new products and brand extensions
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New Products and Brand ExtensionsTRANSCRIPT
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
Fig: One way McDonald’s grows its brand is through market development and expanding in overseas markets such as Japan
When a firm introduces a new product, it has threechoices for branding it:
1. develop a new brand
2. apply one of its existing brands
3. use a combination of a new brand and an existing brand
Brand Extensions
uses an established brand name to introduce a new product
new brand called as sub-brand
existing brand called as parent brand
parent brand with multiple products called as family brand
Brand extensions fall into two general categories :
Line extension
Category extension
Brand Extensions
Facilitate New Product Acceptance
Improve brand image
Reduce risk perceived by customers
Increase the probability of gaining distribution and trial
Increase efficiency of promotional expenditures
Reduce costs of introductory and follow-up marketing programs
Avoid cost of developing a new brand
Allow for packaging and labelling efficiencies
Permit consumer variety-seeking
Provide Feedback Benefits to the Parent BrandClarify brand meaning
Fig : Expanding Brand Meaning through Extensions