Lecture - Ch 13, New Products & Brand Extensions

What steps happen when a New Product is developed? (3)

1.Develop a new brand

2.Apply one of its existing brands

3.Use a combination of new and existing

A Brand Extension can include what 2 types?

–Line extension

–Category extension

Fill in Ansoff’s Growth Matrix of Markets & Products

What are the advantages of brand extensions? (2)

•Facilitate new-product acceptance

•Provide feedback benefits to a parent brand

How can you Facilitate New Product Acceptance (8)

•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

Provide Feedback Benefits to the Parent Brand and Company (5)

•Clarify brand meaning

•Enhance the parent brand image

•Bring new customers into the brand franchise and increase market coverage

•Revitalize the brand

•Permit subsequent extensions

Disadvantages to brand extensions (8)

•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 forego the chance to develop a new brand

Conditions for Favourable Brand Extension (4)

•Consumers have awareness and positive associations of parent brand

•Some of the positive associations will be evoked by the brand extension

•Negative associations are not transferred from the parent brand

•Negative associations are not created by the brand extension

How to create extension equity

•Saliency of parent brand associations (It stands out from parent company)

•Favourability of any inferred associations

•Uniqueness of inferred associations in the extension category

Contributing to parent brand equity:

•How compelling the evidence is about the corresponding attribute or benefit association

•How relevant or diagnostic the extension evidence is

•How consistent the extension evidence is

•How strongly existing attribute or benefit associations are

What is a vertical brand extension?

Extend a brand up into more premium market segments or down into more value-conscious segments

Evaluating Brand Extension Opportunities - 5

•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

Brand Extension Guidelines Based on Academic Research