Brand Extension Decision

JuLY 28 , 2014

What is Brand Extension?

What is Brand extension?

Brand extension is using the leverage of
a well known or established brand name in
one category to launch a new product.

Logic:
customers in a new category would
be familiar with the name & possibly equate the same
value or image of the brand on many important
dimensions when they buy the new product.

Some Successful extensions Ralph Lauren

Successful Extensions - Apple

Apple
Imac
Ipod
Iphone
Apples Core Values of Superb Cutting Edge
Design and Technology leveraged into first
class consumer products!

Example of successful brand :

- Yamaha is an original Japanese
manufacture for motorbikes but they
also moved successfully into branded
pianos and sport equipments
- McDonalds extend its brand into another
restaurant concepts such as Mc Caf
- Sony won the market by extending the
brand to laptops and digital camera

Procter & Gambles

Ivory Soap (1879)

Ivory Liquid hand Soap;

Ivory Aloe Bar Soap;
Key Brand Values:
Purity, mildness , Gentleness
Other Cleansing related categories:
Ivory Dish Soap (Dishwashing Liquid)
Ivory Snow in Powder & Liquid ( Detergent)
Skincare In-gradients, Vitamin E; Shampoo,
Carpet Cleaner; Co-branding with bed
linens?

A few Brand Extension Failures

Levis Tailored Classics suits did not

succeed.
Maggi pickles whats that??
Amul Instant Pizza failed to inspire the
Indian public

Why Brand Extension?

Leveraging brand equity/ value by introduction of

logical & complementary new product categories
Innovation to surpass consumer expectations
It increases awareness of the same brand name
Enables presence in more than one product category.
(widening the net to catch new consumers.)
Its a great way to reinforce a brand name, or reach
out to new customers, create a BUZZ.

Types of Brand Extensions

Similar product in a different form from original parent

products
Mentos : Gum and Chewy Mints

Distinctive flavour/ingredient in new item

Benefit/attribute/feature owned is extended

Expertise gained over time can be extended into areas where

this expertise is a competitive advantage

Companion products Natural extension into related

categories

Line & Category Extensions

Brand extension is classified as:
Line extensions : when the parent
brand is used to brand a new product
that targets a new market segment
within the same product category
Category extensions: when the parent
brand is used to enter a different
product category

Sub Brand & Family Brand

When a new brand is combined with

an existing brand, the brand is called
a sub-brand.

If a brand is associated with multiple

product categories then brand is
called a family brand, where original
brand is called the parent brand.

Brand Extension

Sub-Brand - A new Brand name is combined

with an existing Brand

Tommy Hilfiger perfume, watches, home

accessories.

Ralph Lauren Polo, Safari, V.Dot from Van

Heusen, Dockers from Levis.

Parent Brand The pre-existing Brand that

gives birth to the sub-Brand.

Product extension/Line Extensions

Product extensions are different/ new versions of the

same parent product.
They serve a different segment of the target market
and increase the variety of a product offering.
Example:
(i) Coke extends itself to Diet Coke in the same
product category of soft drinks.
(ii) Amul Butter extends itself to Amul reduced salt
butter, Amul Cheese and Cheese slices in its Core
area of milk product derivatives.

Brand extensions could be across different

product categories. Examples:
(i)Harley Davidson Motorcycles extends to Harley Davidson
Accessories.

(ii) Land Rover extends itself from Tough Off Road vehicles to
a line of stylish, yet functional outdoor clothing, shoes etc.

Brand Extension:
Assumptions

In a brand extension, it is typically assumed that:

Consumers have some awareness of and
positive associations about the brand in
memory

Some of these positive associations are evoked

by the brand extension

Negative associations are not transferred from

the parent brand
Negative associations are not created by the
brand extension

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When are Brand Extensions

Appropriate?

When Strong Prior Brand Awareness

exists
Consumers must see some fit between
the proposed extension and the parent
brand
The proposed extension contributes to
the overall brand equity of the parent
brand

No dilution of existing Image

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Categories of Brand
Extensions

Line extension

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

H&S dry scalp shampoo

Category extension

Parent brand is used to enter a different

product category from that currently served
by the parent brand
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Categories of Brand
Extensions

Line extension

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

H&S dry scalp shampoo

Category extension

Parent brand is used to enter a different

product category from that currently served
by the parent brand
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Strategies for category extensions

Same product in a different form

Introduce products that contain the
Brands distinctive taste, ingredient or
component
Companion products
Capitalize on the firms perceived expertise
Distinct benefit, attribute, or feature
Image or prestige
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Advantages of Extensions

Extensions can potentially provide the

following benefits to facilitate new product
acceptance:

Reduce risk perceived by customers & distributors

Decrease cost of gaining distribution & trial
Increase efficiency of promotional expenditures
Avoid cost (and risk) of developing new names
Allow for packaging and labeling efficiencies
Variety-seeking
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Advantages of Extensions

Enhance the parent brand image

Convey broader brand meaning to consumers

Improve strength, favorability, and uniqueness of brand

associations
Improve perceptions of company credibility
Clarify core benefit proposition and business definition of
the company

Bring new customers into the franchise and

increase market coverage
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Disadvantages of Extensions

Extensions can potentially result in the

following troubles:

They can cannibalize sales of the parent brand

eg; Amul Lite (reduced Salt Butter) is slowly
eating into sales of Amuls normal Butter.

Disadvantages of Extensions

Extensions can also Hurt / Erode the image of

the parent brand
If the extension fails;
1. Xerox Computers; because Xerox was
synonymous with copiers and no one
believed they could make computers too.
Luckily they recovered by focussing on core
competence and re-invented themselves as
The Document Company.
Pierre Cardin extended too far by branding all
sorts of un-related products with his name.)

Disadvantages of Extensions

Extensions have risks, too.

They can fail.

Moreover, extensions can potentially result in the

following costs:

Cannibalize sales of the parent brand

Affect the image of the parent brand

If the extension fails

Even if the extension is successful

Forego the chance to develop a new

brand name or market the parent brand
differently (opportunity cost)

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Model of Extension
Evaluations
Creating extension equity depends on 3
factors:
1.

2.

3.

Salience of parent brand associations in

extension context
Favorability of any inferred associations
in the extension context
Uniqueness of any inferred associations
in the extension context
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Successful Brand Extension

Fit: What categories will consumers accept from a

brand?
A brand is easily stretch-able when lies on the
boundaries of another Product category
Leverage: Distinctive properties or competitive
advantages that the brand owns encashed upon
Research attempts to see what categories consumers
will accept for the brand (stretch-ability)
Ex: Is Duracell Flashlights name can be extended to
cameras? It was not accepted!

Principles of Brand Extensions

Brands should not be extended unless they are well

known, have high awareness and good reputation

Must be a logical fit in consumers judgement

Must have some meaningful association in the new

category

Not create confusion or negative impact on the parent

brand

Generally names not be stretched to too many

categories to avoid dilution of equity.

Principles of Brand Extensions

Extensions that do not create positive

synergies for patent brand should not be
pursued

Should open new category for the firm

Brand Extension must make business sense

Extension Failures

Campbell's tomato sauce

LifeSavers chewing gum
Cracker Jack cereal
Harley Davidson wine coolers
Hidden Valley Ranch frozen entrees
Bic perfumes
Ben-Gay aspirin
Kleenex diapers
Levi's Tailored Classics suits
Nautilus athletic shoes
Domino's fruit-flavored bubble gum
Smuckers ketchup
Fruit of the Loom laundry detergent
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