LINE & BRAND EXTENSIONS

Leveraging Brand Equity

One of the most important changes in the market is the proliferation of extensions.

Managerial Questions
When considering entering a new product category, two important questions: 1. Should the firm use a brand extension strategy or a new brand strategy? 2. If the firm chooses to use a brand extension strategy, under what conditions will extensions be successful in capturing sufficient market share?

Why Extensions?
Managers use extension strategies under the assumption that brand associations (e.g., quality, reliability, status) and affect (attitudes) will transfer to the extension.

Line Extension Strategy

When a brand is used to brand a new product that targets a new market segment within a product category currently served by the parent brand. Examples: Coca-Cola diet Colgate for Kids Watts pear juice

Example
Bisleri is the pioneering brand in the mineral water category. Originally, Bisleri used to come in a one litre bottle. But recently, Bisleri has exhibited a spate of innovations. The brand launched bottles of different sizes and quantities. The Bisleri portfolio now includes one litre, 1.2 litre, 1.5 litre and 5 litre bottles.

Line Extension strategies

Bisleri 1.1 ltr

Product Sizes

Bisleri .5 ltr

Bisleri 1.2 ltr

Bisleri 1.5 ltr

Bisleri 5 ltr

Colour

Pantene White

Pantene Black

Pantene Pink

Etc.,

Flavours

Rasna Orange

Rasna Mango

Rasa Rose , etc

Ingredient

Colgate gel

Colgate Herbal

Colgate Salt etc.,

Form

Vim Bar Vim Liquid Vim Powder

 According to Gautam Singhania, Chairman and Managing Director, Raymond India: "Raymond aims to acquire a dominant position in the apparel sector in the country.
We believe that venturing into exclusive stores for our apparel brands will make our brands stronger and give the right impetus to our growth plans. We have enhanced our offerings under all our apparel brands to provide a complete wardrobe solution."

 "Men today want different solutions for different occasions - formalwear, relaxed work wear, evening wear, club wear, traditional wear, travel wear as well as sportswear. Our brands Park Avenue, Parx and Manzoni, have different categories to cater to this need. Thus, all our brands offer a solution to changing men's fashion needs at different price points," says Shreyas Joshi, President, Raymond Apparel.

Why Line Extensions?

In most of the product categories including fast moving consumer goods, consumer durables and services, line extension has been the name of the game. It is an expansionist move. The firms seem to seek growth more vigorously.

Nine prominent reasons

Customer Segmentation Customer need for variety Pricing Breadth Capacity Utilization Quick gains Competitive Reasons Trade Demands Counter Competition Image Benefits

Line Extension Risks

There are several dangers associated with line extensions. Line Confusion - Marketers sometimes add products to their line without sound logic and reasoning, without any clear role and goal. This may confuse the customers and the retailers and will affect the brands owner company in the long run.

Line Extension Risks

Encourage Variety seeking Brand loyalty is every marketers dream. By line extension, customers practice and become the habitant of variety seeking. Hence it influence brand switching behaviours. The loyalty is thus weakened.

Line Extension Risks

Success Myopia An idea may be a grand enough to be converted into a full-fledged independent brand. But the lure of extension seems to be so strong that the ideas are brought into the market as line extensions. This implies loss of a winning asset in the long-term.

Line Extension Risks

Strained relations When the lines expand, marketers tend to pressurize their trade partners such as wholesalers and retailers to carry the complete line in accordance with their wishes. The pressure appears to be applied more intensely at the retail level. The marketers seek adequate shelf space, promotion and information. But at the retailers end, it brings confusion and chaos. The result is the strained relations between the marketer and the retailer.

Brand Category Extension Strategy

Effort to use a successful brand name to introduce a new product into a different product category.
Examples:
Nike MP4 player Colgate toothbrush Sony digital camera

BRAND EXTENSIONS
Using an existing brand name to promote a product in a different category, is Brand Extension. The key difference between line and brand extension is the product category. In line extension the pdt. Category remains constant whereas in brand extensions product category is a variable.

EXAMPLE
Ponds Cold cream, Toilet soap Shampoo, Tooth paste, Moisturising lotion, Talc & Face wash. LG Television, Refridgerators, Computer monitors, Microwaves, Air Conditioners, Washing Machines & Mobile phones. Park Avenue Shirts, Shaving cream, Jeans, Belts, Perfumes, Soap & Razar.

Sub-Branding Strategy
Using a new brand name in conjunction with a family brand name to introduce new products.
Examples: Courtyard by Marriott Technics by Panasonic Levis Dockers Milo de Nestle

Co-Branding/Brand Alliance Strategies

When two or more brand names are attached to a product.
Examples: Compaq - Intel (Intel inside) Lan Chile-Mastercard-Banco Stgo

Example of Strategies
Parent Brand: Salomon (ski-equipment)
Line Extension: New type of skis Brand (Category) Extension: Salomon tennis racquet

Sub-Brand: Avenger by Salomon

Co-Brand: ingredient brand for grip, frame, or strings (Wilson and Goodyear rubber on soles of ProStaff Classic tennis shoes)

Why Brand Extension?

Cost of New launches Promotional Efficiency Consumer Benefits Feedback effects Returns

Types of Extensions
Product form extension A product launched in a different form usually means line extension, but if a different product form constitutes an entirely different product category. Example:
Amul milk Real Juices Amul Condensed milk Real Juice Concentrate

Types of Extensions
Companion Product The idea here is to capitalise 0n product complementarity. The consumer may view both the products jointly. Example :
Colgate Dental Cream Gillette Razors Gillette Shave forms Colgate Tooth Brush Gillette After Shave

Customer Franchise
A marketer may extend a product range in order to meet the needs of a specific customer group.

J&J Baby Talc

J&J Baby Oil

J&J Baby Cream

J&J Baby Shampoo

J&J Baby Diapers

Company Expertise
Brand Extensions often come in the forms of different product category introductions using a common name but emanating from a common expertise pool. This strategy is particularly seen in Japanese companies.
Honda scooters Honda Lawn movers

Honda Cars

Brand Distinction
Many brands achieve distinction in the form of a unique attribute, benefit or feature which gets uniquely associated with the brand. For instance, Parachute may have expertise of coconut nourishment in customers minds over time. This would give Marico Industries, the brand owner, the opportunity to launch a variety of products exploiting this distinction. Parachute
Hair Oil
Shampoo

Cream

Cooking Oil

Baby Soap

Baby Oil

Brand Image or Prestige

A brand extension may involve a foray into unrelated product categories based on a brands exclusive image or prestige value.

Steel, Automobile, Heavy Vehicles, Watches, S/W devpt. Training etc.,

Distinctive Taste, Ingredient or Component

A brand may develop equity based on any and / or combination of taste, ingredient or component. Then the marketers can make entries into unrelated product categories capitalising on these properties.
Nescafe Milk Supplement Nescafe Cold Coffee

Nescafe Coffee

Nescafe Chocolate

Nescafe Biscuits

Brand Extentability

 Extensions involve transfer of associations from the parent brand to the extension. The brand extendability depends on its character. The brands can be classified into 5 types through extendability.

Five forms of brands

The Product Brand - it is a situation where there is very little difference between the brand and the product. The brand is used as an identity of the product. Example : vicks,

Form 2 Formula Brand

Formula means a set procedure A brand which comes in the formula category simply implies that a standard procedure has been used to make the product. Example : cooking oil, pickles etc.,

Form 3 Know how brand

Know how is an expertise that a firm develops in a specialized area of activity.
Example : nokia is known for user friendly. Amul has developed its brand as an expertise in milk processing.

Form 4 Interest brand

A brand may be defined by its centre of interest. It may reflect its core spirit. Example Gillette maintains its focus on mens grooming in all its brands. Logo is the best a man can get which creates the interest among the target audience. Whirlpool home maker Nike winning to be on the cutting edge.

Form 5 - Philosophy
The brand at this level acquires more intangible character and orientation. The philosophy transforms its products in a realm altogether different from its physical reality. Example : Parker pen, De beers diamond

Forms of brand extendability

Product Brand Pillsburry Atta

Formula Brands Mothers Recipes Pickles lime, mango, mixed

Know how brand Bajaj Irons, Fans, coolers, mixers etc., Interest Brand Disney Toys, Theatre, Theme park, movies, etc

Philosophy Brand
Cartier Watches, jewellery, Bags, pens

Extensions.
Extensions are not simple as they appear to a layman. Consumers reject extensions when they do not make sense. Brand extension is not a physical act of merging two products. It is a tough process involving marrying two cognitive or perceptual concepts in order to create a consistent entity. Therefore, it must begin with exploring the brand in a prospects mind.

Exploring the brand involves seeking answers to the following questions.

What is a brands awareness level? What are its recall and recognition levels? What are different attributes associated with a brand? What benefit associations are connected with a brand? What are a brands personality associations? What are the symbols associated with the brand? What are a brands user associations? What is the perceived essence of the brand? What is a brands philosophy?

Strength of Associations - Ponds

PONDS
Talc Body care

Feminine

Floral

Cream

-Body Talc -Talc for Special occasions

Nail enamels Lip colours etc

Room Freshner, soaps, Fragrance, shampoo, etc

Body lotion, Body oil, creams

Beauty cream, Conditioning cream, cleansing cream, etc

Making an Extension successful

Aaker & Keller proposed certain assumptions about consumer behaviour which are fundamentally responsible for the success of a brand extension. The parent brand enjoys positive beliefs and favourable attitude in customers memory. It is these pre-existing beliefs and attitudes which help in the formation of positive beliefs and favourable attitude toward the brand extension. The negative associations are not transferred to the brand extensions, also these are not created by the brand extension.

Hypothetical Brand Extensions

Nikon Nestle Disney Haagen-Dazs Milo Colgate Fisher-Price Bacardi film beer daycare centers chocolate syrup sports clothes chewing gum baby shampoo

chocolates

Possible Extensions for the Lubriderm Brand

BRAND DEFINITIONS
moisturizer lotion

RELATED CATEGORIES
Soap - face cream - skin cream sunburn - after-shave - baby antiseptic - first-aid - hemorrhoid cream cotton - gauze - sterile pads emery boards - muscle toner - cotton swabs liquid hair net - mustard - glass cleaner perfume - room deodorizer - deodorant

Nivea Cream

medicinal purity body care pump bottle fragrance

Category Extension Strategies

1. Introduce the same product in a different form
examples: Jello Pudding Pops, Starbucks coffee ice-cream

2. Introduce products containing the brands distinctive taste, etc.

examples: Haagen-Dazs Cream liqueur, Philadelphia Cream Cheese salad dressing

3. Introduce companion products for the brand

examples: Nikon Film, Duracell Durabeam flashlights, Colgate toothbrush

4. Introduce products relevant to customer franchise of the brand

examples: Visa Travelers Checks, Gerber baby bottles

Category Extension Strategies

5. Introduce products capitalizing on the firms perceived expertise
examples: Honda motorcycles, Canon photocopy machines, Canon Scanner

6. Introduce products that reflect the brands distinctive benefit, attribute or feature owned: examples: Nestle chocolates, Nestle chocolate milk
Dove cream, Dove deodorant (Mild and Pure)

7. Introduce products capitalizing on image or prestige of the brand

examples: Calvin Klein clothes, Porsche sunglasses

Expanding Brand Meaning Through Extensions

Brand
Nesquik

Original Product
Flavoring for milk (children)

Extension Products
Cereals, yogurt, chocolate sauce, postre de leche.

New Brand Meaning

Fun Food for Kids

Crayola

Crayons

Markers, pens paints, pencils clay, etc.

Colorful Crafts for Kids

Nestl

Condensed and powered milk Razor Blades

Baby food, Nutritious and cereales, chocoHigh Quality lates, ice-cream, etc. Food. Shaving Set, deodorant. Personal Care For Men and Women

Gillette

Questions for Assignment

Highlight atleast five brands of various product category and find out the extension opportunities of those brands.
Find out which brand can be extended far from its present product, and which can move just above the extension boundary.