CHAPTER: 12

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Introducing and
Naming New
Products

 
and Brand
Extensions

Strategic Brand Management: Building, Measuring, and Managing Brand Equity, 4e

By Kevin Lane Keller, Ambi M. G. Parameswaran and Isaac Jacob
 Learning Objectives
• Define the different types of brand extensions.

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• List the main advantages and disadvantages of brand
extensions.

• Summarize how consumers evaluate extensions and how

 
extensions contribute to parent brand equity.

• Outline the key assumptions and success criteria for

brand extensions.

Strategic Brand Management: Building, Measuring, and Managing Brand Equity, 4e

By Kevin Lane Keller, Ambi M. G. Parameswaran and Isaac Jacob
New Products and Brand Extensions

Brand extension: When a firm uses an established brand

name to introduce a new product.

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• Line extension: Adds a different variety, a different form
or size, or a different application for the brand.

• Category extension: Marketers apply the parent brand to

 
enter a different product category from the one it currently
serves.

Strategic Brand Management: Building, Measuring, and Managing Brand Equity, 4e

By Kevin Lane Keller, Ambi M. G. Parameswaran and Isaac Jacob
Advantages of Extensions

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Acceptance
Product
New-
Facilitate

 
Brand
the Parent
Benefits to
Feedback
Provide

Strategic Brand Management: Building, Measuring, and Managing Brand Equity, 4e

By Kevin Lane Keller, Ambi M. G. Parameswaran and Isaac Jacob
Facilitate New-Product Acceptance
Increase the
Reduce Risk Probability of
Improve Brand
Perceived by Gaining

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Image
Customers Distribution and
Trial

Reduce Costs of
Increase Efficiency Introductory and Avoid Cost of
of Promotional Follow-Up Developing a New
Expenditures Marketing Brand

 
Programs

Allow for
Packaging and Permit Consumer
Labeling Variety-Seeking
Efficiencies

Strategic Brand Management: Building, Measuring, and Managing Brand Equity, 4e

By Kevin Lane Keller, Ambi M. G. Parameswaran and Isaac Jacob
Provide Feedback Benefits to the
Parent Brand

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Enhance the
Clarify Brand
Parent Brand
Meaning
Image

Bring New
Customers into the
Revitalize the
Brand Franchise

 
Brand
and Increase
Market Coverage

Permit Subsequent
Extensions

Strategic Brand Management: Building, Measuring, and Managing Brand Equity, 4e

By Kevin Lane Keller, Ambi M. G. Parameswaran and Isaac Jacob
Disadvantages of Brand Extensions
Can Confuse or Frustrate Consumers

Can Encounter Retailer Resistance

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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
Strategic Brand Management: Building, Measuring, and Managing Brand Equity, 4e
By Kevin Lane Keller, Ambi M. G. Parameswaran and Isaac Jacob
 Understanding How Consumers
Evaluate Brand Extensions
• Managerial assumptions

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• Brand extensions and brand equity

• Vertical brand extensions

 
Strategic Brand Management: Building, Measuring, and Managing Brand Equity, 4e
By Kevin Lane Keller, Ambi M. G. Parameswaran and Isaac Jacob
 Managerial Assumptions
• Consumers have some awareness of and positive
associations about the parent brand in memory.

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• At least some of these positive associations will be evoked
by the brand extension.

 
• Negative associations are not transferred from the parent
brand.

• Negative associations are not created by the brand

extension.

Strategic Brand Management: Building, Measuring, and Managing Brand Equity, 4e

By Kevin Lane Keller, Ambi M. G. Parameswaran and Isaac Jacob
 Brand Extensions and Brand
Equity

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• Creating extension equity.

• Contributing to parent brand equity.

 
Strategic Brand Management: Building, Measuring, and Managing Brand Equity, 4e
By Kevin Lane Keller, Ambi M. G. Parameswaran and Isaac Jacob
 Vertical Brand Extensions

• Pros and cons

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• Examples

• Naming strategies

 
Strategic Brand Management: Building, Measuring, and Managing Brand Equity, 4e
By Kevin Lane Keller, Ambi M. G. Parameswaran and Isaac Jacob
 Evaluating Brand Extension
Opportunities
• Define actual and desired consumer knowledge about the

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brand.

• Identify possible extension candidates.

 
• Evaluate the potential of the extension candidate.

• Design marketing programs to launch extension.

• Evaluate extension success and effects on parent brand

equity.
Strategic Brand Management: Building, Measuring, and Managing Brand Equity, 4e
By Kevin Lane Keller, Ambi M. G. Parameswaran and Isaac Jacob
Figure 12-7: Brand Extension
Guidelines Based on Academic
Research

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Strategic Brand Management: Building, Measuring, and Managing Brand Equity, 4e
By Kevin Lane Keller, Ambi M. G. Parameswaran and Isaac Jacob
Figure 12.7: Brand Extension
Guidelines Based on Academic
Research

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Strategic Brand Management: Building, Measuring, and Managing Brand Equity, 4e
By Kevin Lane Keller, Ambi M. G. Parameswaran and Isaac Jacob
 To Sum Up…

Brand extensions occur when a firm uses an established brand

name to introduce a new product.

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The basic assumption behind brand extension:
• Consumers have some awareness of and positive
associations about the parent brand in memory.

 
• Brand extension will evoke at least some of these
associations.

Strategic Brand Management: Building, Measuring, and Managing Brand Equity, 4e

By Kevin Lane Keller, Ambi M. G. Parameswaran and Isaac Jacob
 To Sum Up...
The extension’s ability to establish its own equity will depend
on:

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• Salience of consumers’ associations with the parent brand.

• How compelling and relevant is the evidence about the

corresponding attribute.

 
• How strong consumers’ existing attribute or benefit
associations are for the parent brand.

To evaluate brand extension opportunities, marketers need to

consider strategies by applying managerial judgment and
consumerStrategic
research.
Brand Management: Building, Measuring, and Managing Brand Equity, 4e
By Kevin Lane Keller, Ambi M. G. Parameswaran and Isaac Jacob
 Copyright © 2015 Pearson India Education Services Pvt. Ltd.
Thank you.

 
Strategic Brand Management: Building, Measuring, and Managing Brand Equity, 4e
By Kevin Lane Keller, Ambi M. G. Parameswaran and Isaac Jacob