ch. 12 introducing and naming new products and brand extensions

H&M collaboration

H&M has only participated in limited edition collaborations and has been very successful with this strategy more recently H&M has been more inventive with this strategy by collaborating with... - bloggers - charities - costume designers - cycle shop

JC Penneys collaboration

JC Penneys strategy from 2005-2010 was to acquire brands to be exclusively offered at the retailer afterwards, JC Penney has participated in mostly limited edition collaborations with brands however JC Penneys collaborations arents as successful as other retailers - JC Penney has had to reduce its Joe Fresh inventory - limited edition collections stay longer on the shelves

history of retailer's limited edition

(1983) JC Penney was the first to collaborate with designer brand Halston as a limited edition collection - the market wasnt ready for this type of collaboration and the brand lost its prestige - Bergorf Goodman stopped selling Halston because it was perceived that the value of the brand name had cheapened (2004) H&M re-pioneered limited edition collaborations with Karl Lagerfeld (2005) Target soon followed by introducing a series of limited edition collaborations (2011) Macy's was next to introduce a limited edition collab, followed by JC Penney and Kohls in 2012

examples of unsuccessful category extensions

- Harley Davidson wine coolers - Hidden Valley ranch frozen entrees - Bic perfumes - Ben-Gay aspirin - Kleenex tailored classics suits - Dominos fruit flavored bubble gum - Smuckers ketchup - Fruit of the Loom laundry detergent

disadvantages of extensions

- can fail and hurt parent brand image - can succeed but hurt the image of the parent brand - can succeed but cannibalize sales of parent brand - can dilute brand meaning - can cause the company to forgo the chance to develop a new brand - can confuse or frustrate consumers - can encounter retailer resistance (because does not offer new products to consumers)

examples of successful category extensions

- ivory shampoo and conditioner - vaseline intensive care skin lotion - hershey chocolate milk - jello pudding pops - Sunkist orange soda - Colgate toothbrushes - arm&hammer toothpaste - bic disposable lighters - honda lawn mowers

brand extension pre-conditions

- requires large investments - the brand needs to possess enough credibility and value - must make sense within the larger brand philosophy - all extensions should follow the same rules of delivering value and a competitive advantage in the new arena as well

advantages of extensions

FOR COMPANIES - bring new customers into brand franchise and increase market coverage - enhance the parent brand image (if succeed) - reduce the costs of introductory and follow-up marketing programs - avoid cost of developing a new brand - increase the probability of gaining distribution and trial - increase efficiency of promotional expenditures - enhance the parent brand image - increase market coverage FOR CONSUMERS - facilitate new product acceptance - reduce risk perceived by customers - permit consumer variety seeking

Kohls collaboration

Kohls strategy until 2009 was to offer ongoing brand extensions to be offered exclusively at the retailer - since 2010 Kohls has been offering both ongoing and limited edition collections - this is different from other retailers who often have an either/or strategy at one time collaborations have been mainly successful - Vera Wangs product offering grew from clothing to also include shoes, accessories, and fine jewelry - Ralph Laurens Chaps products offering grew from womens apparel to home goods

Macys collaboration

Macys started focusing on limited edition collections in 2011 introducing a Designer Capsule (2011-2012) program - the Designer Capsule program offers a series of designer limited edition products that rotate every few months since 2013 Macys has only introduced ongoing brand collaborations that are available exclusively at the retailer - this time the brand in more creative and has collaborated with celebrities, popular magazines, and fashion bloggers

limited collaboration between Target and Neiman Marcus

during Christmas holidays in 2013 was a multi-designer collaboration where top designers such as Marc Jacobs, Oscar de la Renta, Diane Von Furstenberg, and Tory Burch each designed an item under the Neiman Marcus name with these top fashion icons included in the collaboration, the collab received much hype and attention, and Target's president CEO and chairman told retail analysts that it would be a stretch if the collection did not sell out in a week Target even imposed quantity restrictions for customer purchases in anticipation that the partnering line would sell out quickly however consumers left Target empty-handed and items still left on the rack in the New Year were eventually deeply discounted at 70%

brand extension and brand equity

brand extension should contribute to brand equity of new product as well as that of parent brand brand extension should create a positive image for an extension and will depend on three consumer-related factors 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 compared to competitors

understanding how customers evaluate brand extensions

for a successful brand extension, the following assumptions should hold true - 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

brand extends should contribute to parent brand equity

it depends on... - 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 of 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

evaluating brand extension opportunities

need carefully consider brand extension strategies by applying managerial judgement and consumer research to the following steps define actual and desired consumer knowledge about the brand identify possible extensions candidates - via consumers research, brainstorming, etc. evaluate the potential of extension candidates based on 3 Cs - consumer factors - corporate and competitive factors - category factors design marketing programs to launch extensions evaluate extension success and effects on parent brand equity

types of collaboration by time frame: ongoing vs. limited

ongoing: offers all the time - Simply Vera Wang at Kohls limited: offers only limited time or only limited quantity - Missoni at Target - compared to offering an ongoing collaboration, limited edition is often successful because they can.. - create excitement and increase short-term sales - give the brand exposure to a new (lower-emd) market - the brand manages its distribution, so it decreases the risk of becoming too widespread and diluted - there are some reported failed cases, where the limited edition collections are deeply discounted weeks later to move merchandise

Targets limited edition

since 2005 Target has offered 36 limited edition collections - limited edition collaborations is a current dominate branding strategy for Target during this time, Target has offered two limited edition programs - Go International Program (2005-2011) - designed to bring international designers to the American market - often up and coming designers - Designer Collaborations Program (2008-2011) - collaboration with well-established designers

perceived fit

the perceived fit is the amount of congruence or similarity between the extension and the parent brand the higher the perceived fit is, the higher chance of success will be consumers usually categorize brand extensions and transfer their perceived quality of the parent brands, or their brand trust, to brand extension based on the perceived fit between the parent brand and the brand extension how about perceived fit for the following parent brand-extension brand? - Levi's jeans and Levi's tailored classics - Honda and Honda lawn mowers how about perceived fit for a collaboration between Target and Neiman Marcus?

failure cases of limited edition: Neiman Marcus with Target

there was a lack of perceived fit between Target and Neiman Marcus Neiman Marcus did not fit with Target's fashion forward and price conscious consumers prices were too high merchandise didnt move until it was marked over 70% off products offered did not resemble Target consumers labeled as offering 'old money' products such as cheese serving trays and letter openers

types of line extension

vertical: different price point in the same product - upward: same product, high price, high quality - downward: same product, low price, low quality horizontal: similar price point in new line or new category - line extension: new product, same category - category extension: new product, different category

brand extensions

when a firm uses an established brand name to introduce a new product ex. Giorgio Armani -> Emporio Armani, Armani Exchange