INTRODUCING AND NAMING NEW

PRODUCTS AND BRAND

EXTENSIONS
 Leverage the Brand
• Firms are seeking to build “power” or “mega”
brands that establish a broad market
footprint, appealing to multiple customer
segments with multiple products all
underneath the brand umbrella.
Ansoff’s Growth Share Matrix
Current New
Products Products

Current Market Product

penetration development
Markets
strategy strategy
New Market Diversification
development strategy
Markets
strategy
 Branding strategies and opportunities for growth

• Launch a new brand in an existing product category –

Flanker brand
• Launch a new brand in a new product category – New
product
• Launch an existing brand in an existing product category
– Line extension
• Launch an existing brand name in a new product
category – Category extension/ Franchise extension/
Brand extension
 Effect of brand extension

Brand strategy
Synergies with Higher probability
Brand extension established brand of success
vs. individual
brands
 Why Line extension?
• Diversity of customers
• Customers’ need for variety
• Pricing breadth
• Capacity utilization
• Increasing profitability
• Competitive reasons
• Trade demands
• Counter competition
• Image benefits
 Types of line extensions

Line Extension

Horizontal line Vertical line

extension extension

Upscale Downscale
extension extension
 Why category/brand extension
• To capitalize on the brand equity that has been built
over a period of time
• Less money needs to be invested in comparison to an
individual brand
• To capture opportunities in the market
• Enhances appeal of the brand
• Fewer brands need to be managed in the portfolio
• Advertising efficiencies are increased.
 Types of category extensions
• A category-related extension is when an organization
launches a brand related to the same category as the
parent brand.
• Image-related brand extension is when the company
leverages its image to launch new products.
• An unrelated extension is when a company launches a
brand in a product category that is entirely new.
 Advantages of Extensions

• Facilitate new product acceptance

– Improve brand image
– Reduce risk perceived by customers
– Increase the probability of gaining distribution and
trial
– Increase efficiency of promotional expenditures
– Reduce costs of introductory and follow-up
marketing programs
– Avoid cost of developing a new brand
– Allow for packaging and labeling efficiencies
– Permit consumer variety seeking
 Advantages of Extensions (Cont.)
• Provide feedback benefits to parent brand
– Clarify brand meaning
– Enhance the parent brand image
– Bring new customers into brand franchise and
increase market coverage
– Revitalize the brand
– Permit subsequent extensions
 Disadvantages of Extensions
• Can confuse or frustrate consumers
• Can encounter retailer resistance
• Can fail and hurt parent brand image
• Can succeed but cannibalize sales of parent brand
• Can succeed but diminish identification with any one
category
• Can succeed but hurt the image of the parent brand
• Can dilute brand meaning
• Can cause the company to forgo the chance to
develop a new brand
 Brand stretching
• The terms stretching and extension are often used
interchangeably.
• However, some have delineated extension as the
addition of product variants or new products under
the established brand name in the same product field
as the established brand. On the other hand,
stretching refers to a brand in a new product field.
 Factors supporting brand stretch
• Awareness and reputation of the parent brand
• Applicability of the brand essence
• Expertise and know-how
• Consumers’ perception of the difficulty to
manufacture the new brand
• Offering complementary products
• Filling a market gap
 Factors against brand stretch
• Inappropriate association between the
parent brand and new brand
• Wrong associations between parent and new
brand
• Consumers’ perception of the organization
 Brand extension decision: An analysis
• A brand is an organizational asset built painstakingly
over a period of time.
• This calls for a careful evaluation of the brand
extension strategy and managers should take a call as
to when to protect the brand name and when to
exploit it.
• This requires a careful understanding of the various
advantages and pitfalls associated with using an
established brand name to launch a new product in
the market.
 Critical factors for Brand extension success

Relationship between
Parent Brand
Parent and extended
characteristics
brand
•Quality of product
•Perceptual Fit
•Conviction of parent brand
•Benefit transfer
•Experience with parent
brand
Brand extension
success

Extended brand Retailer acceptance

•Marketing support of the extended
•Competitive leverage brand
Understanding How Customers Evaluate Brand Extensions

• Managerial assumptions
– Consumers have some awareness of and positive
associations about the brand in memory
– At least some of these positive associations are
evoked by the brand extension
– Negative associations are not transferred from
the parent brand
– Negative associations are not created by the
brand extension
Launching a brand extension
Brand to be extended by the organization
For example Amul
Stage 1
Identify the associations with the brand name
Stage 2 (example Amul – associated with quality milk products)

Definitions for each association*

•

Stage 3
Butter Milk drinks Fresh milk Powdered milk Cheese
Pizza Curd Ice-cream Sweets

Related categories are identified for each definition*

Stage 4 For example, cheese: processed cheese, cottage cheese,
cheese spreads, mozzarella cheese etc.

Stage 5 Selecting the ‘candidate product’

Stage 6 Launching the brand extension

 Creating Extension Equity
1. Salience of parent brand associations in the
minds of consumers in the extension context
2. Favorability of any inferred associations in
the extension context
3. Uniqueness of any inferred associations in
the extension context
 Contributing to Parent Brand Equity
• How compelling the evidence is concerning
the corresponding attribute or benefit
association in the extension context
• How relevant or diagnostic the extension
evidence is concerning the attribute or benefit
for the parent brand
• How consistent the extension evidence is with
the corresponding parent brand associations
• How strong existing attribute or benefit
associations are held in consumer memory for
the parent brand
 Successful Extensions
• Must create points-of-parity and points-of-
difference in extension category
– Must recognize competitive reactions
• Must enhance points-of-parity and points-of-
difference of parent brand
• Must maximize the advantages and minimize
the disadvantages of brand extensions