Brand extensions definition

Definition:
Brand extension is using the leverage of
a well known brandname in one category
to launch a new productin a
different
category.
In a practical term- customers in a new category would
believe the new brand extension is better than the
existing products on an important dimension.

(Tauber, M. E. 2004)

Growth strategies
Current Products

Current
Market

New
Market

New Products

Market

Product

Penetration

Development

Strategy

Strategy

Market

Diversification

Development

Strategy

Strategy

How does a firm grow?

A Company/ Brand can:

Focus on current products and markets

Market penetration strategy

Put existing products into new markets

Market development strategy

Put new products into existing markets

Product development strategy

Put new products into new markets

Diversification strategy

Why Brand Extension

Leveraging brand equity/ value by introduction of logical

& complementary new product categories
Product Innovation to surpass consumer expectations
It increases awareness of the brand name
Increases profitability from offerings in more than one
product category. (widening the net to catch new
consumers.)
Its a great way to reinforce a brand, reach out to new
customers, create a BUZZ.

Brand Extensions
When a firm introduces a new product, it has
three choices on branding
1. Develop a new brand
2. Apply one of its existing brands in some
way
3. Use a combination of new and existing
brand

Brand Extensions

Brand extension when a firm uses an

established brand to introduce a new
product
When a new brand is combined with an
existing brand, the brand extension can
also be called a sub-brand
The existing brand is called the parent
brand, and if associated with multiple
product is called a family brand.

Brand Extensions
Brand extension can be classified as:
Line extensions : when the parent brand
is used to brand a new product that
targets a new market segment within the
same product category
Category extensions: when the parent
brand is used to enter a different product
category

Some Terminology

Brand Extension - A firm uses an established

Brand name to introduce a new product.

Sub-Brand - A new Brand is combined with an

existing Brand

Tommy Hilfiger perfume, watches, home

accessories.
Ralph Lauren Polo, Safari, V.Dot from Van
Heusen, Dockers from Levis.

Parent Brand The pre-existing Brand that gives

birth to the sub-Brand.

Product extension/Line Extensions

Product extensions are different/ new versions of the

same parent product.
They serve a different segment of the target market and
increase the variety of a product offering.
Example:
(i) Coke extends itself to Diet Coke in the same product
category of soft drinks.
(ii) Amul Butter extends itself to Amul reduced salt
butter, Amul Cheese and Cheese slices in its Core area
of milk product derivatives.

Brand extensions could be across different

product categories. Examples:
(i)Harley Davidson Motorcycles extends to Harley Davidson
Accessories.

(ii) Land Rover extends itself from Tough Off Road vehicles to
a line of stylish, yet functional outdoor clothing, shoes etc.

Brand Extension Assumptions

In introducing a brand extension, it is typically assumed

that:
Consumers have some awareness of and positive
associations about the brand in memory
Example:
(Raymond The complete man) * This is why Raymonds

were able to extend from their core in manufacturing fabrics to a

readymade clothing brand (Park Avenue) and from there to
Accessories & Grooming even!
Some of these positive associations are evoked by the brand
extension. -- since Raymond was always positioned as the The
Complete Man and Guide to the well-dressed male, their
extension into personal care was automatically promoted as the
Guide to the well-groomed male and viewed as such by
consumers.

Brand Extension
Example

Proctor &Gamble Crest

12 different types of toothpaste

Floss, Mouthwash, & Whitening strips

Advantages of Brand Extensions

Convey broader brand meaning to consumers

Some Enhance the parent brand image

Improve strength, favorability, and uniqueness of brand
associations
Reinforce the brand in the minds of the target group of
consumers and aspiring consumers.
Help increase buy-in , consumer mind-share and slowly
progress to share of wallet.
Improve consumer perceptions of company credibility
Clarify core benefit proposition and business definition of the
company

Bring new customers into the franchise and increase market

coverage
Facilitate new product acceptance (Nike clothing)
Reduced risk perceived by customers (Sony PC, Apple iphone)
Increase the probability of gaining distribution by brands reputation

When are Brand Extensions

Appropriate?

When Prior Brand Equity exists

Consumers must see some connection
between the proposed extension and the
parent brand.
Eg: Jeep/ Land Rover vehicles extending to
Jeep/ Land Rover Brand outdoor clothing
etc.
The proposed extension contributes to and
reinforces the overall brand equity of the
parent brand.

Some Successful extensions Ralph Lauren

Successful Extensions - Apple

Apple
Imac
Ipod
Iphone
Brands Core Values of Superb Cutting Edge Design
and Technology leveraged into first class consumer
products!

Example of successful brand :

- Yamaha is an original Japanese
manufacture for motorbikes but they
also moved successfully into branded
hi-fi equipment, pianos and sport
equipments
- McDonalds extend its brand into another
restaurant concepts such as Mc Caf
- Sony won the market by extending the
brand to laptops and digital camera

Brand Extension End-to-end example

1

Brand Extension End-to-end example

2
T SHIRTS &
SPORTS
APPAREL

LACOSTE BRAND
FRAGRANCES

LACOSTE
BRANDED
SPORTS &
FASHION
ACCESSORIES

LACOSTE SHOES

Here we see an excellent example of how a pure play sports brand extended itself
into several other relevant yet lucrative categories, while at all times, retaining the
essence of the mother brand. Their iconic use of the colour green signified
freshness and sport-derived from the traditional Wimbledon colours.

Disadvantages of Extensions

Extensions have risks, too.

They can fail over time.
(Example: The Virgin Megastores retail business didnt do well and now has been sold to zavvi.co.uk. Even Virgin Cola couldnt make a dent in the market place.)

Disadvantages of Extensions

Extensions can potentially result in the following

troubles/ costs:

They can cannibalize sales of the parent brand

(Eg; Amul Reduced Salt Butter is slowly eating
into sales of Amuls normal Butter.)

Disadvantages of Extensions

Extensions can also Hurt / Erode the image of the

parent brand
If the extension fails;
1. Xerox Computers; because Xerox was
synonymous with copiers and no one believed
they could make computers too. Luckily they
recovered by focussing on core competence
and re-invented themselves as The Document
Company.
Pierre Cardin extended too far by branding all
sorts of un-related products with his name.)

Frito Lay name is extended from potato chips into other types of
snack foods and dips. An introduction of Frito Lay lemonade
did not succeed because the fruity, sweet drink had little
connection to other Frito Lay products.

Other examples that did not work in the consumer market

include
Ben-Gay aspirin,
Fruit of the Loom laundry detergent.

However, M&M ice cream, Reeses peanut butter, and

Minute Maid orange soda experienced success because the
brands held direct and logical connections to their new
categories.

A few other Extension Failures

Levis Tailored Classics suits did not succeed.

Maggi pickles whats that??
Amul Instant Pizza failed to inspire the Indian
public

How far is too far?

Example: Maggi.
Core Product = 2 minute Noodles
Extension 1 = Soup cubes and Sauces/ Ketchup
Extension 2 = Soup Packets
Extension 3 = Pickles
* The first 2 extensions did well and were accepted by
consumers. In these two they created a number of
product line extensions and introduced new flavours and
variants which were accepted.
However, the third (Pickles) met with a poor response
because Maggi was viewed as a westernized ready-tocook concept and pickles were largely viewed as home
made/ traditional.

How far is too far?

Example: Pierre Cardin.

Core Product = Designer Apparel.
Extension 1 = Fragrances and Cosmetics
Further Extensions = Watches, Pens, Base ball caps,
cigarettes etc etc.
The first extensions did phenomenally well and were accepted
by consumers because fragrances and cosmetics etc were a
perfect brand fit and thus a natural extension.
However, the other wildly non-adjacent/ indiscriminate/
commoditized extensions, met with a poor response on
account of a sharp drop in quality as well as perception. There
was no way the consumer would believe that these products
stood for the same values as the original products and
product extensions had.

Is it always too far?

Would it be possible for the luxury designer jewellery brand
BVLGARI to successfully extend into Boutique Hotels too?

Considering the core values of BVLGARI are design,

craftsmanship and aesthetics - YES!
However, an Hotels core values are predominantly built
around hospitality.
Thus, the BVLGARI designed hotel in Central Milan has
RITZ-CARLTON as their hospitality partner.
A natural fit, since the RITZ-CARLTON has impeccable
credentials in luxury and hospitality.
To summarize this thought, the extension will most likely
succeed, provided the right synergies exist and there is a
clear target consumer group.

Successful Umbrella Brand Extensions

There are also cases of some Super brands that never

needed to re-brand or introduce sub-brands and yet created
huge successes in brand/ product extensions.

Examples:
Godrej covers office furniture through hair dye to ready-to-cook
chicken.

TATA covers a whole range of products/ services from Salt to

SUVs.

Mahindra covers products and services from Tractors to

Holidays.