1. COURSE TITLE : STRATEGIC BRAND MANAGEMENT
Ashesi University
COURSE TITLE : STRATEGIC BRAND MANAGEMENT
SEMESTER : SECOND, 2010/2011
MODULE 10: Designing and Implementing a Branding Strategy II: Introduction & Naming New Products & Brand Extensions
Lecturer: Ebow Spio

2. Learning Outcomes
Appreciate the role of brand extensions in creating, maintaining, and enhancing brand equity.
Know the guidelines for introducing and naming of new products and brand extensions
Know the role and characteristics of strong brand managers.

3. 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.

4. Ansoff’s Growth Share Matrix
Current
Products
New
Markets
Market penetration strategy
Product development strategy
Market development strategy
Diversification strategy
Ansoff’s Growth Share Matrix seeks to demonstrate how a firm can grow its business.

5. Brand Extensions
When a firm uses an established brand name to introduce a new product
Brand extension classification
Line extension
Using a sub-brand to target a new market segment within the same product category. A line extension often adds a different flavour, or ingredient variety, different form or size
Category extension
Using the parent brand in a different product category
Brand extensions, which apply an established brand name to a new product in the same product category (line extension) or in a different product category (category extension) has been fueled in part by the rising cost of introducing new brands and by the growing realization among companies that their brand investments can be leveraged.
Brand extensions can facilitate new product acceptance by reducing consumers’ perceived risk, raising the probability of gaining distribution and trial, increasing the efficiency of promotional expenditures, lowering the costs of marketing programs, eliminating new brand development costs, allowing for packaging and labeling efficiencies, and permitting consumer variety seeking. They can provide feedback benefits to the parent brand by clarifying the meaning of a brand, enhancing the parent brand image, attracting new customers to the brand franchise, and thereby expanding market coverage, revitalizing the brand, and facilitating subsequent extensions.
However, brand extensions are not a risk-free strategy. They can confuse or frustrate consumers, encounter retailer resistance, hurt the parent brand image if they fail, cannibalize sales of the parent brand, diminish the parent brand’s identification with any one category, create unfavorable associations for the parent brand if they succeed, dilute the overall meaning of the parent brand, and eliminate the opportunity to develop a new brand with its own unique image and equity.
The best brand extensions not only create equity for the new product, but also add to the equity of the parent brand. All else being equal, an extension will be more successful if consumers perceive that the parent brand and the extension product fit together in some way. 75

6. General Strategies for Establishing a Category Tauber’s Franchise—Extension
Introduce the same product in a different form. Example: Key Powder (i.e. Key Soap is the parent brand)
Introduce products that contain the brand’s distinctive taste, ingredient, or component. Example: Omo Stain Remover Bar (i.e. Omo Detergent Powder is the parent brand)
Introduce companion products for the brand. Example: Coleman camping equipment
Introduce products relevant to the customer franchise of the brand. Example: Visa’s Travelers’ Cheque
Introduce products that capitalize on the firm’s perceived expertise. Example: Honda lawn mowers
Introduce products that reflect the brand’s distinctive benefit, attribute, or feature. Example: Lysol’s “deodorizing” household cleaning products
Introduce products that capitalize on the distinctive image or prestige of the brand. Example: Calvin Klein clothes
Many factors have led to aggressive line extension strategies, including customer segmentation, pricing breadth, excess capacity, competitive intensity, and trade pressure. Some of the risks of brand proliferation include: weaker line logic, lower brand loyalty, poorer trade relations, and increased costs. Recommendations to companies seeking effective product-line strategies include: improve cost accounting, allocate resources to winners, research consumer behavior, work with channel partners, and manage deletions.

7. Advantages of Extensions
Facilitate new product acceptance
Improve brand image
Reduce risk perceived by customers
Increase the probability of gaining distribution and trial
Increase efficiency of promotional expenditures
Reduce costs of introductory and follow-up marketing programs
Avoid cost of developing a new brand
Allow for packaging and labeling efficiencies
Permit consumer variety seeking 75

8. Advantages of Extensions (Cont.)
Provide feedback benefits to parent brand
Clarify brand meaning
Enhance the parent brand image
Bring new customers into brand franchise and increase market coverage
Revitalize the brand
Permit subsequent extensions 76

9. Disadvantages of 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 77

10. Understanding How Customers Evaluate Brand Extensions
Managerial assumptions
Consumers have some awareness of and positive associations about the brand in memory
At least 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 79

11. Creating Extension Equity
Salience of parent brand associations in the minds of consumers in the extension context
Favorability of any inferred associations in the extension context
Uniqueness of any inferred associations in the extension context

12. Contributing to Parent Brand Equity
How compelling the evidence is concerning the corresponding attribute or benefit association in the extension context
How relevant or diagnostic the extension evidence is concerning the attribute or benefit for the parent brand
How consistent the extension evidence is with the corresponding parent brand associations
How strong existing attribute or benefit associations are held in consumer memory for the parent brand

13. Successful Extensions
Must create points-of-parity and points-of-difference in extension category
Must recognize competitive reactions
Must enhance points-of-parity and points-of-difference of parent brand
Must maximize the advantages and minimize the disadvantages of brand extensions

14. Successful Category Extensions
Ivory shampoo and conditioner
Vaseline Intensive Care skin lotion
Visa traveler’s checks
Sunkist orange soda
Colgate toothbrushes
Mars ice cream bars
Bic disposable lighters
Honda lawn mowers

15. Unsuccessful Category Extensions
LifeSavers chewing gum
Harley Davidson wine coolers
Bic perfumes
Kleenex diapers
Levi’s Tailored Classics suits
Domino’s fruit-flavored bubble gum
Fruit of the Loom laundry detergent

16. Evaluating Brand Extension Opportunities
Define actual and desired consumer knowledge about the brand
Identify possible extension candidates
Evaluate the potential of the extension candidate
The likelihood that the extension will realize the advantages and avoid the disadvantages of brand extensions. As with any new product, analysis of consumer, corporate, and competitive factors can be useful.
A firm engaging in a brand extension strategy should 1) define actual and desired consumer knowledge about the brand, 2) identify possible extension candidates, 3) evaluate the potential of each candidate, 4) evaluate extension feedback effects, 5) consider possible competitive advantages and reactions, 6) design a marketing program to launch the extension, and 7) evaluate the success of the extension and its impact on the equity of the parent brand.

17. Evaluating Brand Extension Opportunities
Design marketing programs to launch extension
Building brand equity for a brand extension requires choosing brand elements, designing the optimal marketing program to launch the extension, and leveraging secondary associations.
Evaluate extension success and effects on parent brand equity

18. When are brand extensions appropriate?
If they see some basis of “fit” or similarity between the proposed extension and parent brand
The major mistake in evaluating extension opportunities is failing to take all of consumers’ brand knowledge structures into account.
Often, marketers mistakenly focus on only one brand association and ignore other potentially important brand associations in the process. 80

19. Guidelines for brand extensions
Successful brand extensions occur the parent brand has favourable associations and consumers perceive a fit between the parent brand and the extension product
There are many bases of fit : product –related attributes and benefits, as well as non-product –related attributes and benefits relate to common usage situations or user types
Depending on their knowledge of the product categories, consumers may perceive fit based on technical or manufacturing commonalities, or on surface considerations such as necessary or situational complementarity
High quality brands stretch farther than average-quality brands, although both types have boundaries
A brand that consumers see as prototypical for a product category can be difficult to extend outside the category

20. Guidelines for brand extensions
6. Concrete attribute associations tend to be more difficult to extend than abstract benefit associations
7. Consumers may transfer associations that are positive in the original product class but become negative in the extension context.
8. Consumers may infer negative associations about an extension, perhaps event basedon other inferred positive associations
9. It can be difficult to extend into a product class that consumers see as easy to make

21. Guidelines for brand extensions
10. A successful extension can not only contribute to the parent brand image but also enable a brand to extend even further
11. An unsuccessful extension hurts the parent brand only when there is a strong basis of fit between the two.
12. An unsuccessful brand extension does not prevent a firm from backtracking and introducing a more similar extension.
13. Vertical extension can be difficult and often require sub-branding strategies.
14. The most effective advertising strategy for an extension is one that emphasizes information about the extension (rather than reminders about the parent brand)

22. Key Points
Extensions can be either introduced in a product category currently served by the parent brand (i.e., line extension) or a completely different product category (i.e., category extension).
Extensions allow firms to reduce the costs of brand-building advertising campaigns and of educating consumers about specific product attributes.
3. The risks of brand extensions include dilution of the brand name and negative feedback effects on existing products.
4. The best extensions are those where the parent brand name helps the new product and the new product helps the parent brand.

23. Tutorial
How successful do you predict these recently proposed extensions will be? Why?
a. Evian (famous for water) and high-end spas
b. Starbucks (famous for coffee) and film production & promotion
2. Consider the following brands and discuss the extendibility of each:
Harley-Davidson, Red Bull, Tommy Hilfiger, Ashesi University College, UT Financial Services, Databank, Devtraco

24. Characteristics of Strong Brands Managers
Understand brand meaning and market appropriate products in an appropriate manner
Properly position the brand
Provide superior delivery of desired benefits
Employ a full range of complementary brand elements and supporting marketing activities
Embrace integrated marketing communications and communicate with a consistent voice
Measure consumer perceptions of value and develop a pricing strategy accordingly
Establish credibility and appropriate brand personality and imagery
Maintain innovation and relevance for the brand
Strategically design and implement a brand hierarchy and brand portfolio
Implement a brand equity management system to ensure that marketing actions properly reflect the brand equity concept