Download - Lecture 4 Brand Extentions
BRAND EXTENSIONSMSc Marketing (Executive)Dr Kevina CodyOctober 19th 2010
Brand extension
What is Brand extension?What is Brand extension? Why extend ?Why extend ? Where to extend ?Where to extend ? RisksRisks Keys to successKeys to success FittingFitting … … why NOT extend ? why NOT extend ?
SOURCES OF GROWTH FOR A FIRM
Ansoff’s growth share matrix
Introduction of new product….
Three branding choices:
1) develop a new brand, chosen for new product
2) apply, in some way, one of its existing brands
3) it can use a combination of a new brand & and existing brand
What is a brand extension?
When a firm uses an established brand name to introduce a new product
New brand + existing brand = sub-brand Existing brand that leads to brand
extension = parent brand Parent brand associated with multiple
products through brand extensions = family brand
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What is the brand extending ?
It is the transfer of brand values on the new market
It shows that the brand is not related directly to one sector but has values that can transcend different products categories
Categories of brand extensions
Line extension
Category extension
Which is more common???
Categories of brand extensions
Line Extension Vs Category Extension
Key difference between line & category extension = product category
Line extension – product category remains constant
Category – product category is a variable
Brand Extension Strategies
1. Introduce the same product in a different form
2. Introduce products that contain the brand’s distinctive taste, ingredient or component
Tauber, E. M. (1988), ‘Brand Leverage: Strategy for growth in a cost controlled world’, Journal of Marketing Research,
3. Introduce companion products for the brand
4. Introduce products that capitalize on the firm’s perceived expertise
Brand Extension Strategies
5. Introduce products that reflect the brand’s distinctive benefit, attribute or feature
6. Introduce products that capitalize on the distinctive image or prestige of the brand
Tauber, E. M. (1988), ‘Brand Leverage: Strategy for growth in a cost controlled world’, Journal of Marketing Research,
Brand Extension Strategies
Corporate Brand Names E.G. Kellogg’s, Heinz, Cadbury
House Brand Names E.G. Lexus
Family Brand Names E. G. Dulux Weathershield
Mono Brand Names E. G. Procter & Gamble, Unilever
Laforet, S. and Saunders, J. (1994) ‘Managing Brand Portfolios: how the leaders do it’, Journal of Advertising Research, Sep/Oct
Why Extend???
Facilitate New Product Acceptance
Risks of new product launch? Market too small Product poor match for company Inadequate/inaccurate market research Poor profit margins & high costs Not new or different Credibility not confirmed on delivery
Law & Order – Successful Brand Extension
TVs most valuable franchise… Law & Order Law & Order: SVU Law & Order: Criminal Intent Law & Order: Trial by Jury
Self-contained episodes… Extension strategy allows
migration of audiences Revenues through DVD sales,
books, computer game, clothing
Why Extend??
Improve Brand Image
Why Extend??
Reduce Risk perceived by customers
Extensions by established parent brands communicate longevity & sustainability
Credibility & trustworthiness
Avonmore, Del Monte, Nivea
Why Extend??
Increase efficiency of promotional expenditures
Study of 98 consumer brands in 11 markets Successful brand extensions spent less on
advertising than did comparable new-name entries
Sullivan, M. W. (1992), ‘Brand Extensions: When to use them’, Management Science, 38 (6)
Why Extend?
Permit consumer variety seeking
Can switch to different product type without having to leave brand family
Why Extend? Clarify Brand Meaning
Brand Original Product
Extension Products
New Brand Meaning
Weight Watchers
Fitness Centres
Low-Calorie Foods
Weight loss & maintenance
Kelloggs Cereal Nutri-Grain Bars, Special K Bars
Healthy Snacking
Petit Filous Kids’ yoghurts
Frubes Fun, healthy, kid-centred snacks
Crayola Crayons, markers, pencils, chalk
Squeeze & Squirt Foaming Hand Soap
??
Why Extend?
Clarify brand meaning
Helps avoid ‘marketing myopia’
E.G. Ocean Spray….
Why Extend?
Bring new Customers into brand franchise & increase market coverage
e.g. offering product benefit whose absence inhibited trial
Strepsils….. Disprin Direct… Solpa Sinus…
Why Extend?
Revitalise the brand
A means to renew interest in & liking for the brand
Habituation… E.G. Old Spice E.G. Wine Gums…
http://www.youtube.com/watch?v=TusJ8HSLaUs
http://www.youtube.com/watch?v=xgWNNimr0Yo&feature=related
Risks
Can confuse or frustrate customers
16 Coke varieties 35 Crest toothpaste varieties…
Can encounter retailer resistance Goods vs retail space….
Risks
Can fail & hurt parent brand image
FIAT… AUDI (1986) – Audi 5000 – sudden
acceleration problem…. Diet Coke Cherry…
Counter –case: Guiness Light
Guinness Light 1981- ‘They said it couldn’t be done’ http://www.youtube.com/watch?v=tqSvrbKwT
8M
Parent brand difficulty with younger drinkers… Meticulous planning & positive market
research results Did it harm the master brand? What was the
effect? Pitfalls of correlating ideas with market
research…
Risks
Cannibalization of parent brand
Establishing points of parity… Preemptive cannibalization…
Coke Vs Diet Coke… Actimel Vs Actimel 0.1% fat Light Milk Vs Supermilk
Risks
Can Succeed but hurt image of parent brand….
Virgin – are there any boundaries????
"I believe there is almost no limit to what a brand can do. You can ignore those who go on about brand stretching
Figure 12.13 Companies in the Virgin Group
Risks
Can Dilute Brand Meaning
Gucci… Expansive product line Semiotically counter-effective…
What determines whether a brand extension can capitalize on these potential advantages….??
Understanding how consumers evaluate brand extensions….
Study of brand elasticity Brand Identity perspective Brand Equity & Brand Extensions
Understanding how consumers evaluate brand
extensions Baseline semiotic inferences
Porsche --------coffee makers…. Bic ------disposable lighters… Honda---------- lawn mowers Harley Davidson ------------ wine coolers Bic ------------ perfumes Levis --------------------- tailored suits Fruit of the loom ------------------ washing
detergent
1) Consumers must have some awareness of & positive associations about the parent brand
2) At least some of these positive associations will be evoked by the brand extension
3) Negative associations are not transferred by the parent brand
4) Negative associations are not created by the brand extension
Brand Elasticity
Consumers put limits on where a brand can go…. Kleenex diapers
Some brands are more elastic than others Virgin Vs Coca-Cola
Brand strength in an existing realm of expertise does not drive brand elasticity
“Far in” is easier to work than “far out”….
Page, G. & Farr, A. ‘Do you have an elastic brand’, Advertising Research Foundation Workshop (2000)
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Brand Elasticity – 2 cases in point
reliable, resistant, masculine
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The success of pen, lighter, and razors Bic
Accessible, practical, disposable
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The failure of Bic perfume
The Bic values are not relevant to perfume
Product Expertise
Clearly defined philosophy
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Keys to success in brand extension
Brand
identity
Brand extension Market’s values
RelevanceFit
Added value
Understanding how consumers evaluate brand
extensions Baseline semiotic inferences
Porsche --------coffee makers…. Bic ------disposable lighters… Honda---------- lawn mowers Harley Davidson ------------ wine coolers Bic ------------ perfumes Levis --------------------- tailored suits Fruit of the loom ------------------ washing
detergent
Understanding how consumers evaluate brand
extensions Exploring brand equity of parent
brand…. What are different attributes associated
with a brand? What benefit associations are connected
with a brand? What is the perceived essence of the brand
Understanding how consumers evaluate brand
extensions Strength of Associations – Ponds
Talc Feminine
FloralBody
-Care
Cream
Body TalcSpecial
Occasion Talc
Nail Polish, Lipsticks,
Body Lotion
Room Freshener,
Soaps, Shampoos
Body Lotion,
Body Oil, Exfoliater
Cleanser, toner,
moisturizer, anti-
cellulite
Figure 12.21 Possible extensions of Vaseline Intensive Care brand
Brand Extensions & Brand Equity
Creating Extension Equity & Contributing to Parent Brand Equity
Extension equity: salience, favourability, uniqueness
E.G. Dettol Easy Mop System Vs Johnson & Johnson Asprin….
Parent Brand Equity: compelling benefits, relevant, consistent
Vertical Brand Extensions
Key strategy in enhancing equity through brand extensions
Up to premium, down to value conscious
Transferable equity….
Advantages & disadvantages??? Cannibalization = biggest risk
Marlboro Basic Vs Monarch…..
Kodak Gold Vs Kodak Funtime
What’s happening????
Success stories…..Marriot Hotels…
Successful Vertical Brand Extension – Levi’s
1990s – declining sales…. CEO from PepsiCo – Philip Marineau…..
Segmentation strategy….
Levi Strauss Signature – $19-23 Levi Strauss Signature Authentics - $24-25 Levi’s Redtab - $25-50 Levi’s Capital E - $70-178 Levi’s Vintage - $80-325
Considering Options for a Brand Extension
Nestle – Findus Division – Lean Cuisine Brand Intro of new line of frozen prepared foods
positioned for lunch….
Options: Introduce as line extension of Findus – ignore
Lean Cuisine? Introduce a new stand-alone single brand: Lunch
Express? Lean Cuisine with Lunch Express as sub-brand?
Brand Stretching in a postmodern world
Link between marketing & theories of postmodernism Image is all & more important than reality Brands provide an anchor of stability Postmodern world is ideal environment for
‘retrospection’
Retrospection used in brand extension opportunities
Brand Stretching in a postmodern world
1990s Extensions of established brands reflecting earlier versions of the brand
Identify Possible Extension Candidates
Transfer of meaning process….
How do products come to generate meaning??
Part 1 of process: Product as signified
Starting point….
Product/service has no ‘meaning’ in its own right EG: cigarettes….
Where is the meaning, the sign value to come from
Borrowed from a system of meaning with which customers are already familiar… EG: source of product/parent brand EG: Richard Branson???? – meanings???
Case in point: Chanel
Borrowed images from the celebrity system… REM: attaching meaning often implies
differentiation… Williamson: ‘advertising raids cultural stores
of meaning for signifiers which are then associated with brands’
Catherine Deneuve = Margaux Hemingway
Chanel No. 5 = Babe
Part 2 of process: product as signifier in its own right
One correlate becomes fused with the product so that it appears that the link between them is ‘natural’…product can become generator of meaning in its own right….
The product purports to becomethe actual referent for the sign
EG: ads tell us they can createthe feelings which they represent
Williamson: ‘products having been associated with a particular feeling for a long time, become linked to the feeling to the extent that they come to “be” the feeling’
EG: Lucozade…
‘Pavlov dog syndrome’…
Baudrillard: ‘system of products more coherent thansystem of needs’
Identifying Brand Extensions through Transfer
of Meaning
Hovis Bread Case Study….
Academic Research & Extension Guidelines
Levy & Tybout (1989) ‘Schema Congruity as a basis for product evaluation’, Journal of Consumer Research
Rodder John & Loken (1993), ‘Diluting Brand Equity: The impact of brand extensions’, Journal of Marketing
Aaker & Keller (1990)’ Consumer evaluations of brand extensions’ Journal of Marketing
Academic Research on Extension Guidelines
1) Successful brand extensions occur when the parent brand has favourable associations & consumers perceive a fit between the parent brand & the extension product…. Categorization perspective….
2) there are many bases of fit: product-related attributes & benefits, non-product related related to common usage situations or user types Product feature similarity Vs brand concept
consistency
PSU - Global Brand Management - Alain Hutinel
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Swatch move into jewellery
Modern, Quality/price, Variety, Innovative design
Academic Research & Extension Guidelines
3) High-quality brands stretch farther than average-quality brands, although both types have boundaries…
4) A brand that consumers see as prototypical for a product category can be difficult to extend outside the category
http://www.growthink.com/content/10-famous-product-failures-and-advertisements-did-not-sell-them
5) concrete attribute associations tend to be more difficult to extend than abstract benefit associations
Lifestyle brands…..
Thursday’s Lecture
Socio-Cultural Perspective on Brand Management
Emotions & Branding