CH 6: Brand extensions

•How NEW to the market is the new product? •How FAST is the market growing? •How COMPETITIVE is the market?

Assuming that there is a good product and brand fit, what kind of new products gain most from being supported by an established brand? Factors to consider include...

1. new product acceptance 2. raising parent brand value

Benefits of brand extensions

Brand image.

Both tangible product-related and intangible non-product related associations play a role in image fit. (ex: swiss army luggage, fail ex: nike casual shoes)

brand extension is when we introduce a new product line extension is where we introduce new and different versions of the same product

Brand Extension vs line extension

product development

Brand extension correspond to a strategy of _______ in Ansoff's matrix.

greater extendibility.

Brands with an identity not tied so closely to a narrow product-market category tend to have ______

•First, co-brand only with companies that share complementary values. •Second, co-brand only with products that hold best-in-class status. •Third, retain full review and approval rights on all communications

Co-branding guidelines

•Samsung stays close to its core manufacturing identity (semi-conductors, televisions, mobile phones, and home appliances). Good but makes it harder to build an attractive consumer brand. •Apple's identity is tied to the "cool" brand: The success of the iPod was followed by iPhone and the iPad - good. •IBM's business-to-business competence did not link up well with the skills needed for consumer sales and distribution channels of the PCs - not good. •Sony, with brand identity in premium consumer electronics, extended into movies, music, and entertainment - not good.

Examples of good and bad extendability:

Co-Branding

Instead of introducing new product, an established brand can leverage its strength in a particular market segment by _____ with an existing brand. is the practice of combining two independent brands into a single product or promotion.

dual branding ex: Zanussi - The Electrolux Group.

It is possible to use _____ with inferred endorsement without the "by"

PROS •1. A strong endorsing brand will reduce consumers' perceived risk. •2. The product can piggyback on an established brand's distribution. •3. An established brand will yield spillover effects in advertising. •4. The introductory campaign will be less costly. CONS •1. Less uniqueness compared with a new brand. •2. Brand fit may not be good enough to create acceptance.

New Product Acceptance Pros & cons

PROS •1. Increases the brand value by expanding brand reach. •2. Adds desirable associations of size to brand identity, image, and personality. CONS •1. Bad fit may dilute brand equity by creating negative associations. •2. New product failure will generate negative feedback to parent brand.

Parent Brand Value Growth Pros & Cons

•Need to evaluate the performance of the individual brand managers. •An umbrella hampers managerial initiatives by limiting independence. •Spillover of an accidental product failure can be contained. Ex: P&G, Unilever

Reasons against umbrella brands

1. Is the brand well-known with strong REPUTATION? 2. Is the brand's present customers also in the TARGET SEGMENT for the new product? 3. Does the brand have a loyal FOLLOWING? 4. Does the brand identity associations FIT with the new product category involved? 5. Does the brand have image and personality associations that will be NEGATIVES in the new target segment? 6. Is the new product's POSITIONING compatible with the existing brand's?

Several factors determine whether a brand is good for extension.

SAME NAME and LOGO in exactly the same design as the original. Since the associations will be obvious, this approach requires a very CLOSE FIT between the old and new products.

Several options exist to implement a brand extension. The simplest and most direct way involves using the...

brand personality

Since ________ basically transcends the product category, a very strong brand personality can be extended to widely different products. (ex: Virgin brand w/ excitement, etc. fail ex: IBM making personal computers)

Yamaha pianos and motorcycles Amazon.com from books to superstore Nokia From paper to cell phones Ericsson Telecom leader, but not for cell phones Marlboro Apparel is a red ocean

Some Unlikely Successes & Surprising Failures

•1. CONFIRMATION of the brand identity, image and personality that the qualitative research has suggested. •2. checking how respondents think the extended brand would PERFORM in the category. •3. ASSESSING the pros and cons of the extension for the parent brand's equity.

Standard surveys of representative samples of target audience members are used in a second step with three main goals:

intention to trial and purchase

The research should try to elicit some kind of ______ and ______ at different price points, however unreliable such responses may be.

psychological risks and enhance self-expression.

The second question of "fit" involves the brand's ability to reduce ______ The question is whether the brand itself "fits" the new product in image and personality.

endorsement uhis requires a new brand but with a tagline, as in "NexWatch A Honeywell company"

To accommodate some weaker fits, an alternative would be to use the existing brand as an _____ brand.

PROS increased brand equity marketing OPEX efficiencies CONS Lack of coordination (countered by "category management.") vulnerability

Umbrella branding pros and cons

brand's value and equity.

When a brand extension reduces functional risk and enable self-expression, the brand extensions will not only help the new product acceptance, but also raise the...

ex: X-Box by Microsoft ex: Honda and Acura

When the product fit is GOOD but the brand fit is BAD, a new brand might be needed to help indicate a new brand personality.

ex: Armani cologne.

When the product fit is WEAK, but the brand fit is GOOD, another name may not be needed.

new brand

When the product line extension goes too far - when it breaks the limits set by the brand identity, image, and personality - a ___________ _________ is called for.

the functional "fit" as good.

Where the original product that helped build the brand identity and the new product draw on the same core competence in the company, the chances are that consumers perceive....

Brand name image and personality "fit" with target, but brand identity is with cola and drinks only.

Why Have Coca Cola Extensions Failed?

brand extension separate brands in these segments

With little evidence of cross-overs between these segments, P&G sees no gain in using ______, but instead introduces

•the NEWER the product is to potential customers. •the SLOWER the market growth is. •the MORE COMPETITIVE the market is. (these three factors prove obstacles for the acceptance of the new product without the extension support)

•Generally, the usefulness of a brand extension is greater...

character (identity, image, and personality)

Every brand has a boundary beyond which it should not be extended. As we have seen, the brand's _____ sets limits.

The brand identity

defines the competency of the company and sets the limits for the credibility of the promises. (ex: dove in shampoo, fail ex: Dr. Pepper marinade)

brand extension

describes the case where an established brand is used to introduce a new product from a different product category.

Shift the form Transfer a component: Transfer a benefit: Leverage an expertise: Companion products: Leverage the customer base: Leverage a lifestyle: Leverage a celebrity expertise Leverage a celebrity lifestyle Change the game by changing a brand image

10 Examples of Successful Brand Extensions:

•It helps the new product's market acceptance. •It also helps grow the value of the extended parent brand.

A brand extension is supposed to accomplish two things:

-A new product will be more easily accepted if the fit is good. -The parent brand equity will rise further if the fit is good.

A good fit enhances the probability of success, while a lack of fit reduces it:

Both brand logos appear on a product it can involve advertising the two separate brands jointly it can mean that the brands share the same facilities it can involve ingredient branding

co branding options

house of brands Ex: P&G

company with a set stand alone of brands

sub brand pro: high visibility parent brand cons: vulnerability, OPEX per brand and sub brand

connect to master brand in some way

endorsed brand ex: Marriott PROS: faster market penetration quality assurance CONS: negative spillovers brand dilution *would weaken the effect, but also avoid backlash due to the weaker fit.

endorsed brands by larger brands

Jeep offers a special Eddie Bauer model.

ex of co branding Both brand logos appear on a product

The "Intel inside" campaign.

ex of co branding It can involve "ingredient branding."

Bacardi and Coca-Cola use a co-branding strategy.

ex of co branding It can involve advertising the two separate brands jointly.

Starbucks can be found in Barnes & Noble

ex of co branding It can mean that the brands share the same facilities

Umbrella branding EX: •In hair care: L'Oreal EverPure , L'Oreal VivePro, L'Oreal Kids. •In skin care: L'Oreal RevitaLift and L'Oreal Age Perfect. •In cosmetics: L'Oreal True Match Naturale and L'Oreal Colour Riche.

means one over-arching name for a set of products, with sub-brands "under" the umbrella. -all strongly attached to the parent brand

PROS focus on specific markets avoid negative spillovers CONS weaker brand loyalty OPEX inefficient

pros & cons of house of brands

PROS •Each of the brands gains goodwill from the partner. •Each of the brands gains potential customers. •Cost savings, especially for the more powerful brand. •Helps a new brand "piggy-back" on a better known brand. CONS •Lack of complementary fit will hurt the brand. •Co-brand's problems will spillover to the brand.

pros and cons of co-branding

The brand-product fit

refers to the degree to which the new product category and product features are reflective of the parent brand identity, image and personality.