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Brand and Line extensions

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Brand ExplosionBrand Consolidation Brand variants

Brand Extensions: How does a firm grow?

A firm can:– Focus on current products and markets

Market penetration strategy

– Put existing products into new markets Market development strategy

– Put new products into existing markets Product development strategy

– Put new products into new markets Diversification strategy

Brand Extensions

Brand extension– Involves using an existing brand name to launch a

product in a different category.

Category extension– Parent brand is used to enter a different product

category from that currently served by the parent brand

Swiss army watches, Porsche bicycles

Ponds

LG

Park Avenue

Line Extensions

Line extension – Parent brand is used to brand a new product that

targets a new market segment within a product category currently served by the parent brand

H&S dry scalp shampoo

Line extension – Involves making entries in brand’s exiting product

category by using same brand name. These entries can come in the form of varying product sizes, flavors, colors, and ingredients and forms

Advantages of Extensions

– Reduce risk perceived by customers & distributors

– Decrease cost of gaining distribution & trial

– Increase efficiency of promotional expenditures

– Avoid cost (and risk) of developing new names

– Allow for packaging and labeling efficiencies

– Variety-seeking

Advantages of Extensions

Enhance the parent brand image– Improve strength, favorability, and uniqueness of brand

associations– Improve perceptions of company credibility

Convey broader brand meaning to consumers– Clarify core benefit proposition and business definition of

the company

Bring new customers into the franchise and increase market coverage

Disadvantages of Extensions

Extensions have risks, too. – They can fail.

Moreover, extensions can potentially result in the following costs:– Cannibalize sales of the parent brand– Hurt the image of the parent brand

Forego the chance to develop a new brand name or market the parent brand differently (opportunity cost)

– Consumers have some awareness of and positive associations about the brand in memory

– 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

Brand Extension Assumptions

Product Form

Extension

Amul MilkAmul

Condensed Milk

Real Juices Real

Juice Concentrate

Companion Product

Colgate Dental Cream

Colgate Tooth Brush

Gillette Razors Gillette

Shave Foam

Gillette After Shave

Customer Franchise

J & J

Baby

Shampoo

J & J

Baby

Talc

J & J

Baby

Oil

J & J

Baby

Diapers

Company Expertise

Honda Cars

Honda Gensets

Honda Scooters

Honda Lawnmovers

Types of Brand Extensions

Brand Distinction

Parachute

Coconut

Expertise

Parachute

Hair Oil

Parachute

Shampoo

Parachute

Cream

Parachute

Cooking Oil*

*hypothetical

Types of Brand Extensions

Distinctive Taste, Ingredient or

Component

Cartier

Jewellery

Cartier

Watches

Cartier

Purses

Cartier

Pens

The Product Brand Formula Brand Know-how Brand Interest Brand Philosophy

Brand Extendibility

Product Brand

It is a situation where there is very little difference between the brand and the product. Brand is a close approximation of the product. Passively, the brand is used to identify the product, maybe for internal purposes. The brand does not play any role from the customer’s point of view

Formula Brand

Formula means a set procedure (used to make the product). This type of brand may be find in categories like cooking oil, food, and pickles

Know-how Brand

Know-how is an expertise that a firm develops in a specialized area of activity. Sony is know to have expertise in miniaturization and robotics. Honda has know-how in engines. Amul has developed expertise in milk processing

Interest Brand It’s the centre of interest or the core spirit of the brand. Gillette brand maintains its focus on men’s grooming in all its brands. Nike’s focal point is winning. Whirlpool’s centre of interest is the home (‘homemaker’)

Philosophy The brand at this level acquires more intangible character and orientation. This generally happens in case of designers and artists. The Armani signature on the product provides a higher philosophical meaning – a meaning proudly expresses in Armani’s creatively styled products

Product dissimilarity

Philosophy BrandCartier

Interest BrandDisney (Entertainment)

Know-how BrandBajaj (Electronics)

Formula BrandMother’s Recipes

Product BrandRose Brand Flour

PicklesLemon

PicklesMango

PicklesMixed

OTGIrons

Fans

Coolers

Mixers

Toasters

ToysTheatre

Movies

ThemeParks

Music

Clothes

Acces-sories

Games

WatchesJewellery

Bags

Pens

Extendibility of a Brand

Brand Extendibility

Amul Milk

Amul MilkType I II III

AmulExpertiseIn milkprocessing:Milk,Ghee,Butter,CondensedMilk

Amul SymbolPersonality:LovableIndiannessTasteFunTrustworthyValue GoodIce CreamCheeseMil AdditiveChocoloate

“Amulishness”Drinks?Energy Bar?Energy Tabs?Mil Cakes?Biscuits?

Product Formula/ Expertise/Brand Recipe Know-how Interest Philosophy

Time / Brand’s

Evolution

Products are manifestations of BrandBrands identifies the product