BRAND EXTENSIONS

By Chinam Ahuja

Overview
Brand Extension Advantages Disadvantages How Consumers Evaluate Extensions?

The FASCINATING world of brands

A BRAND is symbolic embodiment of all the information connected to a Company, Product or Service. It serves to create associations and expectations from products made by a producer, in the mind of the consumer. The key objective is to create a Relationship of TRUST with its consumers .

What Is A Brand ?

New Product Branding Decisions

A new brand individually chosen for the new product. An existing brand name applied in some way. A combination of a new brand with an existing brand.

BRAND EXTENSIONS
A Brand Extension occurs when a firm uses an established brand name to introduce a new product (approaches 2 or 3). When a new brand is combined with an existing brand (approach 3), the brand extension can also be a sub-brand. An existing brand that gives birth to a brand extension is the parent brand. If the parent brand is already associated with multiple products through brand extensions, then it may also be called a family brand.

Types of Brand Extension LINE EXTENSION CATEGORY EXTENSION

new product that targets a new market segment with in a product category currently served by the parent brand. A line extension often adds a different flavour or ingredient variety, a different form or size, or a different application for the brand. Coke s Line Extension

LINE EXTENSION The parent brand is used to brand a

CATEGORY EXTENSION
The parent brand is used to enter a different product category from that currently served by the parent brand. ITC s Category Extension

Why Brand Extensions?

Leveraging brand equity/value by introduction of logical & complementary new product categories. E.g HP Product Innovation to surpass consumer expectations It increases awareness of the brand name Increases profitability from offerings in more than one product category.(widening the net to catch new consumers.) It s a great way to reinforce a brand, reach out to new customers, create a BUZZ

Advantages of Brand extensions

 Improve brand image  Reduce risk perceived by Customers  Permit consume variety-seeking  Clarify brand meaning  Increase the probability of gaining distribution and trial  Increase efficiency of promotional expenditures  Reduce costs of introductory & follow-up marketing programs (save 40-80%) E.g. Apple iPods  Avoid costs of developing a new brand  Allow for packaging & labeling efficiencies  Enhance the parent brand image  Bring new customers into brand franchise and increase market coverage  Revitalize the brand  Permit subsequent extensions

disAdvantages of Brand extensions

Can fail & hurt parent brand image Xerox Computers-synonymous with copiers & no one believed they could make computers Can succeed but cannibalize sales of parent brand Amul Butter- reduced salt butter is slowly eating up Amul normal butter Can succeed but diminish identification with any one category Can succeed but hurt the image of parent brand Can confuse or frustrate consumers Can encounter retailer resistance Can dilute brand meaning Can cause the company to forgo the chance to develop a new brand

When are Brand Extensions Appropriate?

When Prior Brand equity exists Consumer must see some connection between the proposed extension and the parent brand. The proposed extension contributes to and reinforces the overall brand equity of the parent brand.

Conditions For Evaluating Consumer s Brand Extension

 Consumers have some awareness & positive associations about the parent brand  At least some of these positive associations will be evoked by the brand extension  Negative association are not transferred from the parent brand  Negative associations are not created by the brand extension  Define actual & desired consumer knowledge  Identify possible extension candidates  Evaluate potential of the extension candidate  Evaluate potential candidate feedback effects  Consider possible competitive advantages & reactions  Design marketing campaign  Evaluate extension success & effects on parent brand equity  Evaluating Brand Extension Opportunities

Brand Loyalty

Brand loyalty, long a central construct in marketing, is a measure of the attachment that a customer has to a brand. It reflects how likely a customer will be to switch to another brand, especially when that brand makes a change, either in price or in product features.

As brand loyalty increases, the vulnerability of the customer base to competitive action is reduced. It is one indicator of brand equity which is demonstrably linked to future profits, since brand loyalty directly translates into future sales. There are several levels of loyalty.

The bottom loyalty level is the non-loyal buyer who is completely indifferent to the brand. Each brand is perceived to be adequate and the brand name plays little role in the purchase decision.

The second level includes buyers who are satisfied with the product or at least not dissatisfied. Basically, there is no dimension of dissatisfaction that is sufficient to stimulate a change especially if that change involves effort. These buyers might be termed habitual buyers.

The third level consists of those who are also satisfied and, in addition, have switching costs costs in time, money, or performance risk associated with switching. To attract these buyers, competitors need to overcome the switching costs by offering an inducement to switch or by offering a benefit large enough to compensate. This group might be called switching-cost loyal.

On the fourth level we find those that truly like the brand. Their preference may be based upon an association such as a symbol, a set of use experiences, or a high perceived quality. Segments at this fourth level might be termed friends of the brand because there is an emotional/ feeling attachment.

The top level are committed customers. They have a pride of discovering and/or being users of a brand. The brand is very important to them either functionally or as an expression of who they are. Their confidence is such that they will recommend the brand to others.

Brand Image

The concept of Brand Image Brand Image is defined as the characteristics and associations that are part of consumers perceptions of a brand, but some incorporate also feelings and expectations.

Brand image depends on brand awareness. A completely unknown brand as no image. It comprises aspects like mental associations with high quality, innovation, success, reliability or distinctiveness and even more abstract representations, like social responsibility or environmental friendly. It can integrate also associations with people with some characteristics.

For Example:
Some sport brands try to be connected with strong, dynamic and young individuals. On the other hand, luxury brands try to be associated with wealth and distinctiveness.

Brand Personality

a set of human characteristics associated with a brand, how the brand behaves according to Gender, age, socioeconomic class, psychographic, emotional characteristics.

SOME EXAMPLES
MASCULINE, FEMININE YOUNGER, OLDER TRENDIER, OLD FASHIONED IRREVERENT, CONFORMING

A brand personality can help a brand in several ways:

It can provide a vehicle for customers to express their own identity. A brand personality metaphor helps suggests the kind of relationship that customer has with brand. Brand personalities serve to represent and cue functional benefits and product attributes well. Brand personality is often a sustainable point of differentiation. Sustainable because it is very difficult to copy a personality.

Thank You