Brand extensions

“ occurs when firm uses an established brand name to introduce a new product”

Ansoff’s growth matrix share

McDonalds strategy

found its popularity in core markets under threat following international concern about the role of fast food in poor health and obesity.

Started posting losses, What can be done?

Go to this web site

http://www1.mcdonalds.com/bagamcmeal/

Adopt the Ansoff’s strategy for…

United spirits Infosys Kamat BEA Pidilite

Certain terminology

Sub brand: new brand combined with existing brand

Parent brand: existing brand gives birth to a brand extension

Family brand: parent brand already associated with multiple products through brand extensions

Two categories of brand extensions

Line extensions: apply parent brand to a new product that targets a new segment within a product category the parent brand currently serves

Category extensions: marketers apply the parent brand to enter a different product category from the one it currently serves

Seven general strategies for establishing a category

Identified by Edward Tauber Also known as franchise-extension1. Introduce same product in a different form2. Introduce products with brand’s distinctive ingredients,

taste or component3. Introduce companion products for the brand4. Introduce products relevant to the customer franchise of

the brand5. Introduce products capitalize on the firm’s perceived

expertise6. Introduce product that reflect the brand’s distinctive

benefits, attributes or features7. Introduce products that capitalize on the distinctive

image, prestige of the brand

Some examples

Iodex MTR AIM Visa Canon Photocopying machines Amway’s Ferrari Gear

Advantages of extensions

Facilitate New Product Acceptance Provide Feedback Benefits to the

Parent Brand

Facilitate New Product Acceptance

Nine main reasons for product failure The market was too small The product was poor match for the company The product was justified on inadequate or

inaccurate marketing research, or company ignored research results.

The company was too early or too late in researching the market.

The product provided insufficient ROI The product was not new or different The product did not go hand in hand with familiarity credibility was not confirmed on delivery Consumers did not recognize the product

Cont.. 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

Examples

Sony Vaio TATA HUL LG LED TV iPod Coca Cola Dove

Provide Feedback Benefits to the Parent Brand

Clarify brand meaning Enhance the parent brand image Bring new customers into the brand franchise and

increase market coverage Revitalize the brand Permit subsequent extensions

Examples

Cadbury’s= ESPN= KMF=

Disadvantages 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 and hurt the image of parent

brand Can dilute brand meaning Can cause company to forgo the chance to

develop an new brand.

Exercise

Find out possible extensions for Vaseline intensive care

Brand product Matrix Brand hierarchy