NEW PRODUCTS AND

BRAND EXTENSIONS
Overview
 New Product & Brand Extension
 Advantages
 Disadvantages
 How Consumers Evaluate
Extensions?
New Product & Brand Extensions
New Product –Branding Decisions
A new brand – individually chosen for the
new product.
 An existing brand name applied in some
way.
 A combination of a new brand with an
existing brand.
BRAND EXTENSIONS
 A Brand Extension occurs when a firm
uses an established brand name to
introduce a new product (approaches 2
or 3)

 When a new brand is combined with an

existing brand (approach 3), the brand
extension can also be a sub-brand.
BRAND EXTENSIONS
 An existing brand that gives birth to a
brand extension is the parent brand.

 If the parent brand is already associated

with multiple products through brand
extensions, then it may also be called a
family brand.
LINE EXTENSION
 The parent brand is used to brand a new
product that targets a new market
segment with in a product category
currently served by the parent brand.
 A line extension often adds a different
flavor or ingredient variety, a different
form or size, or a different application for
the brand.
Coke’s Line Extension
 Head
&
Shoulder’s
Extension
CATEGORY EXTENSION
 The parent brand is used to enter a
different product category from that
currently served by the parent brand.
ITC’s Category Extension
 Why Brand Extensions?
 Leveraging brand equity/value by introduction of
logical & complementary new product categories
 E.g HP
 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
 Advantages Of Brand
Extensions
 Improve brand image
 Reduce risk perceived by
Customers
 Permit consume variety-seeking
Advantages Of Brand
Extensions
 Clarify brand meaning
Brand Original Extension New Brand
Product Products Meaning
Weight Fitness Centre Low-calorie Weight loss &
Watchers foods maintenance
Sunkist Oranges Vitamins, Good health
juices
Kellogg’s Cereal Nutri-grain Health
bars, Special K snacking
bars
Aunt Jemima Pancake mixes Syrups, frozen Breakfast
waffles foods
Advantages Of Brand
Extensions
 Increase the probability of gaining
distribution and trial
 Increase efficiency of promotional
expenditures
 Reduce costs of introductory & follow-up
marketing programs (save 40-80%)
 E.g. Apple iPods
 Avoid costs of developing a new brand
 Allow for packaging & labeling efficiencies
Advantages Of Brand
Extensions

 Enhance the parent brand image

 Bring new customers into brand franchise
and increase market coverage
 Revitalize the brand
 Permit subsequent extensions
 Disadvantages Of Brand
Extensions
 Can fail & hurt parent brand image
 Xerox Computers-synonymous with copiers
& no one believed they could make
computers

 Can succeed but cannibalize sales of parent

brand
 Amul Butter-”reduced salt butter”
is slowly eating up Amul normal butter
Disadvantages Of Brand
Extensions
 Can succeed but diminish identification
with any one category
 Can succeed but hurt the image of parent
brand
Disadvantages Of Brand
Extensions
 Can confuse or frustrate consumers
 Can encounter retailer resistance
 Can dilute brand meaning
 Can cause the company to forgo the
chance to develop a new brand
When are Brand Extensions
Appropriate?
 When Prior Brand equity exists
 Consumer must see some “connection”
between the proposed extension and the
parent brand.
 The proposed extension contributes to
and reinforces the overall brand equity of
the parent brand.
Conditions For Evaluating
Consumer’s Brand Extension
 Consumers have some awareness &
positive associations about the parent
brand
 At least some of these positive
associations will be evoked by the brand
extension
 Negative association are not transferred
from the parent brand
 Negative associations are not created by
the brand extension
Evaluating Brand Extension
Opportunities
Define actual & desired consumer knowledge

Identify possible extension candidates

Evaluate potential of the extension candidate

Evaluate potential candidate feedback effects

Consider possible competitive advantages & reactions

Design marketing campaign

Evaluate extension success & effects on parent brand

equity