This chapter discusses brand extensions and evaluating opportunities for new extensions. It defines brand extensions as using an established brand name for a new product. When evaluating potential extensions, firms should define what consumers know about the brand, identify possible new products, evaluate how well each fits the brand and will leverage the brand's advantages. Marketing programs then need to be designed to launch successful extensions while minimizing risks and enhancing the parent brand's equity.
This chapter discusses brand extensions and evaluating opportunities for new extensions. It defines brand extensions as using an established brand name for a new product. When evaluating potential extensions, firms should define what consumers know about the brand, identify possible new products, evaluate how well each fits the brand and will leverage the brand's advantages. Marketing programs then need to be designed to launch successful extensions while minimizing risks and enhancing the parent brand's equity.
This chapter discusses brand extensions and evaluating opportunities for new extensions. It defines brand extensions as using an established brand name for a new product. When evaluating potential extensions, firms should define what consumers know about the brand, identify possible new products, evaluate how well each fits the brand and will leverage the brand's advantages. Marketing programs then need to be designed to launch successful extensions while minimizing risks and enhancing the parent brand's equity.
This chapter discusses brand extensions and evaluating opportunities for new extensions. It defines brand extensions as using an established brand name for a new product. When evaluating potential extensions, firms should define what consumers know about the brand, identify possible new products, evaluate how well each fits the brand and will leverage the brand's advantages. Marketing programs then need to be designed to launch successful extensions while minimizing risks and enhancing the parent brand's equity.
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CHAPTER 12:
INTRODUCING AND NAMING NEW PRODUCTS
AND BRAND EXTENSIONS
Kevin Lane Keller
Tuck School of Business Dartmouth College
12.1 Brand Extension Defined Brand extension or brand stretching is a marketing strategy in which a firm marketing a product with a well-developed image uses the same brand name in a different product category. The new product is called a spin-off. ... An example of a brand extension is Jello- gelatin creating Jello pudding pops.
12.2 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.
12.3 Ansoff’s Growth Share Matrix Current New Products Products
Current Market Product
penetration development Markets strategy strategy New Market Diversification development strategy Markets strategy
12.4 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 Category extension Using the parent brand in a different product category
12.5 General Strategies for Establishing a Category Tauber’s Franchise—Extension Introduce the same product in a different form. Example: Ocean Spray Cranberry Juice Cocktail Introduce products that contain the brand’s distinctive taste, ingredient, or component. Example: Philadelphia cream cheese salad dressing Introduce companion products for the brand. Example: Coleman camping equipment Introduce products relevant to the customer franchise of the brand. Example: Gerber insurance 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 12.6 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
12.7 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
12.8 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 12.9 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
12.10 Creating Extension Equity 1. Salience of parent brand associations in the minds of consumers in the extension context 2. Favorability of any inferred associations in the extension context 3. Uniqueness of any inferred associations in the extension context
12.11 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 12.12 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
12.13 Successful Category Extensions Ivory shampoo and conditioner Vaseline Intensive Care skin lotion Hershey chocolate milk Jell-O pudding pops Visa traveler’s checks Sunkist orange soda Colgate toothbrushes Mars ice cream bars Arm & Hammer toothpaste Bic disposable lighters Aunt Jemima pancake syrup Honda lawn mowers 12.14 Unsuccessful Category Extensions 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 Smucker’s ketchup Fruit of the Loom laundry detergent 12.15 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.
12.16 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
12.17 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.
12.18 Evaluating Brand Extension Opportunities
Define actual and desired consumer knowledge
about the brand Identify possible extension candidates Evaluate the potential of the extension candidate Design marketing programs to launch extension Evaluate extension success and effects on parent brand equity
