Scribd
Upload
258 views27 pages

08 Introducing and Naming New Products and Brand Extensions

This document discusses brand extensions and strategies for introducing new products under an established brand name. It covers leveraging existing brands, types of extensions like line and category extensions, advantages like reduced risk and costs, and disadvantages like confusion or dilution of the parent brand. Guidelines are provided for evaluating extension opportunities, including understanding consumer knowledge of the parent brand, identifying possible extension candidates, evaluating candidates, designing marketing programs, and assessing the extension's impact on the parent brand.

Uploaded by

Devillz Advocate
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
258 views27 pages

08 Introducing and Naming New Products and Brand Extensions

This document discusses brand extensions and strategies for introducing new products under an established brand name. It covers leveraging existing brands, types of extensions like line and category extensions, advantages like reduced risk and costs, and disadvantages like confusion or dilution of the parent brand. Guidelines are provided for evaluating extension opportunities, including understanding consumer knowledge of the parent brand, identifying possible extension candidates, evaluating candidates, designing marketing programs, and assessing the extension's impact on the parent brand.

Uploaded by

Devillz Advocate
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 27

BRAND MANAGEMENT

MKT 543
INTRODUCING AND NAMING NEW Chapter 12
PRODUCTS AND BRAND
EXTENSIONS
LEVERAGE THE BRAND
Firms are seeking to build “power” or
“mega” brands that establish a broad
market footprint, appealing to multiple
customer segments with multiple products
all underneath the brand umbrella.

12.3
ANSOFF’S GROWTH SHARE MATRIX

12.4
NEW PRODUCTS AND BRAND EXTENSIONS
Brand extension: When a firm
uses an established brand
name to introduce a new
product
 Line extension - Adds a
different variety, a different
form or size, or a different
application for the brand
 Category extension -
Marketers apply the parent
brand to enter a different
product category from the
one it currently serves
NEW PRODUCTS AND BRAND EXTENSIONS

Sub-brand: New brand Parent brand: An existing Family brand: Parent brand
combined with an existing brand that gives birth to a associated with multiple
brand. brand extension products through brand
extensions.
ADVANTAGES OF EXTENSIONS
Facilitate New-Product Provide Feedback Benefits to
Acceptance the Parent Brand
• Improve Brand Image • Clarify Brand Meaning
• Reduce Risk Perceived by • Enhance the Parent Brand
Customers Image
• Increase the Probability of • Bring New Customers into the
Gaining Distribution and Trial Brand Franchise and Increase
• Increase Efficiency of Market Coverage
Promotional Expenditures • Revitalize the Brand
• Reduce Costs of Introductory • Permit Subsequent Extensions
and Follow-Up Marketing
Programs
• Avoid Cost of Developing a
New Brand
• Allow for Packaging and
Labeling Efficiencies
• Permit Consumer Variety-
Seeking
DISADVANTAGES OF BRAND EXTENSIONS
 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 but Hurt the Image of the Parent Brand
 Can Dilute Brand Meaning
 Can Cause the Company to Forgo the Chance to
Develop a New Brand
UNDERSTANDING HOW CONSUMERS
EVALUATE BRAND EXTENSIONS
Managerial assumptions

Brand extensions and brand equity

Vertical brand extensions


MANAGERIAL ASSUMPTIONS
Consumers have some awareness of and positive
associations about the parent brand in memory
At least some of these positive associations will be
evoked by the brand extension
Negative associations are not transferred from
the parent brand
Negative associations are not created by the
brand extension
BRAND EXTENSIONS AND BRAND EQUITY
An extension’s ultimate success will depend on its
ability to both achieve some of its own brand
equity in the new category and contribute to the
equity of the parent brand.

Creating extension equity


Contributing to parent brand equity
CREATING EXTENSION EQUITY
Creation of a positive image is based on three factors:
• Saliency of parent brand associations.
• Favorability of any inferred associations.
• Uniqueness of inferred associations in the
extension category.
The more dissimilar the extension product is to the
parent brand, the more likely that points-of-parity will
become a positioning priority, and the more important
it is to make sure that category POPs are sufficiently
well established.
CONTRIBUTING TO PARENT BRAND EQUITY
Effects of an extension on consumer brand knowledge
will depend on four factors:
• Compulsion of the evidence about the corresponding
attribute or benefit association in the extension
context.
• Relevance of the extension evidence will affect
parent brand evaluations only if consumers feel
extension performance is indicative of the parent
brand in some way.
• Consistency of the extension evidence with the
corresponding parent brand associations.
• Ease of an association to change.
VERTICAL BRAND EXTENSIONS
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.

Pros and cons


Examples
Naming strategies
PROS AND CONS
Pros
• 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, revitalize the parent brand,
and permit further extensions in a given
direction.
PROS AND CONS
Cons
• Vertical extension to a new price point, whether
higher or lower, can confuse or frustrate
consumers who have learned to expect a
certain price range from a brand.
• Successful downward extension has the
possibility of harming the parent’s brand
image by introducing associations common to
lower-priced brands.
• It will destroy the sales of the parent company.
EXAMPLES
• Many companies have succeeded in
extending their brands to enter new
markets across a range of price points.
• Armani, HolidayInn.
NAMING STRATEGIES

• Firms often adopt sub-branding strategies to


distinguish their lower priced entries.
• It is difficult to change people’s impressions of the
brand enough to justify a significant upward
extension.
• Honda, Toyota, and Nissan
NAMING STRATEGIES
• It is possible to use certain brand modifiers to
signal a noticeable, although presumably not
dramatic, quality improvement.
• Ultra Dry Pampers, Extra Strength Tylenol,
or PowerPro Dustbuster Plus
• To avoid the potential difficulties associated
with vertical extensions, companies sometimes
elect to use new and different brand names to
expand vertically.
• Gap
EVALUATING BRAND EXTENSION
OPPORTUNITIES
• Define actual and desired consumer knowledge
about the brand
• Identify possible extension candidates
• Evaluate the potential of the extension
candidate
• Design marketing programs to launch extension
• Evaluate extension success and effects on
parent brand equity
DEFINE ACTUAL AND DESIRED CONSUMER
KNOWLEDGE ABOUT THE BRAND

• It’s critical for marketers to fully understand the


depth and breadth of awareness of the parent
brand, and the strength, favorability, and
uniqueness of its associations.
• Profiling actual and desired brand knowledge
structures helps identify possible brand
extensions as well as guide decisions that
contribute to their success.
IDENTIFY POSSIBLE EXTENSION CANDIDATES
• Marketers should consider parent brand
associations and product categories that might
seem to fit with that brand image in the minds
of consumers.
• Consumers should be asked their preferences
while introducing a new product.
• Brainstorming is also used to generate
category extension candidates, along with
consumer research.
EVALUATE THE POTENTIAL OF THE EXTENSION
CANDIDATE
• Consumer factors
• Corporate and competitive factors
• Category factors
DESIGN MARKETING PROGRAMS TO LAUNCH
EXTENSION
Building brand equity for a brand extension
requires:
• Choosing brand elements.
• Designing optimal marketing programs.
• Leveraging secondary brand
associations.
EVALUATE EXTENSION SUCCESS AND EFFECTS
ON PARENT BRAND EQUITY
• To help measure the success of the
extension, brand-tracking is used based
on the customer-based brand equity
model or other key measures of consumer
response, centered on both the extension
and the parent brand as a whole.
BRAND EXTENSION GUIDELINES BASED
ON ACADEMIC RESEARCH
BRAND EXTENSION GUIDELINES BASED
ON ACADEMIC RESEARCH

You might also like