategic situation analysis phase of the marketing strategy process identifies market opportunities, defines market segments, evaluates competition, and assesses the organizations strengths and weaknesses. Market sensing information plays a key role in designing marketing strategy, which includes market targeting and positioning strategies, building marketing relationships, and developing and introducing new products.

Market Targeting and Strategic Positioning: Marketing advantage is


influenced by several situational factors including industry characteristics, type of firm (e.g., size), extent of differentiation in buyers needs, and the specific competitive advantage(s) of the company designing the marketing strategy. The core issue is deciding how, when, and where to compete, given a firms market and competitive environment.

The purpose of the marketing targeting strategy is to select the people (or organizations) that management wishes to serve in the product-market. When buyers needs and wants vary, the market target is usually one or more segments of the product-market. Once the segments are identified and their relative importance to the firm determined, the targeting strategy is selected. The objective is to find the best match between the value requirements of each segment and the organizations distinctive capabilities. The targeting decision is the focal point of marketing strategy since targeting guides the setting of objectives and developing a positioning strategy. The options range from targeting most of the segments to targeting one or few segments in a product-market. The targeting strategy may be influenced by the markets maturity , the diversity of buyers needs and preferences, the firms size compared to competition, corporate resources and priorities, and the volume of sales required to achieve favorable financial results. Deciding the objectives for each market target spells out the results expected by management. Examples of market target objectives are desired levels of sales, market share, customer retention, profit contribution, and customer satisfaction. Marketing objectives may also be set for the entire business unit and for specific marketing activities such as advertising. The marketing program positioning strategy is the combination of product, value-chain, price, and promotion strategies a firm uses to position itself against its key competitors in meeting the needs and wants of the market target, the strategies and tactics used to gain a favorable position are called the marketing mix or the marketing program.

Marketing Relationship Strategies: Marketing relationship partners may include


end user customers, marketing channel members, suppliers, competitor alliances, and internal teams. The driving force underlying these relationships is that a company may
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enhance its ability to satisfy customers and cope with a rapidly changing business environment through collaboration of the parties involved. Relationship strategies gained new importance in the last decade as customers became more demanding and competition became more intense. Building long-term relationships with customers and value-chain partners offers companies a way to provide superior customer value. Although building collaborative relationships may not always be the best course of action, this avenue for gaining a competitive edge is increasing in popularity. Strategic partnering has become an important strategic initiative for many well known companies and brands. Many firms outsource the manufacturing of their products. Examples include Motorola cell phones, Calvin Klein jeans, Pepsi beverages, and Nike footwear. Strong relationships with outsourcing partners are vital to the success of these powerful brands. The trend of the 21st century is partnering rather than vertical integration.

Planning for New Products: New products are needed to replace old products
because of declining sales and profits. Strategies for developing and positioning new market entries involve all functions of the business. Closely coordinated new-product planning is essential to satisfy customer requirements and produce products with high quality at competitive prices. New-product decisions include finding and evaluating ideas, selecting the most promising for development, designing the products, developing marketing programs, use and market testing the products, and introducing them to the market.

The new-product planning process starts by identifying gaps in customer satisfaction. The differences between existing product attributes and those desired by customers offer opportunities for new and improved products.

MARKET PROGRAM DEVELOPMENT


Market targeting and positioning strategies for new and existing products guide the choice of strategies for the marketing program components. Product, distribution, price, and promotion strategies are combined to form the positioning strategy selected for each market target. The relationship of the positioning components to the market target is shown in Figure 1.2. The marketing program (mix) strategies implement the positioning strategy. The objective is to achieve favorable positioning while allocating financial, human, and production resources to markets, customers, and products as effectively and efficiently as possible. Product
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Strategy

Positioning Strategy Promotion Distribution Strategy Market Target Strategy

Price Strategy Figure 1.2 Positioning Strategy Development

Strategic Brand Management: Products (goods and services) often are the focal

point of positioning strategy, particularly when companies or business adopt organizational approaches emphasizing product or brand management. Product strategy includes: (1) developing plans for new products, (2) managing programs for successful products, and (3) deciding what to do about problem products (e.g., reduce costs or improve the product). Strategic brand management consists of building brand value (equity) and managing the organizations portfolio for overall performance.

Value-Chain, Price, and Promotion Strategies: One of the major issues in

managing program is deciding how to integrate the components of the mix. Product, distribution, price, and promotion strategies are shaped into a coordinated plan of action. Each component helps to influence buyers in their positioning of products. If the activities of these mix components are not coordinated, the actions may conflict and resources may be wasted. For example, if the advertising messages for a companys brand stress quality and performance, but salesperson emphasize low price, buyers will be confused and brand damage may occur.

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Market target buyers may be contacted on a direct basis using the firms sales force or by direct marketing contact (e.g., Internet), or instead, through a value-added chain (distribution channel) of marketing intermediaries (e.g., wholesalers, retailers, or dealers). Distribution channels are often used in linking procedures with end user household and business markets. Price also plays an important role in positioning a product or service. Customer reaction to alternative prices, the cost of the product, the prices of the competition and various legal and ethical factors establish the extent of flexibility management has in setting prices. Price strategy involves choosing the role of price in the positioning strategy, including the desired positioning of the product or brand as well as the margins necessary to satisfy and motivate distribution channel participants. Price may be used as an active (visible) component of marketing strategy, or, instead, marketing emphasis may be on other marketing mix components (e.g., product quality). Advertising, sales promotion, the sales force, direct marketing, and public relations help the organization to communicate with its customers, value-chain partners, the public, and other target audiences. These activities make up the promotion strategy, which performs an essential role in communicating the positioning strategy to buyers and other relevant influences. Promotion informs, reminds, and persuades buyers and others who influence the purchasing process.

IMPLEMENTING AND MANAGING MARKET STRATEGY


Selecting customers to target and the positioning strategy for each target moves marketing strategy development to the action stage. This stage considers designing the marketing organization and implementing and managing the strategy.

Designing Effective Market-Driven Organizations: An effective organization

design matches people and work responsibilities in a way that is best for accomplishing the firms marketing strategy. Deciding how to assemble people into organizational units and assign responsibility to the various mix components that make up the marketing strategy are important influences on performance. Organizational structures and processes must be matched to the business and marketing strategies that are developed and implemented. Organizational design needs to be evaluated on a regular basis to assess its adequacy and to identify necessary changes.

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Strategy Implementation and Control: Marketing strategy implementation and

control consist of: (1) preparing the marketing plan and budget; (2) implementing the plan; and (3) using the plan in managing and controlling the strategy on an ongoing basis. The marketing plan includes details concerning targeting, positioning, and marketing mix activities. The plan spells out what is going to happen over the planning period, which is responsible, how much it will cost, and the expected results (e.g., sales forecasts). The marketing plan includes action guidelines for the activities to be implemented, who does what, the dates and location of implementation, and how implementation will be accomplished. Several factors contribute to implementation effectiveness including the skills and commitment of the people involved, organizational design, incentives, and the effectiveness of communication within the organization and externally. Marketing strategy is an ongoing process of making decisions, implementing them, and tracking their effectiveness over time. In terms of its time requirements, strategic evaluation is far more demanding than planning. Evaluation and control are concerned with tracking performance and, when necessary, altering plans to keep performance on track. Evaluation also includes looking for new opportunities and potential threats in the future. It is the concerning link in the strategic marketing planning process as shown in Figure 1.2. By serving as both the last stage and the first stage (evaluation before taking action) in the planning process, strategic evaluation assures that strategy is an ongoing activity.

EFFECTS OF BRAND EXTENSION ON PARENT BRAND


Parent brand equity after the extension is signicantly and positively inuenced by initial parent brand equity and consumers attitude toward the extension. Therefore, it is important for rms to have strong and well-known brands to leverage their value through brand extensions. A similar pattern is found when consumers positively evaluate brand extensions. Some managerial implications can also be drawn from the results. Companies should be careful when deciding to launch an extension, because results show a dilution effect in the parent brand equity. Although a strong brand name does not guarantee the extension success, the type of brand used to launch the extension can play an important role in the result. If a company wants to launch a brand extension, it will be less risky when the brand has strong brand equity. The parent brands initial equity may help to provide a defense against failed brand extensions, thus avoiding brand equity dilution or, at least, diminishing potential negative effects.

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Because consumers prefer extensions that are close to the parent brands core market, launching extensions perceived as similar to the parent brands category will help to improve consumers attitude toward the ex-tension and the nal parent brand equity. Although the similarity between the new category and other products from the original brand is important, the similarity between the image of the parent brand and the extension appears to play a critical role when consumers assess brand extensions. Companies can use marketing mix variables, such as the product design or advertising campaigns, to increase this perceived t. For instance, advertising campaigns used for the extension could emphasize the main parent brand associations, as this would help transfer the positive brand associations from the original brand to the extension. Such campaigns could also lead to a greater exposure to the brand extension, helping consumers to recognize more shared attributes between the original brand and the extension and thus increase the perceived t. One of the most fundamental concerns of marketers in many companies is whether the marketing strategies can be used in different international markets. The results from the categories and countries investigated in this study indicate that consumers respond similarly to brand ex-tensions. Therefore, managers should pay attention to the same factors when they are launching extensions into different markets or countries. However, they should recognize that the relative importance of the determinants of brand extension success could be different. When brand managers decide to grow their brands using brand extension strategies, they are advised to consider the potential effects of unrelated brand extensions. Overall, unrelated brand extensions negatively affect parent brand relationship quality. Brand managers are wise to evaluate their brands from the perspective of the level of relationship quality with customers which considers emotions and feelings and not based just on consumers cognitive evaluation of the brand.

CONCLUSION
As such, brand extension is a type of short cut that companies resort to, to minimize risk and maximize their investment in the brand. But more often than not, brand extensions fail. The simple reason for such failure is that the equity of the parent brand is one of the many factors that impact the success of brand extensions. Much has been researched on the success factors of brand extensions in the industry and in academia. Knowledge from the collective wisdom of the industry, best practices of some of the biggest brands and empirical evidence from research is used to present some guidelines on brand extensions to companies In the light of very high rates of new product failures, brand extension seems very attractive. After all, all companies seek to extract the maximum possible returns from the investment in their brands. Brand extensions done without due diligence can be equally detrimental to
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companies. But if companies carefully study the brand extensions and follow the general guidelines, brand extension success could indeed become a corporate reality. A brand can be, cannot be, can do and cannot do things against its identity. While extensions are the most popular method of growth, extending them wisely with a proper market analysis is very important. Especially today, when the most important agenda for any business is growth -- not just organic growth, but leapfrog growth. Globally, brand extensions and expansions are the most used strategy for growth. Extensions are when a brand or business extends its equity within the same category; while expansion happens when a brand or business ventures outside its core category by extending its core values. In closing, Id like to state that brand extensions are certainly a valid strategic option for a brand manager. Brand extensions are flourishing for a number of reasons. Companies are finding that in many cases, their most valuable asset is not their technology or other tangible assets, but rather their brands, including all the loyalty, emotion, and associative power that they command in the market place. With the right basis of extension, they can offer advantages in terms of getting trade support, reducing barriers to trial, improved media-spend multiplier effects, and so on.

REFERENCES
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2. Sullivan, Mary W., Brand Extensions: When to use them?, Management Science, June

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Journal of Marketing, Jain 1990, pp. 27-41.

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4. Sunde, Lorraine and Brodie, Roderick J. (1993), Consumer Evaluations of Brand Extensions: Further empirical results, International Journal of Marketing Research in Marketing, 10, pp.47-53. 5. Swaminathan, V., R,J. Fox, and S.K, Reddy (2001): The Impact of Brand Extension Introduction on Choice, in: Journal of Marketing, 65 ( October), pp.1-15.
6. Ruyter, Ko de and Wetzels, Martin (2000), The Role of Corporate Image and Extension

Similarity in Service Brand Extensions, Journal of Economic Psychology, 21, pp. 639659. 7. Smith, Daniel C. and Park, C. Whan (1992), The effects of Brand Extensions on Market Share and Advertising Efficiency, Journal of Business Research, 29, pp.296-313.
8. Park, C. Whan, Milberg, Sandra and Lawson, Robert (1991), Evaluation of Brand

Extensions: The Role of Product Feature Similarity and Brand Concept Consistency, Journal of Consumer Research, 18 (September), pp. 185-193.

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