2 Contents The concept of brand strategies Naming a brand extension Brand extension strategies – line and category extensionBrand stretchingAdvantages and disadvantages of brand extensionsLaunching new brand extensions
3 Need for designing branding strategies Resources in the form of human effort, time, and money are required in abundance to build a brand from scratch.Once the brand is established and doing well, the companies realize that to stay competitive and to tap other opportunities in the market they need to come out with other products as well as to attract consumers.The new product can be branded under the existing brand or the organization can give an entirely new brand name to the same. The decisions pertaining to the same are strategic and have implications for the organization as a whole.Thus, over a period of time a company can have a number of brands in its basket of offering for consumers in the same or different product categories. This is called brand portfolio and includes all the brands and brand lines that a company has to offer to the market.
4 Product mix and Brand mix An organization’s product width includes all the different product lines it is offering to the market.The organization can come out with a number of related products (that form one product line) or a number of unrelated products (that form different product lines, i.e., the product mix).An organization’s product width denotes the number of product lines it has.In the product line it can have a single brand or a number of brands.All the brand lines that an organization has to offer are called the brand mix or brand assortment
5 Product mix width Product mix width Product line length Tiger Good Day BiscuitsProduct line - 2 CakesProduct line - 3 Dairy DelightsProduct line – 4 and so onTigerGood DayBourbon50-50Marie GoldTreatMilk BikisNutri ChoiceTime Pass NamkeenLittle HeartsNice TimeBar cakesCup cakesChunk CakesVeg cakesCheeseMilkDahiActimindGheeButterDairy WhitenerProduct line length
6 Product Line Depth – Britannia Tiger Biscuits BananaChocolateButterscotchElaichiOrangePineappleStrawberryChai BiskootBrita Energy PopsCoconut PopsRs 10Rs 4Rs 2Similarly can be in different packagings
7 Defining branding strategy Branding strategy ‘reflects the number and nature of common and distinctive brand elements applied to the different products sold by the firm. In other words, branding strategy involves deciding which brand names, logos, symbols and so forth should be applied to which products and the nature of new and existing brand elements to be applied to new products’(Keller, 2004)
8 Brand extensionBrand extension is defined as ‘when a firm uses an established brand name to introduce a new product’ (Keller, 2004).The new brand so launched is called a sub-brand and the existing brand is called the parent brand.If the parent brand name has already been used in various product lines, it is also called family brand
9 Strategies for choosing a brand name Corporate brand name combined with individual nameIndividual namesBlanket family namesSeparate family names for all products
10 Branding strategies and opportunities for growth Launch a new brand in an existing product category – Flanker brandLaunch a new brand in a new product category – New productLaunch an existing brand in an existing product category – Line extensionLaunch an existing brand name in a new product category – Category extension/ Franchise extension/ Brand extension
11 Effect of brand extension Brand strategyBrand extension vs. individual brandsSynergies with established brandHigher probability of success
12 Extensions Extensions can be of the following types Line extension Brand extension or Category extension
13 Line extensionWhen a new product is added to an existing brand in the same product category, it is called line extension. The new product can be new flavours, colours, package sizes, etc., that target a different set of customers
14 Why Line extension? Diversity of customers Customers’ need for variety Pricing breadthCapacity utilizationIncreasing profitabilityCompetitive reasonsTrade demandsCounter competitionImage benefits
15 Types of line extensions Horizontal line extensionVertical line extensionUpscale extensionDownscale extension
16 Category extensionWhen an existing brand name is used to launch a new product in a different product category, it is called category extension.Tauber (1988) popularized the notion of category extension by developing a disciplined approach to develop new products by ‘leveraging an established brand name into categories new to that brand and called it brand franchise extension’.Category extension is also referred to as brand extension by some authors
17 Why category/brand extension To capitalize on the brand equity that has been built over a period of timeLess money needs to be invested in comparison to an individual brandTo capture opportunities in the marketEnhances appeal of the brandFewer brands need to be managed in the portfolioAdvertising efficiencies are increased.
18 Types of category extensions A category-related extension is when an organization launches a brand related to the same category as the parent brand.Image-related brand extension is when the company leverages its image to launch new products.An unrelated extension is when a company launches a brand in a product category that is entirely new.
19 Types of leverages Extension of the product in a different form Companion/complementary productSame customer baseCompany expertiseDistinct features or benefits of the brandBrand image or prestigeDistinctive taste / ingredient
20 Brand stretchingThe terms stretching and extension are often used interchangeably.However, some have delineated extension as the addition of product variants or new products under the established brand name in the same product field as the established brand. On the other hand, stretching refers to a brand in a new product field.
21 Factors supporting brand stretch Awareness and reputation of the parent brandApplicability of the brand essenceExpertise and know-howConsumers’ perception of the difficulty to manufacture the new brandOffering complementary productsFilling a market gap
22 Factors against brand stretch Inappropriate association between the parent brand and new brandWrong associations between parent and new brandConsumers’ perception of the organization
23 Types of products that can be extended Products with function-oriented imageProducts with prestige-oriented image
24 Brand extension decision: An analysis A brand is an organizational asset built painstakingly over a period of time.This calls for a careful evaluation of the brand extension strategy and managers should take a call as to when to protect the brand name and when to exploit it.This requires a careful understanding of the various advantages and pitfalls associated with using an established brand name to launch a new product in the market.
25 Strategic advantages for the parent brand Enhance appeal for the parent brandReinforce key associationsStrengthen parent brand ‘memory structures’ and ‘facilitate retrieval processes’Maximize comparative advantageLead to fewer brands that need to be managedIncrease advertising efficienciesDefend a brandEnhance the life cycle of the brandHelp target a particular segment of customers
26 Strategic advantages for the sub-brand Positioning a brandIntroducing from a position of strengthMinimizing introduction expenseMinimizing marketing expensesQuality associationEncouraging trial purchaseSatisfying variety seeking behaviorIncreasing advertising efficienciesClarifying what the brand means to customersIncreasing market coveragePermitting subsequent extensions
27 Potential pitfalls of brand extensions Failure of brand name to add valueNegative associationProblem of fitCannibalization of parent brand’s salesPerception of poor qualityCreation of undesirable associationsWeakening of existing associationsDilution of the parent brand image resulting in confusionReduced identification with any one categoryEffect of a brand crisisForegoing opportunity to create a new brandEncounter retailer resistance
28 Critical factors for Brand extension success Relationship between Parent and extended brandPerceptual FitBenefit transferParent Brand characteristicsQuality of productConviction of parent brandExperience with parent brandBrand extension successExtended brandMarketing supportCompetitive leverageRetailer acceptance of the extended brand
29 Launching a brand extension Brand to be extended by the organizationFor example AmulStage 1Identify the associations with the brand name(example Amul – associated with quality milk products)Stage 2Definitions for each association*Butter Milk drinks Fresh milk Powdered milk CheesePizza Curd Ice-cream SweetsStage 3Related categories are identified for each definition*For example, cheese: processed cheese, cottage cheese, cheese spreads, mozzarella cheese etc.Stage 4Selecting the ‘candidate product’Stage 5Launching the brand extensionStage 6
30 Quick Recapitulation The concept of brand strategies Naming a brand extensionBrand extension strategies – line and category extensionBrand stretchingAdvantages and disadvantages of brand extensionsLaunching new brand extensions