Brand Extensions

Chapter 12: Introducing and naming new products and brand extensions
Kevin Lane Keller Tuck School of Business Dartmouth College

Powerpoint Templates 12.1 Page 1
Leverage the Brand

Firms are seeking to build power or mega brands that establish a broad market footprint, appealing to multiple customer segments with multiple products all underneath the brand umbrella.
Powerpoint Templates
12.2
Page 2
Ansoffs Growth Share Matrix

Current Products Current Markets
Market penetration strategy Market development strategy
New Products
Product development strategy Diversification strategy
12.3
New Markets
Page 3
Brand Extensions
When a firm uses an established brand name to introduce a new product Brand extension classification Line extension Using a sub-brand to target a new market segment within the same product category Category extension Using the parent brand in a different product category
Powerpoint Templates 12.4
Page 4
Line Extension Strategies

Product Size
Billeri 1L
Bisleri 1.2L
Bisleri .5 L
Bisleri 1.5 L
Bisleri 5 L
Colour
Sunsilk Pink
Sunsilk Black
Sunsilk Yellow
Sunsilk Orange
Flavours
Rasna Orange
Rasna Mango
Rasna Rose
Rasna Lime
Rasna Cola
Rasna Pine Apple
Page 5
Page 6
Line extensions
Good Night mosquito mat and a Good Night mosquito Liquid. They fall under the same core benefit, which is eradicating mosquitoes, but are different categories
Page 7
Why Line Extensions

Customer segmentation
Customer need for variety
Pricing Breadth
Capacity utilization
Quick gains
Counter competition
Trade Demands
Page 8
General Strategies for Establishing a Category

Taubers FranchiseExtension
Introduce the same product in a different form. Example: Ocean Spray Cranberry Juice Cocktail Introduce products that contain the brands distinctive taste, ingredient, or component. Example: Philadelphia cream cheese salad dressing Introduce companion products for the brand. Example: Coleman camping equipment Introduce products relevant to the customer franchise of the brand. Example: Gerber insurance Klein clothes
General Strategies for Establishing a Category

Taubers FranchiseExtension
Introduce products that capitalize on the firms perceived expertise. Example: Honda lawn mowers Introduce products that reflect the brands distinctive benefit, attribute, or feature. Example: Lysols deodorizing household cleaning products Introduce products that capitalize on the distinctive image or prestige of the brand. Example: Calvin
Page 10
Advantages of 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 labeling efficiencies Permit consumer variety seeking
12.11
Page 11
Advantages of Extensions (Cont.)

Provide feedback benefits to parent brand Clarify brand meaning Enhance the parent brand image Bring new customers into brand franchise and increase market coverage Revitalize the brand Permit subsequent extensions
12.12
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What is a flanker brand?

A flanker brand is a new brand introduced into the market by a company that already has an established brand in the same product category. The new brand is designed to compete in the category without damaging the existing items market share by targeting a different group of consumers. This strategy, also called fighter branding or multibranding, is used to achieve a larger total market share than one product could garner alone. Companies with multiple brands in a single product category generally have the following types of products in their portfolios: A premium brand that offers high quality at a higher price.
Page 13
Disadvantages of Extensions
Can confuse or frustrate consumers Can encounter retailer resistance Can fail and hurt parent brand image Can succeed but cannibalize sales of parent brand Can succeed but diminish identification with any one category Can succeed but hurt the image of the parent brand Can dilute brand meaning Can cause the company to forgo the chance to develop a new brand
12.14
Page 14
Understanding How Customers Evaluate Brand Extensions
Managerial assumptions
Consumers have some awareness of and positive associations about the brand in memory At least some of these positive associations are evoked by the brand extension Negative associations are not transferred from the parent brand Negative associations are not created by the brand extension
Creating Extension Equity

1. Salience of parent brand associations in the minds of consumers in the extension context 2. Favorability of any inferred associations in the extension context 3. Uniqueness of any inferred associations in the extension context
12.16
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Contributing to Parent Brand Equity

How compelling the evidence is concerning the corresponding attribute or benefit association in the extension context How relevant or diagnostic the extension evidence is concerning the attribute or benefit for the parent brand 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
Successful Extensions
Must create points-of-parity and points-ofdifference in extension category
Must recognize competitive reactions
Must enhance points-of-parity and pointsof-difference of parent brand Must maximize the advantages and minimize the disadvantages of brand extensions
Powerpoint Templates 12.18
Page 18
Successful Category Extensions

Ivory shampoo and conditioner Vaseline Intensive Care skin lotion Hershey chocolate milk Jell-O pudding pops Visa travelers checks Sunkist orange soda Colgate toothbrushes Mars ice cream bars Arm & Hammer toothpaste Bic disposable lighters Aunt Jemima pancake syrup Honda lawn mowers
Unsuccessful Category Extensions

Campbells tomato sauce LifeSavers chewing gum Cracker Jack cereal Harley Davidson wine coolers Hidden Valley Ranch frozen entrees Bic perfumes Ben-Gay aspirin Kleenex diapers Levis Tailored Classics suits Nautilus athletic shoes Dominos fruit-flavored bubble gum Smuckers ketchup Fruit of the LoomPowerpoint laundry detergent Templates
12.20
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Evaluating Brand Extension Opportunities

Define actual and desired consumer knowledge about the brand Identify possible extension candidates Evaluate the potential of the extension candidate
The likelihood that the extension will realize the advantages and avoid the disadvantages of brand extensions. As with any new product, analysis of consumer, corporate, and competitive factors can be useful. 12.21 Powerpoint Templates
Page 21

Design marketing programs to launch extension
Building brand equity for a brand extension requires choosing brand elements, designing the optimal marketing program to launch the extension, and leveraging secondary associations.
Evaluate extension success and effects on parent brand equity

When are brand extensions appropriate? If they see some basis of fit or similarity between the proposed extension and parent brand The major mistake in evaluating extension opportunities is failing to take all of consumers brand knowledge structures into account. Often, marketers mistakenly focus on only one brand association and ignore other potentially important brand associations in the process. Powerpoint Templates 12.23
Page 23

Define actual and desired consumer knowledge about the brand Identify possible extension candidates Evaluate the potential of the extension candidate Design marketing programs to launch extension Evaluate extension success and effects on parent brand equity

Brand Extensions

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Chapter 12: Introducing and naming new products and brand extensions

Kevin Lane Keller Tuck School of Business Dartmouth College

Leverage the Brand

Ansoffs Growth Share Matrix

Line Extension Strategies

Rasna Pine Apple

Why Line Extensions

General Strategies for Establishing a Category

General Strategies for Establishing a Category

Advantages of Extensions (Cont.)

What is a flanker brand?

Understanding How Customers Evaluate Brand Extensions

Creating Extension Equity

Contributing to Parent Brand Equity

Successful Category Extensions

Unsuccessful Category Extensions

Evaluating Brand Extension Opportunities

Evaluating Brand Extension Opportunities

Evaluate extension success and effects on parent brand equity

Evaluating Brand Extension Opportunities

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