Chapter 12: Brand strategies

Contents The concept of brand strategies Naming a brand extension Brand extension strategies – line and category extension Brand stretching Advantages and disadvantages of brand extensions Launching new brand extensions

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.

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

Product mix width Product mix width Product line length Tiger Good Day Biscuits Product line - 2 Cakes Product line - 3 Dairy Delights Product line – 4 and so on Tiger Good Day Bourbon 50-50 Marie Gold Treat Milk Bikis Nutri Choice Time Pass Namkeen Little Hearts Nice Time Bar cakes Cup cakes Chunk Cakes Veg cakes Cheese Milk Dahi Actimind Ghee Butter Dairy Whitener Product line length

Product Line Depth – Britannia Tiger Biscuits Banana Chocolate Butterscotch Elaichi Orange Pineapple Strawberry Chai Biskoot Brita Energy Pops Coconut Pops Rs 10 Rs 4 Rs 2 Similarly can be in different packagings

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)

Brand extension Brand 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

Strategies for choosing a brand name Corporate brand name combined with individual name Individual names Blanket family names Separate family names for all products

Branding strategies and opportunities for growth Launch a new brand in an existing product category – Flanker brand Launch a new brand in a new product category – New product Launch an existing brand in an existing product category – Line extension Launch an existing brand name in a new product category – Category extension/ Franchise extension/ Brand extension

Effect of brand extension Brand strategy Brand extension vs. individual brands Synergies with established brand Higher probability of success

Extensions Extensions can be of the following types Line extension Brand extension or Category extension

Line extension When 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

Why Line extension? Diversity of customers Customers’ need for variety Pricing breadth Capacity utilization Increasing profitability Competitive reasons Trade demands Counter competition Image benefits

Types of line extensions Horizontal line extension Vertical line extension Upscale extension Downscale extension

Category extension When 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

Why category/brand extension To capitalize on the brand equity that has been built over a period of time Less money needs to be invested in comparison to an individual brand To capture opportunities in the market Enhances appeal of the brand Fewer brands need to be managed in the portfolio Advertising efficiencies are increased.

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.

Types of leverages Extension of the product in a different form Companion/complementary product Same customer base Company expertise Distinct features or benefits of the brand Brand image or prestige Distinctive taste / ingredient

Brand stretching The 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.

Factors supporting brand stretch Awareness and reputation of the parent brand Applicability of the brand essence Expertise and know-how Consumers’ perception of the difficulty to manufacture the new brand Offering complementary products Filling a market gap

Factors against brand stretch Inappropriate association between the parent brand and new brand Wrong associations between parent and new brand Consumers’ perception of the organization

Types of products that can be extended Products with function-oriented image Products with prestige-oriented image

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.

Strategic advantages for the parent brand Enhance appeal for the parent brand Reinforce key associations Strengthen parent brand ‘memory structures’ and ‘facilitate retrieval processes’ Maximize comparative advantage Lead to fewer brands that need to be managed Increase advertising efficiencies Defend a brand Enhance the life cycle of the brand Help target a particular segment of customers

Strategic advantages for the sub-brand Positioning a brand Introducing from a position of strength Minimizing introduction expense Minimizing marketing expenses Quality association Encouraging trial purchase Satisfying variety seeking behavior Increasing advertising efficiencies Clarifying what the brand means to customers Increasing market coverage Permitting subsequent extensions

Potential pitfalls of brand extensions Failure of brand name to add value Negative association Problem of fit Cannibalization of parent brand’s sales Perception of poor quality Creation of undesirable associations Weakening of existing associations Dilution of the parent brand image resulting in confusion Reduced identification with any one category Effect of a brand crisis Foregoing opportunity to create a new brand Encounter retailer resistance

Critical factors for Brand extension success Relationship between Parent and extended brand Perceptual Fit Benefit transfer Parent Brand characteristics Quality of product Conviction of parent brand Experience with parent brand Brand extension success Extended brand Marketing support Competitive leverage Retailer acceptance of the extended brand

Launching a brand extension Brand to be extended by the organization For example Amul Stage 1 Identify the associations with the brand name (example Amul – associated with quality milk products) Stage 2 Definitions for each association* Butter Milk drinks Fresh milk Powdered milk Cheese Pizza Curd Ice-cream Sweets Stage 3 Related categories are identified for each definition* For example, cheese: processed cheese, cottage cheese, cheese spreads, mozzarella cheese etc. Stage 4 Selecting the ‘candidate product’ Stage 5 Launching the brand extension Stage 6

Quick Recapitulation The concept of brand strategies Naming a brand extension Brand extension strategies – line and category extension Brand stretching Advantages and disadvantages of brand extensions Launching new brand extensions

Questions?