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BUILDING_ MEASURING_ AND MANAGING BRAND EQUITY

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BUILDING_ MEASURING_ AND MANAGING BRAND EQUITY Powered By Docstoc
					    New products and brand
          extensions


              Session 8




1
    For today

       Brand extension and new product
        development
       In class – Brand Extension
       December 5th
        –   Mary Weisnewski, Methodologie




2
    Overall, what is our goal as brand
    managers?

       Create brand equity, of course!!
        –   We have talked about creating BE using the IBM


       How do we sustain it?




3
    Brand Extensions: How does a firm
    grow?

       A firm 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

4
    Some Terminology

       Brand Extension - A firm uses an established
        Brand name to introduce a new product
        –   Harley-Davidson clothing
       Sub-Brand - A new Brand is combined with
        an existing Brand
        –   Dockers
       Parent Brand – The pre-existing Brand that
        gives birth to the sub-Brand
       Family Brand – Parent Brand of multiple
5       extensions
    Categories of Brand Extensions

       Line extension
        –   Parent brand is used to brand a new product that
            targets a new market segment within a product
            category currently served by the parent brand
                H&S dry scalp shampoo
       Category extension
        –   Parent brand is used to enter a different product
            category from that currently served by the parent
            brand
                Swiss army watches, Porsche bicycles
6
    Compare these extensions




7
    Extension Failures

       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

8
    Tauber’s strategies for category
    extensions

       Same product in a different form
       Introduce products that contain the Brand’s
        distinctive taste, ingredient or component
       Companion products
       Capitalize on the firms perceived expertise
       Distinct benefit, attribute, or feature
       Image or prestige

9
     Advantages of Extensions


         Extensions can potentially provide the following
          benefits to facilitate new product acceptance:
          –   Reduce risk perceived by customers & distributors
          –   Decrease cost of gaining distribution & trial
          –   Increase efficiency of promotional expenditures
          –   Avoid cost (and risk) of developing new names
          –   Allow for packaging and labeling efficiencies
          –   Variety-seeking


10
     Advantages of Extensions

        Enhance the parent brand image
         –   Improve strength, favorability, and uniqueness of brand
             associations
         –   Improve perceptions of company credibility
        Convey broader brand meaning to consumers
         –   Clarify core benefit proposition and business definition of the
             company
        Bring new customers into the franchise and increase
         market coverage

11
     Disadvantages of Extensions

        Extensions have risks, too.
         –   They can fail.
        Moreover, extensions can potentially result in the
         following costs:
          – Cannibalize sales of the parent brand
          – Hurt the image of the parent brand
                 If the extension fails
                 Even if the extension is successful
         –   Forego the chance to develop a new brand name
             or market the parent brand differently
             (opportunity cost)
12
     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
         –   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
13
     When are Brand Extensions
     Appropriate?

      When Prior BE exists
      Consumers must see some “fit”
       between the proposed extension and
       the parent brand
      The proposed extension contributes to
       the overall brand equity of the parent
       brand
         –   No dilution of existing SKS
14
     Model of Extension Evaluations

 Creating extension equity depends on 3 factors:
     1.   Salience of parent brand associations in extension
          context
     2.   Favorability of any inferred associations in the
          extension context
     3.   Uniqueness of any inferred associations in the
          extension context


15
     Brand Extension – In class

        Spend the remaining time coming up with a
         BE for your brand
        Get ready to discuss.




16

				
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