Academy for Professional Excellence (APEX) Nurturing aspiration

PROJECT REPORT SYNOPSIS

Name : - Amit Deb

Registration Number : - 520936692

Name of the Programme : - Masters of Business Administration

(MBA- Marketing) (IV SEM)

Title of the Project :- PRODUCTLINE EXTENSION & BRAND

EXTENSION IS VERY IMPORTANT

FOR COMPANIES GROWTH

CENTRE CODE :- 1513

Name of the organization :- SUN PHARMACEUTICAL INDUSTRIES LTD.

 PROJECT TITLE

PRODUCTLINE EXTENSION & BRAND

EXTENSION IS VERY IMPORTANT

FOR COMPANIES GROWTH

This paper attempts a study on the determinants of success of a new product launch based
on a survey of distributors. The study covers three new product launch strategies - Line
Extension, Brand Extension and New Brand Entry. The findings capture the determinants of
success of a new product launch using regression analysis. The study confirms that pull
factors play an important role in determining the success of a new product as compared to
the push factors. The findings also suggest that the success perception of line extension is
higher than that of brand extension.

INTRODUCTION

New product launch strategies have always been a popular choice for organizations seeking
growth. New products are launched in the market with an objective to attract more and
more customers and thereby, increasing market share. With increasing competition,
customers are being provided with varied options. Successful organizations all over the
world recognize the importance of 'new product launches' as a means of organic growth and
as a means to differentiate themselves from others. At the same time, it must be
remembered that it is not an easy task to create winning products in an increasingly
competitive environment. Considering the high failure rate of new products, launching a
new product is a risky proposition. The problems in new product launch are compounded by
the increasing competition in distribution channels and customer outlets and rising
advertising cost (Aaker, 1991). Thus, the capability to launch a new product successfully
would be an indication of an organization's capability in a variety of functions and therefore
may be used for distinguishing effective organizations from the ineffective

COMPANY PROFILE

Sun Pharma began in 1983 with just 5 products to treat psychiatry ailments. Sales were
initially limited to two states in Eastern India. Sales were rolled out nationwide in 1985.
Products for cardiology were introduced in 1987, and Monotrate, one of the first products
launched then, continues to be sold even today. Important products in Cardiology were later
added; several of these introduced for the first time in India, and these brought patients the
latest treatments at a sensible cost, a belief we've always lived by.

In 1997, our headquarters shifted to Mumbai, India's commercial capital. We began the first
of our international acquisitions with an initial $7.5 million investment in Caraco, Detroit. By
2000, we had completed 8 acquisitions, each such move adding new therapy areas or
offering an entry to important international markets.
In December 2004, a research center spread over 16 acres was inaugurated by the
President of India, with special lab space for drug discovery and innovation. The post 2005
years have witnessed important acquisitions to strengthen our US business- the purchase of
manufacturing assets for controlled substances in Cranbury,NJ; that of a site to make
creams and lotions in Bryan, that of Alkaloida, a Hungary based API and dosage form
manufacturer , and, Chattem Ltd., a Tennessee-based controlled substance API
manufacturer.

In September 2010 acquisition of Taro Pharmaceuticals doubled the size of our US business
and brought us a range of generics including a strong line of dermatologicals. Taro's
manufacturing facilities in Israel and Canada substantially add to our production capacity.

Line Extension and Brand Extension strategies are classified as:

Line Extensions: Line extension refers to introducing variations of the same brands in a
given product category and it helps the company in occupying various slots. Line extension
often involves a different flavor or ingredient variety, a different form or size, or a different
application for the brand. In line extensions, the parent brand is used to brand a new
product that targets a new market segment within a product category currently served by
the parent brand (Keller, 2003). A study of 7000 products produced in the supermarkets of
US revealed two-thirds of the most successful products, numbering 93 were line extensions
(Tauber, 1988) . For example, Brand Breeze is available in three variants: Magic, Lime and
Sandal.

Brand Extensions: Brands are considered to be one of the most valuable assets of a
company. In brand extensions, the equity of well-known brand is leveraged to obtain
presence in a different product category. The parent brand enters into a different product
category that currently served by the parent brand. The product category can be either
related or unrelated. Brand extension tends to be cost effective and viable in markets that
are highly competitive and also in situations where the cost of introducing new brands is
very high (Aaker, 1990). The launch of Anchor brand toothpaste, which is not related to its
parent product categories of electrical goods, is an example of brand extension. In a relative
term, line extension strategy is more defensive in nature while brand extension is a more
offensive strategy. Both the strategies are frequently used by corporales equipped with
strong brands.
 OBJECTIVE
The success rate for new products that are introduced by the many different companies is
less than 3 percent. As such, more and more companies are resorting to extending their
existing products and product lines. Even though this seems simple and straight forward,
facts paint a different picture .

ESSENTIAL FACTORS THAT IMPACT BRAND EXTENSION SUCCESS

1. Fit between parent brand and brand extension – The fit between the parent brand
and the brand extension is probably the most important factor that impacts the success of
the brand extension. Fit can be analyzed from multiple perspectives. But generally fi t refers
to the compatibility of the brand extension’s product category, product attributes and
associations to the parent brand’s product category, product attributes and associations.
Greater the fi t between the parent brand and the brand extensions, higher is the
probability of the success of the brand extension.

2. Parent brand conviction and parent-brand experience – The other important factor
the infl uences the success of the brand extension is the quality of experience that
consumers would have had with the parent brand. Such brand experience can include the
physical quality of the product, the service encounters, the price and value perceptions, the
post purchase service, the retail atmosphere and such. Also, the parent brand conviction,
which refers to the extent of support and commitment the parent brand has towards the
brand extension, also impacts the success of the brand extension.

3. Retailer experience – In spite of the ever increasing infl uence of the Internet on
shopping of even the branded products, retail spaces in the physical world still continues to
have a stranglehold on distribution. As such, the suc- Brand Extension Success – New profit
growth Martin cess of many brands is contingent on securing shelf space and the marketing
push provided by the retail establishment. Similar is the case with brand extensions. If
companies that extend their brands are not welcomed by retail stores and are not offered
marketing support and push by the retail stores, then the success of such products are
limited.

4. Marketing support – This is one of the important factors that determine the success of
brand extension that is under the control of the company. Given the proliferation of brands
in the market, it is only natural that the company that invests highly in promoting its brand
extension eventually ends up in a better position. Such support will help achieve two
objectives – one, it will facilitate a very aggressive push and pull demand for the brand
extension and two, it will help create positive perceptions about the company in the minds
of the consumers.
 METHODOLOGY
The companies have made an attempt to investigate into the various methods followed by
firms in launching new products. As indicated earlier, the new product launch strategies are:
new brand entry, line extensions and brand extensions. The companies have attempted to
critically evaluate these strategies and their relative success or failure in the Indian context.
For this purpose, the study covers a sample of distributors of various product categories. It
must be emphasized that the success evaluation of these three strategies by the distributors
is based on two major determinants: push or pull-related factors, and product- related
factors. As the research investigation covers one of the key players among the various
members of the distribution channel i.e., distributors, it is possible that the findings may
have some limitations, since the paper has not covered retailers and ultimate consumers.
Despite the limitations, the results would undoubtedly help the firms in designing
appropriate product launch strategies.

STAGE 1: Literature Research (Secondary Data):- A comprehensive review of the

relevant literature including a computer-assisted search has been undertaken in order to
develop an understanding of previous brands are in the market, and their position.Reports
of the literature and previous year facts and figures.

STAGE 2: The Results Based On The Survey(Primary Data) :- It can help to

know what proportion of the new products are a result of new brand launch, line
extension or brand extension. As the scope of the study focuses on distributors, it
attempts to understand the nature of new introduction strategies as perceived by this
trade channel.The data on new product/brand launches were collected from the
distributors of the companies. Distributors of various sectors including automobiles,
fast moving consumer goods and consumer durables were contacted in the Gujarat's
milk capital, Anand. A pre-tested questionnaire was used as research instrument for
distributor's survey. An in-depth interview was held with five distributors to
confirm the factors enlisted from the literature survey
 STAGE 3: Analysis And Broad Observations: - Higher positive correlation was
observed for the following parameters:

* Consumer Acceptances and Success of New Product (0.679).

* Brand Awareness and Success of New Product (0.665).

* Regular Availability and Success of New Product (0.536).

First two factors are associated with pull factors and the third factor is associated with
supply management. The quantitative analysis provides support for the importance of above
parameters responsible for the success of the new product. Regression model was used to
assess the strength of relationship between success, a dependent variable and independent
variables.

QUESTIONNAIRE

1. What is your gender?

o Male
o Female

2. What is your age? _____________ Year.

3. What are the data of your zip code? _______________

4. Do you know brand A?

o Yes
o No

5. Do you know brand B?

o Yes
o No
If you answered yes at question 5, the questionnaire ends here.
Thank you for your cooperation.

The following questions are all about brand A. Can you please give your opinion about the
following theses?

6. I can mention a couple of features of brand A.

o totally agree
o agree
o neutral
o disagree
o totally disagree

7. I think I know brand A well.

o totally agree
o agree
o neutral
o disagree
o totally disagree

5. What is your income?

o Below modal
o Modal
o Above modal

8. What is the outstanding reason that you use this product?

o___
o___
o___
 PROPOSED CONTENTS

COVER PAGE.

COMPANY CERTIFICATE.

TABLE OF CONTENTS.

PART I
EXECUTIVE SUMMARY
i. Introduction
ii. Objective
iii. Methodology
iv. Analysais
v. Conclusions
vi. Recommendations.

PART II
COMPANY PROFILE
I. Brief Introduction of the organization.
II. History of the organization.

PART III
PROJECT OVERVIEW
 I. Introduction
II. Objective
III. Methodology
IV. Analysis
V. Findings
VI. Conclusions
VII. Recommendations

PART IV
APPENDIX

I. Questionnaire
II. Bibliography
III. Glossary