PRESENTATION PRESENTATION ON ON

BRAND EXTENSIONSBRAND EXTENSIONS

PRESENTED BY:PRIYAPRESENTED BY:PRIYA ROLL NO.-07ROLL NO.-07 MBA(HONS)FMBA(HONS)F

ContentsContents- Line ExtensionLine Extension- Reasons for Line ExtensionsReasons for Line Extensions- Line Extension RisksLine Extension Risks- Line Extension TrapLine Extension Trap- Line Extension success and blundersLine Extension success and blunders- Brand ExtensionBrand Extension- Reasons for Brand ExtensionReasons for Brand Extension- Types of ExtensionTypes of Extension- Brand ExtendabilityBrand Extendability- Extending a BrandExtending a Brand- Making an Extension SuccessfulMaking an Extension Successful- Brand Extension and PositioningBrand Extension and Positioning- Diluting brand beliefsDiluting brand beliefs

Line Extension:Line Extension: It involves making enteries into a It involves making enteries into a

brand’s existing product categories by using the same brand’s existing product categories by using the same brandbrand

Entries can come in form of varying Product sizes , Entries can come in form of varying Product sizes , flavours , colours , ingredients , forms etc.flavours , colours , ingredients , forms etc.

Product Sizes- Product Sizes- Bisleri Bisleri Colour- Colour- SunsilkSunsilk Flavours- Flavours- RasnaRasna Ingredients- Ingredients- ColgateColgate Form- Form- VimVim

Reasons for Line Extension:Reasons for Line Extension: Customer SegmentationCustomer Segmentation

--individual customer orientationindividual customer orientation

-less cost-less cost

-less risky-less risky

Example Colgate- Colgate Herbal and Colgate Example Colgate- Colgate Herbal and Colgate Strong Teeth Strong Teeth

HP’s Printer line HP’s Printer line

Customer Need For VarietyCustomer Need For Variety- Product standardizationProduct standardization- Consistency in qualityConsistency in quality- BoredomBoredom

- ““Something NewSomething New””

Example- Lux, CintholExample- Lux, Cinthol BiscuitsBiscuits

Pricing BreadthPricing Breadth-“-“movemove up”up”

-Various Price Bands-Various Price Bands

-Wider Spectrum Of Customer-Wider Spectrum Of Customer Examples- Videocon, Credit CardsExamples- Videocon, Credit Cards

Capacity UtilizationCapacity Utilization-high fixed cost elements-high fixed cost elements

-Utilizing excess capacity-Utilizing excess capacity

Quick GainsQuick Gains

--high cost of launching new brands high cost of launching new brands

-dismal success rates-dismal success rates

-technologies -technologies

-less risky-less risky

-less costly-less costly

COMPETITIVE REASONSCOMPETITIVE REASONS- - shelf spaceshelf space

- difficulty for rival firms- difficulty for rival firms

- price of minimum entry goes -up- price of minimum entry goes -up

Example -HLLExample -HLL

Trade DemandsTrade Demands--Trade PartnersTrade Partners

- Retail Channels- Retail Channels

Counter CompetitionCounter Competition--to counter competition from rival firmsto counter competition from rival firms

Example- Caiptain Cook,Example- Caiptain Cook,- Colgate gel to counter closeupColgate gel to counter closeupCountering Competition – The Nirma WayCountering Competition – The Nirma Way• In 1987,Nirma Detergent Cake to counter RinIn 1987,Nirma Detergent Cake to counter Rin• In 1990, debuted in “beauty” benefit category to In 1990, debuted in “beauty” benefit category to

counter Luxcounter Lux• In 1990,launched Nirma Super Detergent Cake In 1990,launched Nirma Super Detergent Cake

with Premium Positioning to counter Rinwith Premium Positioning to counter Rin• In 1992, launched variant of Nirma Super to In 1992, launched variant of Nirma Super to

expand categoryexpand category

• In 1995,came Nirma Popular to cater to a different niche In 1995,came Nirma Popular to cater to a different niche of washing powder marketof washing powder market

• In 1995, Nirma Super Washing Powder was launched in In 1995, Nirma Super Washing Powder was launched in premium segment to counter Surf and Arielpremium segment to counter Surf and Ariel

• In 1998,took on HLL in the Lime Soap Category In 1998,took on HLL in the Lime Soap Category • In 1999, Nima Rose arrived in the market to counter In 1999, Nima Rose arrived in the market to counter

HLL’s Breeze and also entered in sandal category HLL’s Breeze and also entered in sandal category

Image BenefitsImage Benefits-positive image-positive imageExample- Mercedes launched 190 modelExample- Mercedes launched 190 model

LINE EXTENSION RISKS LINE EXTENSION RISKS toothpastes like toothpastes like Colgate , Crest (P&G), Kimberley Clark’s(kleenex)Colgate , Crest (P&G), Kimberley Clark’s(kleenex)

Line Confusion: Line Confusion:

--No clear cut role and goalNo clear cut role and goal

-Blurred product vision-Blurred product vision

- Confused Customers and Confused RetailersConfused Customers and Confused Retailers Encourage Variety SeekingEncourage Variety Seeking

--brand loyalty is weakenedbrand loyalty is weakened

-Encourage brand switching behaviours -Encourage brand switching behaviours

Success Myopia:Success Myopia:

--short term gains are preffered rather than long termshort term gains are preffered rather than long term

Strained RelationsStrained Relations

--Marketers seek adequate shelf space, promotion and Marketers seek adequate shelf space, promotion and informationinformation

-Pressurize retailers and wholesalers-Pressurize retailers and wholesalers

Primary Demand is not expandedPrimary Demand is not expanded Short lived gainsShort lived gains Invisible costs associated e.g- image dilution, Invisible costs associated e.g- image dilution,

production complexity ,distraction in R&Dproduction complexity ,distraction in R&D CannibalizationCannibalization

Extensions often fail to excite:Extensions often fail to excite:

--Managers often fall victim to “Managers often fall victim to “trends”trends”

-variants are not added because -variants are not added because Market GapsMarket Gaps demands it demands it but because managers are but because managers are hyperactivehyperactive

-Many FMCG companies extensions did not work as -Many FMCG companies extensions did not work as expectedexpected

Example- Lux Chocolate Seduction, Palmolive Aroma Example- Lux Chocolate Seduction, Palmolive Aroma Therapy, Pepsi Café Chino, Vanilla coke, Strawberry and Therapy, Pepsi Café Chino, Vanilla coke, Strawberry and Coconut Perk Coconut Perk

Failure to craft true identities for these variants was the Failure to craft true identities for these variants was the prime reason for their failure prime reason for their failure

LINE EXTENSION TRAPLINE EXTENSION TRAP

Sometimes the position of a Brand Sometimes the position of a Brand name is so strong that it becomes generic for the product name is so strong that it becomes generic for the product ..

“ “ from the prospect’s point of view, line expansion works from the prospect’s point of view, line expansion works against the generic brand position . It blurs the sharp against the generic brand position . It blurs the sharp focus of the brand in the mind”focus of the brand in the mind”

Line Extension tend to educate customers that product and Line Extension tend to educate customers that product and brand are two different things brand are two different things

LINE EXTENSION SUCCESS AND LINE EXTENSION SUCCESS AND BLUNDERS:BLUNDERS:

Horlicks to Chocolate Horlicks-arrests declining market Horlicks to Chocolate Horlicks-arrests declining market of a brandof a brand

Cinthol to Cinthol Lime and also extended to Cinthol Cinthol to Cinthol Lime and also extended to Cinthol Cologne and Cinthol Sandal –rejuvenate the mother Cologne and Cinthol Sandal –rejuvenate the mother brandbrand

Cibaca decide to enter into gel segment, chose green Cibaca decide to enter into gel segment, chose green colour, positioned as a squeaky new mouth wash colour, positioned as a squeaky new mouth wash

BRAND EXTENSIONSBRAND EXTENSIONS

It involves using an It involves using an existing Brand existing Brand NameName to launch a product in a to launch a product in a different categorydifferent category

Examples- Examples- Ponds- cold cream, shampoo, talc, facewash , Ponds- cold cream, shampoo, talc, facewash ,

toothpastetoothpaste LG-TV, Refrigerators, microwave, AC, Washing MachineLG-TV, Refrigerators, microwave, AC, Washing Machine Park Avenue- shirts, shaving cream, jeans , belts, Park Avenue- shirts, shaving cream, jeans , belts,

perfumesperfumes

TRENDS IN BRAND EXTENSION:TRENDS IN BRAND EXTENSION:In the US , between the years 1977 and 1984 each In the US , between the years 1977 and 1984 each

year 120 to 175 brands were launched among year 120 to 175 brands were launched among these 40% were in the form of Brand these 40% were in the form of Brand ExtensionsExtensions

In 1990, 63% of the new product launches were In 1990, 63% of the new product launches were line Extensions and 18% were Brand Extensions line Extensions and 18% were Brand Extensions

REASONS FOR BRAND EXTENSIONSREASONS FOR BRAND EXTENSIONS:: Cost Of New LaunchesCost Of New Launches

--Decreasing CostsDecreasing Costs

-Increasing probabilities of success-Increasing probabilities of success Promotional EfficiencyPromotional Efficiency

--Investment in promotion of one brand helps in promotion Investment in promotion of one brand helps in promotion of other brands alsoof other brands also

-Example- advertisement of Dettol Soap benefits other -Example- advertisement of Dettol Soap benefits other brands which share the same namebrands which share the same name

-Awareness of brands already exists-Awareness of brands already exists

Consumer BenefitsConsumer Benefits

--Less Risk percieved by the customerLess Risk percieved by the customer- ExpectationExpectation

Feedback EffectsFeedback Effects- Clarity in Brand MeaningClarity in Brand Meaning- Broaden the product meaningBroaden the product meaning- Resolves definitional issuesResolves definitional issues- Example- J&J is not about the Example- J&J is not about the baby shampoobaby shampoo its about its about

baby care, IBM baby care, IBM claimed that it is not in claimed that it is not in computers computers businessbusiness its in its in customer solutions businesscustomer solutions business

- Extensions contribute to the Parent Brand’s Associations Extensions contribute to the Parent Brand’s Associations e.g Reebok watches may reinforce the image of e.g Reebok watches may reinforce the image of proffessionalism in sportsproffessionalism in sports

ReturnsReturns

--Many Brand have evolved a diversified structure Many Brand have evolved a diversified structure

-Example – Walt Disney earlier focused on making -Example – Walt Disney earlier focused on making animation films for children but later diversified in films, animation films for children but later diversified in films,

TV, Publishing, Theme Parks, CruisesTV, Publishing, Theme Parks, Cruises..

Return ComparisonReturn Comparison between focused and diversified between focused and diversified brands revealed that focussed brands like Dell, Levi’s brands revealed that focussed brands like Dell, Levi’s manage to earn 0.9% higher than industry margin while manage to earn 0.9% higher than industry margin while diversified brands manage to earn 5% higher than diversified brands manage to earn 5% higher than industry averageindustry average

Types of Extensions:Types of Extensions: Product Form ExtensionProduct Form Extension

--Example – Amul Milk and Amul Condensed MilkExample – Amul Milk and Amul Condensed Milk

-Chocolate Bars and Chocolate Powder-Chocolate Bars and Chocolate Powder

Companion Product-Companion Product- capitalise on product capitalise on product complementaritycomplementarity

-Example – colgate dental cream and colgate toothbrush-Example – colgate dental cream and colgate toothbrush

- AC and Voltage Stabilisers- AC and Voltage Stabilisers

Customer FranchiseCustomer Franchise

--to meet the to meet the needsneeds of a specific customer group of a specific customer group

-Example-J&J baby shampoo, J&J Baby Talc, J&J Baby Oil-Example-J&J baby shampoo, J&J Baby Talc, J&J Baby Oil

Company ExpertiseCompany Expertise- Emanates from a common Expertise poolEmanates from a common Expertise pool- Japanese CompaniesJapanese Companies- Example- Honda Cars, Honda Gensets, Honda Example- Honda Cars, Honda Gensets, Honda

Scooters, Honda Lawnmovers Scooters, Honda Lawnmovers

Brand DistinctionBrand Distinction- Many brands achieve distinction in the form of a Many brands achieve distinction in the form of a

Unique Attribute, Benefit or FeatureUnique Attribute, Benefit or Feature- Example- Parachute may have a expertise of Example- Parachute may have a expertise of

“coconut nourishment” in customers mind “coconut nourishment” in customers mind overtimeovertime

- Parachute coconut expertise, Parachute Hair Parachute coconut expertise, Parachute Hair Oil, Parachute Shampoo, Parachute CreamOil, Parachute Shampoo, Parachute Cream

Brand Image or PrestigeBrand Image or Prestige

--brand prestige bestows great extension brand prestige bestows great extension

OpportunitiesOpportunities- Designer BrandsDesigner Brands- Example- CartierExample- Cartier- Cartier Jewellery, Cartier Watches, Cartier Cartier Jewellery, Cartier Watches, Cartier

Purses, Cartier PensPurses, Cartier Pens

Distinctive Taste, Ingredient or Distinctive Taste, Ingredient or Component:Component:

--brand may develop equity based on any and /or brand may develop equity based on any and /or combination of taste, ingredient or componentcombination of taste, ingredient or component

- Example-Nescafe enjoys proprietary association of Example-Nescafe enjoys proprietary association of distinctive taste so the brand can be leveraged in other distinctive taste so the brand can be leveraged in other product fields:product fields:

Nescafe coffee, Nescafe Chocolate, Nescafe Biscuits, Nescafe coffee, Nescafe Chocolate, Nescafe Biscuits, Nescafe Milk Supplement, Nescafe cold coffeeNescafe Milk Supplement, Nescafe cold coffee

Good, Bad and Ugly ExtensionsGood, Bad and Ugly ExtensionsGood Extension: when parent brand contributes positively Good Extension: when parent brand contributes positively

to the extended productto the extended product

-Brand Associations -Brand Associations

-Quality Associations-Quality Associations

-Recognitions and Awareness-Recognitions and Awareness- Example - Exending Tata name to IndicaExample - Exending Tata name to Indica- Nirma when extended to Toilet soapsNirma when extended to Toilet soaps- Dettols extension into Toilet soapsDettols extension into Toilet soaps

More Good ExtensionsMore Good Extensions

not only brand helps extension not only brand helps extension rather the extension also helps the Parent Brand rather the extension also helps the Parent Brand by way of Positive Feedbackby way of Positive Feedback

- Increases the Brand Visibility- Increases the Brand Visibility- Supports Core AssociationsSupports Core Associations- Example – Example – Dettol brand is strengthened by Dettol brand is strengthened by

launching products which are Antiseptic launching products which are Antiseptic Oriented like Plaster , Shaving Cream, Toilet Oriented like Plaster , Shaving Cream, Toilet Soap Soap

The BadThe Bad

Sometimes the name does not help the Sometimes the name does not help the extensionextension

- When name does not add valueWhen name does not add value- Name passes Negative AssociationsName passes Negative Associations- Example- Ponds and Nirma in Toothpaste Example- Ponds and Nirma in Toothpaste

extensionsextensions- Pierre Cardin to range of Writing InstrumentsPierre Cardin to range of Writing Instruments- Lack of Credibility and ExpertiseLack of Credibility and Expertise

The UglyThe Ugly

extension succeeds but success comes at a extension succeeds but success comes at a costcost

- Extension damages Brand NameExtension damages Brand Name- Creates undesirable Attribute AssociationsCreates undesirable Attribute Associations- Hurts Quality PerceptionsHurts Quality Perceptions- Alters its Existing AssociationsAlters its Existing Associations- Negative Feedback to the Parent BrandNegative Feedback to the Parent Brand- Example- Rolex enters into mid-priced clothing Example- Rolex enters into mid-priced clothing

lineline- Amul launching aerated drinksAmul launching aerated drinks

Brand ExtendabilityBrand Extendability Types of BrandsTypes of Brands- Product BrandProduct Brand: : when there is a little difference b/w when there is a little difference b/w

the product and the brand. Brand is used to identify the the product and the brand. Brand is used to identify the productproduct

- Formula BrandFormula Brand: : a set procedure, a set procedure a set procedure, a set procedure has been used to make the producthas been used to make the product

Example- cooking Oil, Food, picklesExample- cooking Oil, Food, pickles

Know- how Brand-Know- how Brand- is an expertise that a firm is an expertise that a firm develops in a specialized area of activitydevelops in a specialized area of activity

- Example- Sony has in miniaturization and RoboticsExample- Sony has in miniaturization and Robotics- Honda has in EnginesHonda has in Engines

- Amul in Milk ProductsAmul in Milk Products Interest Brands-Interest Brands- defined by its centre of interest, defined by its centre of interest,

reflects its core identityreflects its core identity- Example- Gillette brand focused on men’s groomingExample- Gillette brand focused on men’s grooming

- Nike’s focal point is WinningNike’s focal point is Winning

Philosophy Philosophy

Brand at this level acquires more Brand at this level acquires more intangible character and orientationintangible character and orientation

- Example- Armani Signature- Example- Armani Signature

Extending a BrandExtending a Brand- Discover the brand itselfDiscover the brand itself- Knowledge network that exists in people’s mindKnowledge network that exists in people’s mind- Brand Associations and Strengths are Brand Associations and Strengths are

determined determined - Identify the product areas where brand can be Identify the product areas where brand can be

extendedextended- More systematic analysisMore systematic analysis- The extension list of products is examined from The extension list of products is examined from

resources point of viewresources point of view- Systematic customer analysisSystematic customer analysis

Making an Extension SuccessfulMaking an Extension Successful- AssumptionsAssumptions- the concept of “Fit” Extension must be fit with the the concept of “Fit” Extension must be fit with the

parent brandparent brand- Complementarity b/w extension and parent Complementarity b/w extension and parent

brandbrand- Transferability of Skills and Assets: ability of the Transferability of Skills and Assets: ability of the

brand manufacturer in making the extension brand manufacturer in making the extension productproduct

- substitutabilitysubstitutability- The fit can also be based on functional or brand The fit can also be based on functional or brand

performance attributes on intangible performance attributes on intangible associationsassociations

Brand Extension and PositioningBrand Extension and PositioningCustomers form knowledge through Inference Process as Customers form knowledge through Inference Process as

they integrate their existing beliefs about both the Parent they integrate their existing beliefs about both the Parent Brand and extension categoryBrand and extension category

Importance of positioning diminishes under conditions of Importance of positioning diminishes under conditions of poor Brand- Category Fitpoor Brand- Category Fit

Positioning is important in understanding knowledge Positioning is important in understanding knowledge formation about Brand Extensionformation about Brand Extension

Important conditions for success of brand extension is Important conditions for success of brand extension is

- Customers ability to leverage their parent brand beliefs - Customers ability to leverage their parent brand beliefs

- Customers ability to leverage Category belief - Customers ability to leverage Category belief

Managers ,may seek to maximize brand leverage when Managers ,may seek to maximize brand leverage when brand –category fit is good and equity of brand is strongbrand –category fit is good and equity of brand is strong

They could use the brand positions to maximize brand They could use the brand positions to maximize brand derived belief strength and parent brand attitude transfer derived belief strength and parent brand attitude transfer

Managers may seek to minimize brand leveraging if Managers may seek to minimize brand leveraging if extension is risky in terms of brand category fit, product extension is risky in terms of brand category fit, product quality, or end user acceptancequality, or end user acceptance

managers may want to protect equity of parent brand managers may want to protect equity of parent brand and use category or distinct positions and use category or distinct positions

Alternatively if the brand extension contains an Alternatively if the brand extension contains an important feature advantage they may not want strong important feature advantage they may not want strong brand beliefs to interfere with extensionbrand beliefs to interfere with extension

Diluting Brand BeliefsDiluting Brand Beliefs- Degree of riskDegree of risk- Risk of brand name dilution appears to be more evident Risk of brand name dilution appears to be more evident

for some type of belief than others, beliefs about more for some type of belief than others, beliefs about more global and less distinctive attributes is more immune global and less distinctive attributes is more immune than beliefs about very specific and distinctive attributesthan beliefs about very specific and distinctive attributes

- Damage Control – Determine the extent of damage Damage Control – Determine the extent of damage (dilution) in terms of specific attributes beliefs about (dilution) in terms of specific attributes beliefs about family brand beliefsfamily brand beliefs

- Increase consumer perception that brand extension is Increase consumer perception that brand extension is atypical of the family brandatypical of the family brand

- Increase the veracity and saliency of prior beliefs about Increase the veracity and saliency of prior beliefs about the family brand name the family brand name

THANK YOUTHANK YOU