BRAND EXTENSION

Presented ByDeepti Paliwal

Brand Extension refers to the use of a successful brand name to launch a new or modified product in a new market.

Virgin Group , which has extended its brand from Transportation (airplanes) it established videos stores such as Virgin megastore and now Virgin group has come in cell phone market also.

KNORR Soups add Indian and Chinese soups in its existing Classic soup.

Today Companies are adopting various strategies to remain in the market like,

When a firm introduces a new product it has 3 main choices:

1. It can develop a new brand individually.

2. It can use a same way, to its existing brands.

3. It can use a combination of a new brand with an existing brand.

Extension

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Image Related

Parent & Brand Extension (TATA steel ) Product differentiation

(TATA tea)

UnrelatedRelated

1. An example of this related category is Cinthol soap which launched Lime fresh and Spicy Fresh versions. Here the product did not been changed but stretched to accommodate variety.

Extension into related categories also can be divided in two parts:-

(a) Extension into the same product category OR Line Extension:-

Category-related extension is the other name for a

variant.

Extension into related categories :-

What are the reasons of Category Related Extension:-

(I) The brand is seen to have lost some of its luster

(II) The brand volumes are slipping and the organization suspects that it is lack of variety in the brand.

(III) Competition has come too close or launched a brand similar to the parent brand.

Examples of Category related Extensions are:- Colgate Dental cream to Colgate Gel :- This

brand extension came when Unilever launched Gel- version- Close up and made it a run away success. Colgate’s volumes were slipping.

Nirma Powder to Nirma Detergent cake:- the reason for Nirma powder success was price difference between ‘Surf and Nirma’ . The cake found ready acceptance in price sensitive households, specially rural ones.

(b) Image Related Extension :-Liril which is very popular in soaps becomes a brand name for a talcum powder also .

“BUT” Does the brand name Liril sound attractive

for toothpaste? This is the problem with Image Related

extensions, while it is true that the Image of the Extension should match with the parent product.

Examples of Image-Related Extension:-

Brand Name Brand Extension AMUL Milk to cheese spread LAKME Nail polish to

moisturizers MAGGIE Noodles to sauces&

Pazzta VICKS Vaporous to inhaler

Keo Karpin hair oil to baby oil:- Keo Karpin hair oil largely has an up market, hair oil image, this could have been successfully extended to women’s cosmetics or other things but in baby products success of Keo Karpin is looks suspicious because J&J is well established with baby products.

(2) Unrelated extensions:- TATA has been extended from Steel to salt

to chemicals to tea. GODREJ can be seen on hair dyes, safety locks, refrigerators and electronic typewriters.

There does not seem to be anything common to these products and yet these brands are successful.

There are several reasons for this:-

(I) TATA and GODREJ both are age-old brands, almost Hundred years old now. The fact that they have survived long ,gives the brand name an image of quality.

Examples of Unrelated Extensions:-

JK Tires to Cement :- There does not seem any logic of Brand extension and parent brand, but extension brand are doing well.

WIPRO Computers to lighting:- Wipro started as a food products company , but today Wipro identifies with information technology. It is difficult to see what is common in computers, lighting and shikaakai soap.

Wipro’s Santoor is also a popular name in soaps.

1. Improve Brand image:- Good Brand

extensions improves image of parent product as well as of company also.

2. Increase the probability of gaining distribution and trial:- Because of the potentially increased consumer demand resulting from introducing a new product as the extension it will be easier to convince retailers to stock and promote a brand extension.

Advantages of Brand Extension:-

3. Increase efficiency of promotional expenditure:-

Brand extension provides efficiency in promotional expenditure because as if that brand is already in the market organization does not require to create awareness of both brand and the new product.

Disadvantages of Brand Extension:-

1. Can confuse or Frustrate consumers:- Different varieties of line extensions may confuse and perhaps even frustrate consumers as to which version of the product is the right one. Consequently , some consumer s may be disappointed when they are unable to find an proper guidance regarding product or their benefits.

2. Can fail and hurt parent brand image:- Poor choices for brand extensions may dilute and deteriorate the core brand and damage the brand equity.

3. Can succeed but cannibalize sales of parent brand:- Even if sales of a brand extensions are high and meet targets. It is possible that this revenue may have merely resulted from consumers switching to the extensions from existing product offering of the parent brand in effect cannibalizing parent brand by decreasing the sales.

(1.) The “Fit” -: Category chosen for the brand extension must be seen as compatible with the nature of parent brand and the expertise it represents, there must be a fit.

For ex. Nirma looks fit for dish wash bars but it does not sound good for ketchup or noodles.

(2.) The value perception:- The second criteria on for successful brand extension is to ensure that there is consistency in the value perception of the brand in the new category as compared to its parent brand.

For ex. Dettol represents personal care and hygiene , if Dettol launches a beauty cream that will distinguish value of the brand name.

Criteria for Brand extension:-

3. The Edge:- Even if the value perception is favorable , consumers will expect to derive some advantage , some new benefits, before they switch. The extended brand needs to measure itself against each strong competitor which it will face.

For ex. If Dettol were to launch a shaving cream to take care of cuts during the shave it will built –in edge.

Brand Stretching:- Brand Stretching refers to the use of an established brand mane for products in unrelated markets.

Example- YAMAHA ( Japanese manufacturer of motorbikes) into branded hi-fi equipments , pianos and sports equipments.