Managing Product Extensions

• Brand
Management
Professor Carl Mela System
BA 460 Product Management • On Building
Fuqua School of Business A Brand
• Managing
Across
Brands

Extensions –
 Agenda

• Why Extend?
• Problems With Extensions
• When to Extend?
• How to Extend?

Extensions –
 Brand Extensions

• Across lines; across categories

• 81% of All New Products

Extensions –
 Why Extend?
• Facilitate new product acceptance
– Reduced risk to consumers and trade
– More efficient promotions
– One stop solutions
– Variety seeking and multiple segments
– Trading up / converting
– Scale economies
– Usurp shelf space / please trade
• Benefits parent brand and firm
– Enhance image
– Attracts new customers

Extensions –
 Problems with Extensions

• Effects on Brand
– Retailer resistance
– Failure hurts parent brand
– Weakens associations of parent
– Forego chance to develop new brand
– Cannibalization
– Reduced focus on star brands

Extensions –
 Problems with Extensions

• Effects on Consumer
– Confuse customers
– Disturb loyalty patterns built over years
• Effect on Firm
– Copy catting by other brands
– Costs (inventory, time, production)

Extensions –
 When to Extend

• The parent brand’s associations are

salient, favorable, and unique
• There is a “fit” (benefits, technology,
etc.) with the parent brand
– and Parent is not too prototypical (e.g.,
detergent w/ Clorox bleach)

Extensions –
 How to Extend
1. Ascertain what consumers know and like about parent
brand.
2. Identify possible pertinent extensions
3. Evaluate extensions
Assess what associations port to extension
Assess relevant internal (fit) & external (e.g., competition) factors
4. Develop marketing programs & brand elements
5. Measure success and effect on parent

Extensions –
 How to Extend
Super-Brand
Comfort Inn adds
Sleep and Quality

Brand Hierarchy
Brand
Brand
Bundling
Parent Brand Bridging
e.g., Ingredient
e.g, Endorsement
Brands

Sub-Brand
e.g., flavors

Ingredient Hierarchy Extensions –

 Summary

• Brand Extensions
– Very alluring
• Cheap, effective
– But be wary
• Adverse effects on parent brand

Extensions – 1