Introducing and Naming New Products and Brand Extension

New Products and Brand Extensions

When a new product is introduced a Firm has 3 choices
1.

2.
3.

A new brand individually chosen for the product Or a Brand extension / sub-brand Apply in some way one of its existing brands Combine new brand with existing brand

Most new products are line extensions Most successful brands are extensions

New Products and Brand Extensions

Brand extension / sub-brand Classified in 2 general categories

Line extensions parent brand is used to brand the products that targets a new segment in the product category currently served by the parent brand

It involves different flavors, ingredients, form, size, application

Category extensions parent brand is used to enter another category from that currently served by the parent brand

New Products and Brand Extensions

Brand extension / sub-brand come in all forms
1. 2.

3.

4.
5. 6.

7.

Same product in a different form Products that contain the brands distinctive taste, ingredient, components Companion products for the brand Products relevant to customer franchise of the brand Products that capitalize on the brands expertise Products that reflect the brands distinctive benefit attribute or feature Brands that capitalize on the distinctive image or prestige of the brand

Advantages of Extensions
Facilitate new product acceptance: Extensions potentially provide the following benefits

Improves brand image

Improves strength, favorability, uniqueness of brand associations

Reduces risk perceived by consumers

Corporate credibility expertise, trustworthiness (quality products)

And the use of the brand to a greater extent, and in different ways Focus only on the new product

Permits consumer variety seeking

Increases efficiency of promotional expenditure

Reduces cost of introductory, follow-up marketing programs Increased probability of gaining Distribution and Trial Allows for packing and labeling efficiencies

Lower production costs consumer research, skilled personnel

Avoids cost of developing a new brand

Advantages of Extensions
Provides Feedback benefits to parent brand and the company as a whole

Clarifies brand meaning more broadly

Clarifies core benefit proposition and business definition of the company

How it completely satisfies consumer needs in a certain area Improves strength, favorability of an associations, and or Adds new associations Improves perceptions of company credibility

Enhances the parent brand image

Brings new customers into the franchise and expands market coverage Revitalizes the brand Permits subsequent extensions

Disadvantages of Extensions

Can confuse and frustrate consumers as to

Which version of the product is the right one Disappointment if advertised extension is not stocked by retailer If the extension is deemed inappropriate, it may question the integrity and competence of the brand

Can encounter retail resistance

too much shelf space to stock all variants belief that they are me-too and need not be stocked / eliminated

Can fail and hurt the parent brand image and all or some of the other products in brand family

Negative product performance can be damaging Failure for a lack of distribution etc, not be as damaging

Disadvantages of Extensions
Even if extension succeeds it can potentially result in the following costs :

Can cannibalize sales of the parent brand

Line extensions are likely to, but may be considered preemptive cannibalization Reduce brand awareness because of over extensions Being associated with abstract values quality reduces this risk When there are attributes that are inconsistent / conflicting with the parent brand

Can diminish identification with any one category

Can hurt the image of the parent brand

Can dilute brand meaning with high quality and prestige brands Can forego the chance to develop a new brand name or market the parent brand differently

opportunity cost new products Loss of flexibility for the brand positioning in trying to live up to parent brand image

How Consumers Evaluate Brand Extensions

Consumer response and evaluation of a brand extension
Response and evaluation will be on the basis of

What they know about the parent brand What they know about the category

4 basic assumptions must hold true if brand extension evaluation is to be favorable:

Some awareness and positive associations about brand Some of these positive associations must be evoked by the brand extension Negative associations are not transferred from the Parent brand (in the extension context) Negative associations (in the extensions context) are not created by the brand extension

When are Brand Extensions Appropriate?

Consumer response and evaluation of a brand extension

Brand extensions are more likely to be favorably evaluated by consumers if they see some basis of fit or similarity between the proposed extension and parent brand. Mistake in evaluating extension opportunities is

failing to take all of consumers brand knowledge structures into account. focus on one or so brand associations and ignore other potentially important brand associations in the process.

Extension achieve some brand equity and contribute to the equity of the parent brand. Therefore, extension must also have a sufficiently high level of awareness and some strong, favorable, and unique associations.

Brand Extensions and Brand Equity

Brand extensions success depend on its ability to 1. Create extension equity 3 factors
Salience of parent brand associations in extension context 2. Favorability of any inferred associations in the extension context 3. Uniqueness of any inferred associations compared with competition for the extension PODs and POPs are important
1.

Brand Extensions and Brand Equity

Brand extensions success depend on its ability to 2. Contribute to parent brand equity feedback effects depends on 4 factors:
1.

2.

3. 4.

How compelling (important) the evidence is concerning the corresponding attribute or benefit association in the extension context (will not be ignored) How relevant or diagnostic the extension evidence is concerning the attribute or benefit for the parent brand (indicative of the parent brands performance) How consistent the extension evidence is with the corresponding parent brand associations. How strong existing attribute or benefit associations are held in consumer memory for the parent brand

Evaluating Brand Extension Opportunities

1.

2.

3.

4.

A useful baseline case to study is when consumers evaluate brand extensions based on the extension itself with no other information Create mental map of parent brand and identify key sources of equity. Identify possible extension candidates on basis of parent brand associations and overall similarity or fit of extension to parent brand. Evaluate candidate potential for a) extension equity according to the three-factor model and b) extension feedback effects on company brand according to the four-factor model. c) competitive advantages as perceived by consumers and possible reactions initiated by competitors.

Evaluating Brand Extension Opportunities

1. Define actual and desired consumer knowledge about parent brand

The depth and breadth of awareness Strength, favorability and uniqueness of associations Basis of positioning and core benefits satisfied by the brand Managerial brainstorming and consumer research Consumer factors the product categories that seem to fit the parent brand image and associations positioning and core benefits

2. Identify possible extension candidates

Evaluating Brand Extension Opportunities

3. Evaluate potential of extension candidates through
a) Consumer factors consider the following

The 3 factors model of extension evaluations - Salience, Favorability, Uniqueness and other brand associations inferred The 4 factor model of extension feedback effects how compelling, relevant, consistent the evidence is, and how strongly held the parent brand associations are Consumers tend to focus more on tangible attributes than abstract attributes

Ensure all associations are investigated

Evaluating Brand Extension Opportunities

3. Evaluate potential of extension candidates extension feedback effects b) Corporate factors

How effectively corporate assets are leveraged How relevant are existing marketing programs, perceived benefits and target customers Extent of competitive advantage perceived by consumers Possible reaction by competitors

C) Competitive factors

Design Marketing Programs to Launch Brand Extensions

Choose brand elements

Retain one or more elements from the existing brand in packaging, advertising, etc. Relative prominence of parent brand elements determines

Strength of transfer from the parent Extent of feedback from extension to parent brand

Adopt its own brand element to distinguish it from the parent brand. Build its awareness and image Guidelines for the new elements

Memorability, Meaningfulness, Projectability, Adaptability, Transferability, Likability

Design Marketing Programs to Launch Brand Extensions

Design optimal marketing programs Positioning

Category extensions - focus more on POP

Less similar extension more important to establish POPs PODs follow from the parent brand and are easily perceived Dove shampoo

Line extensions - minimize cannibalization and confusion

Explain the relationship and difference between parent brand and extension

Design Marketing Programs to Launch Brand Extensions

Design optimal marketing programs Create

Product and non-related associations Pricing based on consumer perception of value Distribution - blend push and pull considerations Marketing communications - integrated by mixing and matching communication options

Leverage secondary brand associations

Leverage same secondary associations as parent brands Sometimes marketing strategies may require more elements endorsers, etc.

Evaluate Extension Success and Effects on Parent Brand Equity

Assess the extent to which extension has

Achieved its own equity Contributes to the equity of the parent brand

Use brand tracking studies based on CBBE model for evaluation, centered on both extension and parent brand as a whole

Successful Extensions

Create points-of-parity & points-of-difference in the extension category, and create BE for itself Enhance points-of-parity & points-ofdifference of parent brand Maximize the advantages & minimize the disadvantages of brand extensions

Extension Guidelines Based on Academic Research

Successful brands occur when the parent band is seen as having favorable associations and there is a perception of fit between the parent brand and the extension product There are many basis of fit (brand concept consistency)

Product related attributes and benefits Non-product related attributes and benefits

Common usage situations User types

Function oriented brands / prestige oriented brands

Extension Guidelines Based on Academic Research

Depending on consumer knowledge of the product category, perceptions may be based on technical /manufacturing commonalities, or more surface considerations such as necessary or situational complementarily High quality brands stretch farther than average quality brands, although both types of brands have boundaries A brand that is seen as prototypical of a product category can be difficult to extend outside the category

Extension Guidelines Based on Academic Research

Concrete attribute extensions are more difficult to extend than abstract extensions Consumers may infer associations that are positive in the original product class but become negative in the extension context Consumers may associate negative association about an extensions, perhaps even based on other positive associations It can be difficult to extend into a product class that is difficult to make

Extension Guidelines Based on Academic Research

A successful extension can not only contribute to the parent brand image but also enable the brand to be extended even farther An unsuccessful extension hurts the parent brand only when there is a fit between the two An unsuccessful extension does not prevent the firm form back tracking and introducing a more similar extension Vertical extensions are difficult and often require subbranding strategies The most effective advertising strategy for an extension is one that emphasizes information about the extension

Jean Noel Kapferer

Evaluation of Extensions

Extensions are acceptable to consumers if it fits their idea of the mother brand - typical products

High perceived similarity with the most typical products Coherence between the brand-contract and the extension

Extensions distant from mother brand atypical products

Objective characteristics are transferred the least Intangible / symbolic characteristics have more impact

Atypical products do not have a negative impact if extension has problems unlike typical products

Some Research Findings

Evaluation of extension depends on

The type of product
Functional products - links between the category of the original product and the extended product is important
Symbolic products - brand creates a link which otherwise would not have been there

Type of consumers - perceived similarity differs individuals

Non-experts see superficial signs of similarity

Complementarities Substitutability

Experts perceive similarity in the composition of product

Brand Extensions - Types

Extensions can be close or distant from original territory

Continuous extensions - specialist brand with a narrow spectrum of products

Compatible automobiles and spark plugs Substitutable shaving cream / shaving foam

Has technological synergies and psychological links with original brand - Line and Range extensions

Discontinuous extensions generalist brand with a large spectrum of products pianos and cars etc. simultaneously (real diversifications)

Draws deep on the meaning of the brand the source of inspiration, a value system Brand extensions

Type of brand
a Values Interests Know-how Formula product b c d

Brands with merely physical facets and no profound identity do not lend themselves to diverse / discontinues extensions

e
Degree of product dissimilarity

Choosing the Right Extension

Inner core line extensions Outer core spontaneous associations Extension zone Latent potential No-go-area threat to brands capital assets

David Aaker

Brand Relationship Spectrum Four Strategies

House of Brands - HUL

Many independent brands not connected Each brand has its own driver role

Endorsed brands Tata and Titan

Endorser has a relatively minor driver role

Sub-brands / Descriptors under a Master Brand

Both have a shared driver role Gillette Sensor

Branded House

Master Brand has the major driver role Virgin

Brand Relationship Spectrum 4 Strategies

The two extremes

House of Brands (each brand has its own driver role)

Brands not connected Disney and Touch Stone Shadow endorsers - Lexus (Toyota)

Branded House (master brand has the major driver role)

Same identity - Virgin Different identity - GE Appliances, GE Capital

Brand Relationship Spectrum 4 Strategies

In-between

Endorser brands - Role may vary from relatively minor to a strong driver role

Strong endorsers Courtyard by Marriott Linked name McMuffin, Nestea Token / shadow endorsers Universal Pictures (Sony)

Sub-brands under a Master Brand (shared driver role)

Master-brand as primary driver HP DeskJet Sub-brand as co-driver Gillette Sensor Sub-brand as a descriptor GE Appliances

Brand Portfolio
Consists of.

Master Brands Endorser / Subbrands Branded Differentiators Alliance / Co-Brands Corporate brands Branded Energizers

Brand Portfolio
Product Defining Roles Master brands Endorser Portfolio Roles Subbrand Strategic brands Descriptors Branded Energizers Product brands Silver bullets Umbrella brands Flanker Brands Branded Differentiators Cash cow brands Co-brand Driver role Brand Portfolio strategy Brand Portfolio Structure Brand Groupings Brand Hierarchy trees Brand Network models Portfolio Graphics Logo Visual presentation