mkt3712 CH 13: introducing and naming new products and brand extensions

what are the disadvantages of brand extensions?

1) confuse or frustrate consumers: greater product variety may induce shoppers to buy less. - consumers may reject new extensions for tried and true favourites or all-purpose versions that claim to supersede more specialised product versions. - many retailers do not have enough shelf or display space to stock the large number of new products and brands continually being introduced even if they wanted to. so some consumers may be disappointed when they are unable to find an advertised brand extension because a retailer is unable or unwilling to stock it. - if a firm launches extensions that consumers deem inappropriate, they may question the integrity and competence of the brand. 2) can encounter retailer resistance: it has become virtually impossible for a grocery store or supermarket to offer all the different varieties available across all the various brands in any one product category. moreover, retailers often feel that many line extensions are merely "me-too" products that duplicate existing brands in a product category and should not be stocked even if there is space 3) fail and hurt parent brand image: Even if an extension initially succeeds, by linking the brand to multiple products, the firm increases the risk that an unexpected problem or even a tragedy with one product in the brand family can tarnish the image of some or all the remaining products. however, 1 reason an unsuccessful brand extension may not necessarily damage the parent brand is the very reason the extension may have been unsuccessful in the first place. 4) succeed but cannibalise sales of parent brand: line extensions designed to establish POPs with current offerings in the parent brand category particularly may result in cannibalisation. - sometimes, such intrabrand shifts in sales are not undesirable; we can think of them as a form of preemptive cannibalisation. in other words, without the introduction of the line extension, consumers might have switched to a competing brand instead. 5) succeed, but diminish identification with any 1 category: 1 risk of linking multiple products to a single brand is that the brand may not be identified enough with any one product. thus, brand extensions may obscure the brand's identification with its original categories, reducing brand awareness. - Some counterexamples to these dilution effects exist, however, in firms that have branded a heterogeneous set of products and still achieved a reasonable level of perceived quality for each. 6) succeed, but hurt the image of the parent brand: if customers see the brand extension's attribute or benefit associations as inconsistent or even conflicting with the corresponding associations for the parent brand, they may change their perceptions of the parent brand as a result 7) dilute brand meaning: a brand extension's lack of identification with any 1 category and a weakened image may be especially evident with high-quality or prestige brands 8) cause the company to forego the chance to develop a new brand: the company forgoes the chance to create a new brand, with its own unique image and equity. - introducing a new product as a brand extension can have significant and potentially hidden costs in terms of the lost opportunities of creating a new brand franchise. - the extension's brand positioning may be less flexible, too, given that it has to live up to the parent brand's promise and image. - the positioning of a new brand, in contrast, could be introduced and updated in the most competitively advantageous way possible.

what are the advantages of vertical extensions?

an upward extension can improve brand image, because a premium version of a brand often brings positive associations with it. extensions in either direction can offer consumers variety, revitalise the parent brand, and permit further extensions in a given direction.

how do marketers evaluate the potential of the extension candidate?

analysis of the 3 Cs—consumer, corporate, and competitive factors—as well as category factors can be useful. 1) consumer factors: we assess its ability to achieve its own brand equity, as well as the likelihood that it can affect the parent brand's existing brand equity. - first, marketers must forecast the strength, favourability, and uniqueness of all associations to the brand extension. - the 3-factor model (salience, favorability, or uniqueness of parent brand associations) of extension evaluations and the 4-factor model (strength, favorability, and uniqueness of any other inferred associations) of extension feedback effects can provide guidance in studying consumer reactions. - ask consumers directly for their brand permission (How well does the proposed extension fit with the parent brand? Would you expect such a new product from the parent brand?). - we can even ask what products they believe are currently attached to the brand. if a majority of consumers believe a proposed extension product is already being sold under the brand, there would seem to be little risk in introducing it, at least based on initial consumer reaction. - to understand consumers' perceptions of a proposed extension, we can use open-ended associations, as well as ratings scales based on reactions to concept statements. - an interesting statistical approach uses Bayesian factor analysis to separate brand and category effects to better assess brand fit. - although consumers ultimately care about benefits, they often notice and evaluate attributes—especially concrete ones—in reacting to an extension. brand managers, though, tend to focus on perceived benefits in predicting consumer reactions, and, as a result, they may overlook some potentially damaging attribute associations. 2) corporate and competitive factors: - how effectively are the corporate assets leveraged in the extension setting - how relevant are existing marketing programs, perceived benefits, and target customers to the extension - what are the competitive advantages to the extension as consumers perceive them, and possible reactions initiated by competitors as a result? - 1 of the biggest mistakes marketers make in launching extensions is failing to properly account for competitors' actions and reactions. - too many extension products and too strongly entrenched competition can put a strain on company resources. - brand counter extensions—whereby a competing brand in the extension category chooses to launch its own extension into the parent brand's category—can pose a significant threat. a successful extension can reduce the perceived fit between categories, making it easier for a brand to counterattack. 3) category factors: marketers must determine the optimal product line strategy for their brand. they need a clear understanding of the market and the cost interdependencies between products. - this means examining the percentage of sales and profits contributed by each item in the product line and its ability to withstand competition and address consumer needs. - a product line is too short if the manager can increase long-term profits by adding items; the line is too long if the manager can increase profits by dropping items. - incremental sales generated by line extensions may more than compensate for the loss in sales due to cannibalisation. despite the pitfalls of line extensions and the many considerations necessary to properly manage extensions, the allure of line extensions for companies remains strong, primarily due to the cost and risk incurred in launching an entirely new brand.

8. consumers may infer negative associations about an extension, perhaps even based on other inferred positive associations.

even if consumers transfer positive associations from the parent brand to the extension, they may still infer other negative associations.

what is the reason for product failure?

the lack of a well-established brand name

how do marketers build brand equity for a brand extension by choosing brand elements, designing the optimal marketing program to launch the extension, and leveraging secondary associations?

1) choosing brand elements: brand extensions retain 1 or more elements from an existing brand. - sometimes packaging is such a critical component of brand equity that it is hard to imagine an extension without it. brand managers are in a real dilemma in such cases, because if they choose the same type of packaging, they run the risk that the extension will not be well distinguished. if they use different packaging, they may leave a key source of brand equity behind. - a brand extension can retain or modify 1 or more brand elements from the parent brand as well as adopt its own brand elements. in creating new brand elements for an extension, marketers should follow the same guidelines of memorability, meaningfulness, likeability, protectability, adaptability, and transferability. new brand elements are often necessary to help distinguish the brand extension and build awareness and image. 2) designing an optimal marketing program: consumer perceptions of value must guide pricing decisions, distribution strategies must blend push and pull considerations, and the firm must integrate marketing communications by mixing and matching communication options. when it comes to positioning, the less similar the extension is to the parent brand, the more important it typically is to establish necessary and competitive POPs. - the PODs for a category extension in many cases directly follow from the PODs for the parent brand, and consumers readily perceive them. - with line extensions, on the other hand, marketers have to create a new association that can serve as an additional POD and help distinguish the extension from the parent brand too. - for line extensions, consumers must also understand how the new product relates to existing products in order to minimise possible cannibalisation or confusion. 3) leveraging secondary brand associations: brand extensions will often leverage the same secondary associations as the parent brand, although competing in the extension category may require some additional fortification like linking to other entities. a brand extension differs in that, by definition, there is always some leveraging of another brand or company. the extent to which these other associations become linked to the extension, however, depends on the branding strategy the firm adopts and how it brands the extension. the more common the brand elements and the more prominence they receive, the more likely it is that parent brand associations will transfer.

what are the factors on how to create a positive image for an extension?

1. how salient parent brand associations are in the minds of consumers in the extension context: what information comes to mind about the parent brand when consumers think of the proposed extension, and the strength of those associations. 2. how favourable any inferred associations are in the extension context: whether this information suggests the type of product or service the brand extension would be, and whether consumers view these associations as good or bad in the extension context. 3. how unique any inferred associations are in the extension category: how these perceptions compare with those about competitors. - as with any brand, successful brand extensions must achieve desired POPs and PODs. without essential PODs, the brand risks becoming an undistinguished "me-too" entry, vulnerable to well-positioned competitors. - marketers must also establish any required POPs. the more dissimilar the extension product is to the parent brand, the more likely that POPs will become a positioning priority, and the more important it is to make sure that category POPs are sufficiently well-established. consumers might have a clear understanding of the extension's intended POD because it uses an existing brand name.

which 2 categories do brand extensions fall into?

1. line extension: marketers apply the parent brand to a new product that targets a new market segment within a product category the parent brand currently serves. - often adds a different flavour or ingredient variety, a different form or size, or a different application for the brand. 2. category extension: marketers apply the parent brand to enter a different product category from the one it currently serves.

what are the steps that marketers must follow while considering their strategies for brand extensions opportunities? (brand extension guidelines)

1. successful brand extensions occur when the parent brand is seen as having favourable associations, and there is a perception of fit between the parent brand and the extension product. (there are many bases of fit: product-related attributes and benefits as well as non-product-related attributes and benefits related to common usage situations or user types.) 2. depending on consumer knowledge of the product categories, perceptions of fit may be based on technical or manufacturing commonalities or more surface considerations such as necessary or situational complementarity. 3. high-quality brands stretch farther than average-quality brands, although both types of brands have boundaries. 4. a brand that is seen as prototypical of a product category can be difficult to extend outside the category. 5. concrete attribute associations tend to be more difficult to extend than abstract benefit associations. 6. consumers may transfer associations that are positive in the original product class but become negative in the extension context. 7. consumers may infer negative associations about an extension, perhaps even based on other inferred positive associations. 8. it can be difficult to extend into a product class that is seen as easy to make. 9. a successful extension can not only contribute to the parent brand image but also enable a brand to be extended even farther. 10. an unsuccessful extension hurts the parent brand only when there is a strong basis of fit between the two. 11. an unsuccessful extension does not prevent a firm from backtracking and introducing a more similar extension. 12. vertical extensions can be difficult and often require sub-branding strategies. 13. the most effective advertising strategy for an extension is one that emphasises information about the extension (rather than reminders about the parent brand). 14. individual differences can affect how consumers make an extension decision, and will moderate extension effects. 15. cultural differences across markets can influence extension success.

16. the most effective advertising strategy for an extension is one that emphasises information about the extension (rather than reminders about the parent brand)

a number of studies have shown that the information provided about brand extensions, by triggering selective retrieval from memory, may frame the consumer decision process and affect extension evaluations. - the most effective strategy appears to be one that recognises the type of information already salient for the brand in the minds of consumers when they first consider the proposed extension, and that highlights additional information they would otherwise overlook or misinterpret. elaborating briefly on specific extension attributes about which consumers were uncertain or concerned led to more favourable evaluations. - providing information could improve perceptions of fit when consumers perceived low fit between the brand and the extension, either by reinforcing an overlooked basis of fit or by addressing a distracting negative association. - repeating an ad that evoked primarily benefit brand associations could overcome negative perceptions of a highly incongruent brand extension. branding effects—in terms of inferences based on parent brand knowledge—operated both in the absence and presence of product experience with an extension, although they were less pronounced, or, in the case of an unambiguous negative experience, even nonexistent. evaluations of a high-equity brand could be diminished by an unfamiliar competitive brand when (1) a mixed display structure led consumers to believe the competitive brand was relevant and useful for judging the high-equity brand, (2) the precedence given to one brand over another in the display made expectations about brand differences or similarities more evident to consumers, and (3) the unfamiliar competitive brand disconfirmed these expectations.

10. a successful extension can not only contribute to the parent brand image but also enable a brand to extend even farther.

an extension can help the image of the parent brand by improving the strength, favourability, or uniqueness of its associations. when consumers did not already have strongly held attitudes, the successful introduction of a brand extension improved their choice and evaluations of a parent brand they originally perceived to be of only average quality. if an extension changes the image and meaning of the brand, subsequent extensions that otherwise might not have seemed appropriate to consumers may make more sense and appear to be a better fit. - by taking little steps, that is, by introducing a series of closely related but increasingly distant extensions, marketers may insert brands into product categories that would have been much more difficult, or perhaps even impossible, to enter directly. a successful extension thus helps brands grow in 3 important ways: 1. by establishing a new market for the brand, 2. by strengthening existing markets for the brand, and 3. by opening up the possibility of additional new markets for the brand to subsequently enter. different factors affect the success of multiple extensions. - consumers evaluated far extensions from a broad brand with extensions already in many different categories more favourably than from a narrow brand who had not been so widely extended. - if the perceived quality levels of different members of a brand portfolio are more uniform, then consumers tend to make higher, more confident evaluations of a proposed new extension. It is as if consumers in this case think, "Whatever this company does, it tends to do well" in terms of stages of the product category life cycle, early-entering brand extensions did not perform as well, on average, as either early-entering new-name products or late-entering brand extensions. the simultaneous introduction of two brand extensions (e.g., two digital cameras) had an effect on consumer evaluations of the extensions independent of their similarity or fit to the parent brand (e.g., Xerox). - consumers appear to view a related set of products from a single manufacturer as inherently appealing. - consumers may form their perceptions of extension fit very differently when a brand operates in multiple product domains.

how does an extension contribute to parent brand equity?

an extension must strengthen or add favourable and unique associations to the parent brand and not diminish the strength, favourability, or uniqueness of any existing associations. effects of an extension on consumer brand knowledge will depend on 4 factors: 1. how compelling the evidence is about the corresponding attribute or benefit association in the extension context: how attention-getting and unambiguous or easily interpretable the information is. 2. how relevant or diagnostic the extension evidence is for the attribute or benefit for the parent brand: how much consumers see evidence on product performance or imagery in one category as predictive of product performance or imagery for the brand in other categories. - evidence will affect parent brand evaluations only if consumers feel extension performance is indicative of the parent brand in some way. 3. how consistent the extension evidence is with the corresponding parent brand associations. - consistent extension evidence is less likely to change the evaluation of existing parent brand associations. - inconsistent extension evidence creates the potential for change, with the direction and extent of change depending on the relative strength and favourability of the evidence. 4. how strongly existing attribute or benefit associations are held in consumer memory for the parent brand, that is, how easy an association might be to change.

2. there are many bases of fit; both product-related and non-product-related attributes and benefits may influence extension fit.

any association about the parent brand that consumers hold in memory may serve as a potential basis of fit. - most academic researchers assume consumers' judgments of similarity are a function of salient shared associations between the parent brand and the extension product category. specifically, the more common and the fewer distinctive associations that exist, the greater the perception of overall similarity, whether based on product- or non product-related attributes and benefits. 1. to demonstrate how fit does not have to be based on product-related associations alone, Park, Milberg, and Lawson showed how the more prestige-oriented Rolex brand could more easily extend into categories such as grandfather clocks, bracelets, and rings than the more function-oriented Timex brand; however, Timex could more easily extend into categories such as stopwatches, batteries, and calculators. 2. a perceived lack of fit between the parent brand's product category and the proposed extension category could be overcome if key parent brand associations were salient and relevant in the extension category. - for example, Froot Loops cereal—that has strong brand associations to sweet, flavour, and kids—was better able to extend to dissimilar product categories—such as lollipops and popsicles than to similar product categories such as waffles and hot cereal—because of the relevance of its brand associations in the dissimilar extension category. thus, extension fit is more than just the number of common and distinctive brand associations between the parent brand and the extension product category. - this is the importance of taking a broader perspective of categorisation and fit. - for example, Bridges, Keller, and Sood refer to category coherence as members that "hang together" and "make sense." based on this concept of category coherence, physically dissimilar toy, bath care, and car seat products in the Fisher-Price product line can be linked together as "products for children." researchers have also explored other, more specific, aspects of fit, and have found that the use of specific contexts could influence judgments of fit. - when fit is judged in the context of a specific brand name ("Time magazine is like Time books"), judgments of fit are different than when fit is judged with only category labels (e.g., magazines and books). - the relationship between fit and new product evaluations was influenced by customers' confidence that a firm could provide a proposed new product.

12. an unsuccessful extension does not prevent a firm from backtracking and introducing a more similar extension.

as these experiences with brand extensions illustrate, failure does not doom a firm never to be able to introduce any extensions—certainly not for a brand with as much equity as Levi's. an unsuccessful extension does, however, create a perceptual boundary of sorts, in that it reveals the limits of the brand in the minds of consumers that may need to be overcome. in fact, Parker and his colleagues showed that if an unsuccessful extension managed to change and broaden the brand concept in the process, it could help to fuel more dissimilar extensions over time.

7. consumers may transfer associations that are positive in the original product class but become negative in the extension context.

because they have different motivations or use the product differently in the extension category, consumers may not value a brand association as highly as the original product.

15. vertical extensions can be difficult and often require sub-branding strategies

brand price premium was positively correlated with the quality of the lowest-quality model in the product line for the lower-quality segments of the market; for the upper-quality segments of the market, brand price premium was also significantly positively correlated with the quality of the highest-quality model in the product line. upscale extensions increased the price image of a brand, and downscale extensions decreased its price image when consumers were browsing or just looking around, but that did not necessarily apply when consumers were actively looking to make a purchase. - in the latter case, the effects could even be reversed: upscale extensions may actually decrease price image, and downscale extensions increase it, if consumers have an explicit buying goal. the ownership effect—whereby owners have more favourable responses than non-owners to brand extensions—in the context of brand line stretches. - they found that the ownership effect occurred for upward and downward stretches of non-prestige brands (such as Acura) and for upward stretches of prestige brands (such as Calvin Klein and BMW). - for downward stretches of prestige brands, however, the ownership effect did not occur because of owners' desires to maintain brand exclusivity. in this situation, a sub-branding strategy protected owners' parent brand attitudes from dilution.

what are the disadvantages of vertical extensions?

can confuse or frustrate consumers who have learned to expect a certain price range from a brand. - if the upward extension is sub-branded on the basis of a new attribute addition, then competitive brands sharing that attribute may enter the picture, and the parent brand may suffer in comparison. consumers may reject the extension, and the parent brand's image will suffer. - for prestige brands in particular, firms must often maintain a balance between availability and scarcity such that people always aspire to be a customer and do not feel excluded. even a successful downward extension has the possibility of harming the parent's brand image by introducing associations common to lower-priced brands, such as inferior quality or reduced service. - research has shown that higher-quality extensions are likely to improve evaluations of the parent brand more than lower-quality extensions might harm it. 1 of the biggest risk factors of a vertical extension, particularly a downward one, is that it will succeed but cannibalise sales of a parent brand. - it may bring new consumers to the brand franchise, but it may also bring a greater number of existing customers of the parent brand.

1. successful brand extensions occur when the parent brand has favourable associations, and consumers perceive a fit between the parent brand and the extension product

categorisation research suggests that people usually evaluate a stimulus in terms of whether they can classify it as a member of a previously defined mental category. - consumers use their categorical knowledge of brands and products to simplify, structure, and interpret their marketing environment. - in this categorisation perspective, if consumers saw a brand extension as closely related or similar to the brand category, they could easily transfer their existing attitude about the parent brand to the extension. if they were not as sure about the similarity, they might evaluate the extension in a more detailed, piecemeal fashion. in this case, the strength, favourability, and uniqueness of salient brand associations would determine how they viewed the extension. brand extensions are more likely to be favourably evaluated by consumers if they see some basis of fit or congruity between the proposed extension and parent brand. interestingly, moderately incongruent extensions can evoke more favourable extension evaluations than highly congruent extensions under certain specialised situations, such as when consumers are highly involved, and the extension is otherwise undifferentiated from competitors

14. both similar and dissimilar brands can partner successfully in a co-branded extension to achieve greater synergies.

co-branded extensions can be equally successful when even highly similar brands (those with similar brand images) join together, by leveraging their similarity of image and appeal. - in contrast, complementary brands (with varying strengths), can combine together to compensate for their relative weaknesses of the other brand and create a more successful jointly branded extension in the process. thus, both similar and complementary extensions can succeed, although their relative success depends on how the information about the co-branded product is processed by consumers. if the brands are dissimilar on the basis of how well-known they are, however, the less well-known brand must be careful that it is not overshadowed by the more well-known brand.

13. a co-branded brand extension can leverage the success and equity of two brands

co-branding can create positive effects for a stock brand, both in terms of consumer perceptions and financial performance. having a co-branded brand extension can strengthen brand attitude by leveraging the strengths of multiple brands.

18. cultural differences across markets can influence extension success.

consumers from Eastern cultures (such as China) have a more holistic style of thinking and perceive higher levels of extension fit than do consumers from Western cultures (such as the United States), who have a more analytical style of thinking. dilution effects for a typical or similar extension that fails also can vary by culture and consumer motivation. - consumers from Eastern cultures exhibit significantly greater dilution when their motivation is high; consumers from Western cultures exhibit significantly greater dilution when their motivation is low. cultural congruency can aid culturally consistent brand extensions over and beyond the effects of perceived fit. they note that a cultural congruent brand extension might be something like Sony electric car; a culturally incongruent car might be something like Sony cappuccino-macchiato maker.

9. it can be difficult to extend into a product class that consumers see as easy to make.

consumers may dismiss some seemingly appropriate extensions if they see the product as comparatively easy to make and brand differences are hard to come by. - then a high-quality brand may seem incongruous; alternatively, consumers may feel the extension will attempt to command an unreasonable price premium and be too expensive. when consumers see the extension category as difficult to make, such that brands can vary a great deal in quality, an extension has a greater opportunity to differentiate itself, although consumers may also be less sure what the exact quality level of the extension will be

4. high-quality brands stretch farther than average-quality brands, although both types have boundaries

consumers often see high-quality brands as more credible, expert, and trustworthy. as a result, even if they believe a relatively distant extension does not really fit with the brand, they may be more willing to give a high-quality brand the benefit of the doubt than a brand they see as average in quality. 1 important benefit of building a strong brand is that it can extend more easily into more diverse categories. if consumers had a high degree of attachment with a brand, they were willing to pay more for an extension, recommend it it others, and forgive any mishaps. if a brand evokes a strong positive emotional reaction, consumers are likely to be less influenced by the fit of the extension.

17. individual differences can affect how consumers make an extension decision and will moderate extension effects.

consumers vary in their short-term or long-term motivation, ability, and opportunity to evaluate an extension in a number of important ways. 1 important individual difference in extension evaluations is whether consumers are analytical (those who focus on comparing particular attributes) or holistic thinkers (those who focus more on comparing overall attitudes and judgments of the parent brand and extension). - analytical and holistic thinkers both gave prestige brands permission to extend widely, but holistic thinkers gave functional brands much greater permission to extend than analytical thinkers. consumers known as incremental theorists, who believe the personality traits of a brand are malleable, are more accepting of brand extensions than consumers known as entity theorists, who believe a brand's traits are fixed. another important individual difference relates to self-construal, or how people view and make sense of life and their life. a person with an independent self-construal is more concerned with the uniqueness of individuals. a person with an interdependent self-construal is more concerned with relationships between and among individuals. A consumer with an interdependent self-construal should be better able to uncover the possible relationships among a brand extension and its parent brand and thus, have higher perceptions of extension fit and favourability, particularly when interdependents were sufficiently motivated. brand-schematic consumers are more likely than others to process or organise information according to their brand knowledge. they were shown to be more likely to see the similarity in a brand extension concept. brand-aschematic consumers, on the other hand, use other information such as product characteristics or attributes as a frame of reference. another important individual difference between consumers is what academics call regulatory focus. this deals with motivation and how people go about pursuing their goals. individuals with a prevention focus are concerned with negative outcomes and avoiding losses via safety, security, responsibility, and so on. individuals with a promotion focus are concerned with positive outcomes, seeking gains and pleasure, and avoiding missed opportunities. consumers who are focused on prevention tend to judge dissimilar extensions less favourably than consumers who focus on promotion, due to their different interpretations of risk. promotion-focused consumers are more likely to focus abstractly on the overlap in benefits in judging an extension, whereas prevention-focused consumers are more likely to focus concretely on sheer category similarity. temporal factors can affect extension evaluations. positive mood led consumers to think more positively of extensions they viewed as moderately similar to a brand they valuated favourably (as opposed to very similar or dissimilar)

what is 1 of the advantages of extensions?

facilitate new-product acceptance 1) improve Brand Image: consumers can form similar inferences and expectations about the likely composition and performance of a brand extension, based on what they already know about the brand itself and the extent to which they feel this information is relevant to the new product. these inferences may improve the strength, favourability, and uniqueness of the extension's brand associations. 2) reduce risk perceived by customers: extensions from well-known brands may communicate longevity and sustainability. although corporate brands can lack specific product associations because of the breadth of products attached to their name, their established reputation for introducing high-quality products and standing behind them may be an important risk-reducer for consumers. - perceptions of corporate credibility—in terms of the firm's expertise and trustworthiness—can be valuable associations in introducing brand extensions. 3) increase the probability of gaining distribution and trial: the potential for increased consumer demand for a new product introduced as an extension may convince retailers to stock and promote it. - brand reputation was a key screening criteria of gatekeepers making new-product decisions at supermarkets 4) increase efficiency of promotional expenditures: the introductory campaign does not have to create awareness of both the brand and the new product but instead can concentrate on only the new product itself. 5) reduce costs of introductory and follow-up marketing programs: other efficiencies can result after the launch. - when a brand becomes associated with multiple products, advertising can be more cost-effective for the family brand as a whole. 6) avoid cost of developing a new brand 7) allow for packaging and labeling efficiencies: similar or identical packages and labels for extensions can result in lower production costs, and, if coordinated properly, more prominence in the retail store where they can create a "billboard" effect. 8) permit consumer variety-seeking: if marketers offer a portfolio of brand variants within a product category, consumers who need a change—because of boredom or satiation—can switch without having to leave the brand family.

what are some naming strategies for vertical brand extensions?

firms often adopt sub-branding strategies to distinguish their lower-priced entries. typically, the parent brand plays a secondary role. an even more difficult vertical extension is an upward brand stretch. - it is difficult to change people's impressions of the brand enough to justify a significant upward extension. at the same time, it is possible to use certain brand modifiers to signal a noticeable, although presumably not dramatic, quality improvement—for example, iPhone SE, Ultra Dry Pampers, Extra Strength Tylenol, or PowerPro Dustbuster Plus. - these indirect extensions, or "super-brands," may be less risky than direct extensions when moving a master brand up-market. to avoid the potential difficulties associated with vertical extensions, however, companies sometimes elect to use new and different brand names to expand vertically. - companies pursuing vertical expansion can avoid a negative transfer of equity from a lower brand to a higher brand, but they sacrifice some ability to transfer positive associations. - yet, when the parent brand makes no secret of its ownership of the vertical brands, as is the case with both the Gap and Toyota, some associations may be transferred because the parent acts as a "shadow endorser" of the new brand.

how do firms decide on new products and brand extensions?

first consider the sources of growth for a firm. 1 useful perspective is Ansoff's product and market expansion grid, also known as the growth matrix (categorise growth strategies according to whether they rely on existing or new products, and whether they target existing or new customers or markets) when a firm introduces a new product, it has 3 approaches for branding it: 1. it can develop a new brand, individually chosen for the new product. 2. it can apply one of its existing brands. 3. it can use a combination of a new brand and an existing brand.

5. a brand that consumers see as prototypical for a product category can be difficult to extend outside the category.

if consumers see a brand as exemplifying a category too strongly, it may be difficult for them to think of it in any other way. the relationship between primary and secondary ingredients Clorox may have encountered might also explain why Aunt Jemima was successful in introducing a pancake syrup extension from its well-liked pancake mix product, but syrup maker Log Cabin was less successful in introducing a pancake mix extension: pancake mix is seen as a more dominant ingredient than pancake syrup in breakfast pancakes.

what are vertical brand extensions?

it extend the brand up into more premium market segments or down into more value-conscious segments, are a common means of attracting new groups of consumers. - the equity of the parent brand can be transferred in either direction to appeal to consumers who otherwise would not consider it.

how does brand extensions create extension equity?

it must have a sufficiently high level of awareness and achieve necessary and desired POPs and PODs. - brand awareness will depend primarily on the marketing program and resources devoted to spreading the word about the extension. it will also obviously depend on the type of branding strategy adopted. the more prominently we use an existing brand that has already achieved a certain level of awareness and image to brand an extension, the easier it should be to create awareness of and an image for the extension in memory.

how do marketers fully understand the depth and breadth of awareness of the parent brand, and the strength, favorability, and uniqueness of its associations?

marketers must know what is to be the basis of positioning and core benefits satisfied by the brand. profiling actual and desired brand knowledge structures helps identify possible brand extensions as well as guide decisions that contribute to their success. in evaluating an extension, a company must understand where it would like to take the brand in the long run. - because the introduction of an extension can change brand meaning, it can affect consumer response to all subsequent marketing activity as well.

how do marketers identify possible extension candidates?

marketers should consider parent brand associations—especially as they relate to brand positioning and core benefits—and product categories that might seem to fit with that brand image in the minds of consumers. although consumers are generally better able to react to an extension concept than to suggest one, it still may be instructive to ask consumers what products the brand should consider offering if it were to introduce a new product. brainstorming is another way to generate category extension candidates, along with consumer research. 1 or more associations can often serve as the basis of fit. identifying key brand associations can become the starting point of identifying potential brand extension opportunities.

6. concrete attribute associations tend to be more difficult to extend than abstract benefit associations.

more abstract associations may be more relevant across a wide set of categories because of their intangible nature. parent brands' concrete attributes can transfer to some product categories. - a concrete attribute that is highly valued in the extension category because it creates a distinctive taste, ingredient, or component can often make the extension successful. - on the other hand, abstract associations may not always transfer easily. perhaps the most important reason was that consumers did not believe the abstract benefit would have the same meaning in the extension category (durability does not necessarily transfer because durability for a watch is not the same as durability for a handbag). consumers often generalise possession of an attribute from a specific category (like Sony televisions) to a more general category (say, all Sony products) more readily than they generalise the attribute from the specific category (Sony televisions) to another specific category (Sony bicycles). - the effect was greater the more the specific extension category was typical of the general category (Sony cameras are more typical than Sony bicycles).

11. an unsuccessful extension hurts the parent brand only when there is a strong basis of fit between the two

perceptions of quality for a parent brand in the health and beauty aids area decreased with the hypothetical introduction of a lower-quality extension in a similar product category (shampoo). quality perceptions of the parent brand were unaffected, however, when the proposed extension was in a dissimilar product category (facial tissue). unsuccessful extensions in dissimilar product categories did not affect evaluations of the parent brand. dilution effects were less likely to be present with flagship products; they occurred with line extensions but were not always evident for more dissimilar category extensions. - in high-motivation conditions, they found that incongruent extensions were scrutinised in detail and led to the modification of family brand evaluations, regardless of the typicality of the extensions. - in low-motivation conditions, however, brand evaluations were more extreme in the context of high (than low) typicality. because consumers considered the less typical extension an exception, it had reduced impact. consistent with these high-motivation findings, Milberg and colleagues found that negative feedback effects were present when (1) consumers perceived extensions as belonging to product categories dissimilar from those associated with the family brand, and (2) extension attribute information was inconsistent with image beliefs that consumers associated with the family brand. in terms of individual differences, Lane and Jacobson found some evidence of a negative reciprocal impact from brand extensions, especially for high-need-for-cognition subjects, but did not explore extension similarity differences. dilution effects with owners of prestige-image automobiles when low-priced extensions were introduced, but not with owners of nonprestige automobiles or nonowners of either auto-mobile. exposing consumers to brand extension information strengthened rather than weakened parent brand associations in memory, particularly for parent brands that were dominant in their original product category.

what is another advantage of extensions?

provide feedback benefits to the parent brand 1) clarify brand meaning: extensions can help clarify the meaning of a brand to consumers and define the kinds of markets in which it competes. - broader brand meaning often is necessary so that firms avoid "marketing myopia" and do not mistakenly draw narrow boundaries around their brand, either missing market opportunities or becoming vulnerable to well-planned competitive strategies. - thinking more broadly about product meaning can easily inspire different marketing programs and new product opportunities. in some cases, it is advantageous to establish a portfolio of related products that completely satisfy consumer needs in a certain area 2) enhance the parent brand image: by strengthening an existing brand association, improving the favourability of an existing brand association, adding a new brand association, or a combination of these. 1 common way a brand extension affects the parent brand image is by helping to clarify its core brand values and associations. core brand associations are those attributes and benefits that come to characterise all the products in the brand line and, as a result, are those with which consumers often have the strongest associations. another type of association that successful brand extensions may improve is consumer perceptions of the company's credibility. 3) bring new customers into the brand franchise and increase market coverage: line extensions can benefit the parent brand by expanding market coverage, such as by offering a product benefit whose absence may have prevented consumers from trying the brand. creating news and bringing attention to the parent brand may benefit the family brand as a whole. 4) revitalise the brand: Sometimes brand extensions can be a means to renew interest in and liking for the brand 5) permit subsequent extensions: 1 benefit of a successful extension—especially a category extension—is that it may serve as the basis for subsequent extensions. it also provided a halo effect that significantly boosted sales for the company's existing computer and software products

3. depending on their knowledge of the product categories, consumers may perceive fit based on technical or manufacturing commonalities, or on surface considerations such as necessary or situational complementarity.

taking a demand-side and supply-side perspective of consumer perceptions, Aaker and Keller showed that perceived fit between the parent brand and the extension product could be related to the economic notions of substitutability and complementarity in product use (from a demand-side perspective), as well as to the firm's perceived grasp of the skills and assets necessary to make the extension product (from a supply-side perspective). on the other hand, some extension examples have little manufacturing compatibility but greater usage complementarity, such as Colgate's extension from toothpaste to toothbrushes or Duracell's extension from batteries to flashlights. in other cases, extensions may leverage a similar target audience, as in the case of Visa traveler's checks. these perceptions of fit, however, may depend on how much consumers know about the product categories. - expert consumers are more likely to use technical or manufacturing commonalities to judge fit, whereas less knowledgeable novice consumers are more likely to use superficial, perceptual considerations, such as common package, shape, colour, size and usage. fit perceptions also vary across different types of consumers and how they view product extensions. - those consumers who believe that the personality traits of a brand are malleable (i.e., incremental theorists), are more accepting of brand extensions than consumers who believe that a brand's traits are fixed (i.e., entity theorists). - when feelings of personal control are low for consumers, they may be more likely to reject brand extensions that do not seem to fit well with a parent brand. mating mind-sets (thinking about a mate) can increase perceptions of extension fit particularly for moderately dissimilar extensions because it induces something called relational processing.

what are the managerial assumptions in evaluation of brand extensions?

the baseline case is where consumers are evaluating the brand extension based only on what they already know about the parent brand and the extension category, and before any advertising, promotion, or detailed product information is available. the baseline case gives managers guidance about whether to proceed with an extension concept and, if so, what type of marketing program they might need. under these baseline conditions, we can expect consumers to use their existing brand knowledge, as well as what they know about the extension category, to try to infer what the extension product might be like. for these inferences to result in favourable evaluations of an extension, 4 basic conditions must generally hold true: 1. consumers have some awareness of and positive associations about the parent brand in memory 2. at least some of these positive associations will be evoked by the brand extension. a number of different factors will determine which parent brand associations are evoked, but, in general, consumers are likely to infer associations similar in strength, favourability, and uniqueness to the parent brand when they see the brand extension as similar or close in fit to the parent. 3. negative associations are not transferred from the parent brand. 4. negative associations are not created by the brand extension

what is competitive leverage?

the set of advantages that a brand conveys to an extended product in the new category, that is, "when the consumer, by simply knowing the brand, can think of important ways that they perceive that the new brand extension would be better than competing brands in the category."

what are some examples of successful vertical extensions?

these companies have made sure that clear differentiation existed between brand extensions, minimising the potential for brand overlap and accompanying consumer confusion and brand cannibalisation. each extension also lived up to the core promise of the parent brand, thus reducing the possibility that any would hurt the parent's image

how do marketers assess the extent to which an extension is able to achieve its own equity as well as contribute to the equity of the parent brand?

they can use brand tracking based on the customer-based brand equity model or other key measures of consumer response centred on both the extension and the parent brand as a whole. a simple checklist and a more detailed scorecard to help in evaluating brand extension opportunities follows.

when does a brand extension occur?

when a firm uses an established brand name to introduce a new product (approach 2 or 3). when a new brand is combined with an existing brand (approach 3), the brand extension can also be a sub-brand. - an existing brand that gives birth to a brand extension is the parent brand. - if the parent brand is already associated with multiple products through brand extensions, then it may also be called a family brand.

when do feedback effects change brand knowledge?

when consumers view information about the extension as equally revealing about the parent brand, and when they hold only a weak and inconsistent association between the parent brand and that information. negative feedback effects are not restricted to product-related performance associations. - if a brand has a favourable prestige image association, then consumers may disapprove or even resent a vertical extension (a new version of the product at a lower price).

when does the freemium vertical extension work?

when there are significant benefits associated with creating a large user base who interact regularly with the free product. these users can then be targeted for up selling the higher-priced extensions of the base product.