Part 4 - Brand Extension & Co-branding

Endorsed Brands

-These brands include a parent brand - which may be a corporate brand, an umbrella brand, or a family brand - as an endorsement to a sub-brand or an individual, product brand -Example: The Marriott is the "parent" hotel to the Courtyard, Fairfield Inn and Suites, and the Residence inn -Example: Nestle KitKat, Cadbury Dairy Milk, Sony PlayStation or Polo by Ralph Lauren

Why marketers extend brands

1) Assumed to be a less risky form of innovation because users already know the brand, retailer acceptance may be higher and in the case of line extensions the costs may be lower 2) Brand extensions are ways to increase the return on investment of the brand. Ex. grow sales, use up production capacity, appeal to new segments, and help the brand enter new markets. 3) Brand extensions are an essential form of brand innovation. 4) Brand extensions are essential if the brand is to avoid being commodified. 5) Brand extensions are a useful way of clarifying the brand's meaning. 6) Brand extensions may be essential to business model success. 7) Brand extensions can be necessary preemptive or reactive competitive moves. Brands may find they need to extend their brand into lower price points or offer fighter brands as a means of protecting themselves against lower cost competitors. 8) Brand extensions improve efficiency in marketing and other related expenditure. 9) Growth in brand portfolio

Why new products fail

1. Lack of primary demand 2. Diffusion barriers 3. Lack of differentiation 4. Improper pricing 5. Poor strategic planning 6. Competitive reaction 7. Product performance failures 8. Poor timing

Risks of category extensions

1. Less "fit" & success 2. Higher costs 3. Less risky in terms of parent-brand equity

Expanding Brand Meaning

Brand - Original Product - Extension Product - New Brand Meaning

Fit

Congruence between existing brand's meaning and extension

Product Life Cycle

Describes the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline - Following launch of any new branded product/service the management challenge is to ensure that the brand achieves its potential over its projected life span

Innovation vs Invention

Invention can be defined as the creation of a product or introduction of a process for the first time. Innovation occurs if someone improves on or makes a significant contribution to an existing product, process or service.

Brand Architecture

Is an organising structure of the brand portfolio that specifies brand roles and the nature of relationships between brands 1. Branded house 2. Sub-brands 3. Endorsed brands 4. House of brands

Risks of line extensions

Line extensions are less risky in terms of acceptance and cost, but they can involve greater risk to the parent-brand equity if it fails.

Pros + Cons of Co-branding

Pros: - Consumers take the positive associations from each brand and attribute these positive features to the co-brand - Both brands benefit from accessing each other's customer base and sharing resources - Enhances equity of both partners Con: If you equate co-branding with sponsorship and celebrity endorsement then dangers arise when one partner gets tainted through scandal

Mindshare-Driven Innovation

Radical / Drive Markets: Creative brands Incremental / Drive Markets: Heritage brands Radical / Market Driven: Share leaders Incremental / Market Driven: Follower brands

BCG Matrix

a means of evaluating strategic business units on the basis of (1) their business growth rates and (2) their share of the market Cash cows, stars, potential stars, dogs

Ansoff Matrix

"A Matrix looking at growth potential of a firms products. It classifies strategies into market penetration, new product development, market development and diversification and measures the degree of risk associated with each strategy."

Potential downsides of brand extensions

1) Customer confusion and reduction of category identification 2) Retailer resistance - realities have limited shelf space and may demand han an extension replace one of your existing products 3) Cannibalisation - big concern, especially with lower-cost line extensions 4) Parent brand dilution 5) Declining authenticity

Benefits of extending the brand

1) Efficiency - because extensions are identified with the parent brand one can spread the costs of marketing, distribution, research and development etc. across both. 2) Growth in sales and coverage 3) Clarify brand image and frame of reference 4) Refreshing the brand - extensions are a form of innovation 5) Build customer relationships

A brand strategy comprises of three things

1. Brand Positioning 2. Brand Architecture 3. Brand Extensions

Brand Extension Authenticity

A consumer's sense that a brand extension is a legitimate, culturally consistent extension of the parent brand. 4 components: 1) Maintaining brand standards and style 2) Honoring brand heritage 3) Preserving brand essence 4) Avoiding brand exploitation - brand authenticity arises when the brand somehow transcends perceptions of commercial intent.

Co-branding

A marketing partnership between two or more brands - Co-branding or brand alliances involve growing each partner brand through accessing the other's market and associations. - Is a way of combining seeming opposites to enhance the performance and image of the brand, without diluting the parent brands

Brand Extensions

A new product, in a new category, introduced under an existing brand name Line extension - involves extending the brand within an existing product or service category. Category extension - extending the brand franchise into new categories

Sub-brands

brand extension in which the new product carries both the parent brand name and a new name

House of Brands

de-centralised companies targeting diverse markets eg. P&G benefits: contradictory positioning across brands possible, exist in multiple categories, category ownership cons: inability to cross-promote & problems in one area can be contagious

Branded House

company applies its brand name to multiple, often unrelated services popular with onsumer and industrial service firms, business-to-business organisations, charities, professional services and government agencies Advantages: It is efficient One can leverage the master brand's credibility across different segments of users Downsides: Risk - if anything affects the master brand then the whole group of products can suffer as a result

Brand Architecture Strategy

helps marketers determine which products and services to introduce, and which brand names, logos, symbols, and so forth to apply to new and existing products Manage brand portfolio = number of individual brands / how to group them / whether or not to identify to users a connection between them → whether and how to use the corporate master brand

brand relationship spectrum

the degree to which brands are separated in consumer's minds the less the separation in consumers minds, the more transfer of associations: house of brands, endorsed brands, sub-brands, branded house