Brand extension’s 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?
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A Company/ Brand can:
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Focus on current products and markets
 Market penetration strategy
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Put existing products into new markets
 Market development strategy
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Put new products into existing markets
 Product development strategy
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Put new products into new markets
 Diversification strategy
Why Brand Extension
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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.)
It’s 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
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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
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Some Terminology
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Brand Extension - A firm uses an established
Brand name to introduce a new product.
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Sub-Brand - A new Brand is combined with an
existing Brand
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Tommy Hilfiger perfume, watches, home
accessories.
Ralph Lauren Polo, Safari, V.Dot from Van
Heusen, Dockers from Levi’s.
Parent Brand – The pre-existing Brand that gives
birth to the sub-Brand.
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Product extension/Line Extensions
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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.
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Brand extensions could be across different
product categories. Examples:
(i)Harley Davidson Motorcycles extends to Harley Davidson
Accessories.
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(ii) Land Rover extends itself from Tough Off Road vehicles to
a line of stylish, yet functional outdoor clothing, shoes etc.
Brand Extension Assumptions
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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 Raymond’s
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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
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Convey broader brand meaning to consumers
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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 brand’s reputation
When are Brand Extensions
Appropriate?
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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
Brand’s Core Values of Superb Cutting Edge
Design
and Technology leveraged into first class
consumer products!
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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 Café
- 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
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Extensions have risks, too.
 They can fail over time.
 (Example: The Virgin Megastores retail business didn’t
do well and now has been sold to zavvi.co.uk. Even
Virgin Cola couldn’t make a dent in the market place.)
Disadvantages of Extensions
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Extensions can potentially result in the following
troubles/ costs:
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They can cannibalize sales of the parent brand
(Eg; Amul Reduced Salt Butter is slowly eating
into sales of Amul’s normal Butter.)
Disadvantages of Extensions
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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, Reese’s™ 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
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Levi’s Tailored Classics suits did not succeed.
Maggi pickles – what’s that??
Amul Instant Pizza failed to inspire the Indian
public
How far is too far?
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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?
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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?
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Considering the core values of BVLGARI are “design”,
“craftsmanship” and “aesthetics” - YES!
However, an Hotel’s 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
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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.
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Examples:
Godrej covers office furniture through hair dye to ready-to-cook
chicken.
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TATA covers a whole range of products/ services from Salt to
SUV’s.
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Mahindra covers products and services from Tractors to
Holidays.