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Ch 12: Introducing and Naming New Products and Brand Extensions

Brand Management
by

Brandon Urwin

on 13 May 2013

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Transcript of Ch 12: Introducing and Naming New Products and Brand Extensions

Disadvantages of
Brand Extensions New Products and
Brand Extensions CHAPTER 12
INTRODUCING AND NAMING NEW PRODUCTS AND BRAND EXTENSIONS Advantages of
Brand Extensions Vertical Brand
Extensions Steps in Successfully Introducing Brand Extensions Extension Guidelines
Based on Academic Research Almost done... Target audience care for design Consumers have some awareness and positive associations about the brand
Some of these 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 CIA. (2013, 03 13). Sweden. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/sw.html

CIA. (2013, 03 15). France. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/fr.html

Citi, B. (2009, 12 23). Paris, New York (ny) income, earnings, and wages. Retrieved from http://www.city-data.com/income/income-Paris-New-York.html

Walker, R. (2010). Focus on London. Income And Spending At Home, Retrieved from http://data.london.gov.uk/documents/FocusOnLondon2010-income-and-spending.pdf References 3. Evaluate the potential of the extension candidate to create equity according to the three-factor model:

Salience of parent brand associations
Favourability of inferred extension associations
Uniqueness of inferred extension associations 5. Consider possible competitive advantages as perceived by consumers and possible reactions initiated by competitors

6. Design marketing campaign to maximise the likelihood of success and potential positive feedback effects

7. Evaluate extension success and effects on parent brand equity Buday, B., & Flynn, C. (2000). Molding Public Opinion. Harvard Management Communication Letter, 3(2), 10.

Goldenberg, J., Mazursky, D., & Solomon, S. (1999). The fundamental templates of quality
ads. Marketing Science, 18(3), 333-351.

Hutton, J. G. (1999). The definition, dimensions, and domain of public relations. Public
Relations Review, 25(2), 199-214.

Keller, K. L., Heckler, S. E., & Michael, J. Houston (1998),“The Effects of Brand Name
Suggestiveness on Advertising Recall,”. Journal of Marketing, 62(1), 48-57.

Peter, J. P., & Olson, J. C. (2001). Consumer Behavior and Marketing Strategy. Boston, Ma:
McGraw-Hill, chapters 1 & 2

Rayport, J.F. (2008). Where Is Advertising Going? Into ‘Stitials. Harvard Business Review, May 2008

Vakratsas, D., & Ambler, T. (1999). How advertising works: what do we really know?. The
Journal of Marketing, 26-43. Akina Ramlakhan Brandon Urwin Caitlin Brand Figure 12.1 When a firm introduces a product, it has 3 choices for branding it. It can:
Develop a new brand, individually chosen for the new product
Apply one of its existing brands
Use a combination of a new brand and an existing brand Also known as a sub brand, occurs when a firm uses an established brand name to introduce a new product.
Parent brand: an existing brand that gives birth to a brand extension
Family brand: is when the parent brand is already associated with multiple products through brand extensions Brand Extension Fall into 2 general categories:
Line extension: apply the parent brand to a new product that targets a new market segment within a product category the parent brand currently serves






Category extension: apply the parent brand to enter a different product category from the one it currently serves Clarify brand meaning
Enhance the parent brand image
Bring new customers into the brand franchise and increase market coverage
Revitalise the brand
Permit subsequent extensions Provide Feedback Benefits
to the Parent Brand 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 labelling efficiencies
Permit consumer variety-seeking Facilitate New Product Acceptance Can confuse or frustrate consumers
Can encounter retail resistance
Can fail and hurt parent brand image
Can succeed but cannibalise sales of the 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 forgo the chance to develop a new brand Understanding How Consumers Evaluate Brand Extensions Managerial Assumptions Brand Extensions
and Brand Equity Creating Extension Equity

Three-factor model:

1. Salience of parent brand associations
2. Favourability of inferred extension associations
3. Uniqueness of inferred extension associations Brand Extensions
and Brand Equity Contributing to Parent Brand Equity

Four-factor model:

1. How compelling the extension evidence is
2. How relevant the extension evidence is
3. How consistent the extension evidence is
4. How strong the extension evidence is Naming Strategies Firms adopt sub-branding strategies to differentiate low priced products
Companies create unique brand names in order to prevent a negative transfer of equity from a lower to higher brand
Companies choose to use new brand names to expand vertically
Companies may use brand modifiers to show quality improvement Evaluating Brand Extensions 1. Define actual and desired consumer knowledge about the brand

2. Identify possible extension candidates on basis of parent brand associations and overall similarity or fit of extension to the parent brand 4. Evaluate extension candidate feedback effects according to the four-factor model:
How compelling the extension evidence is
How relevant the extension evidence is
How consistent the extension evidence is
How strong the extension evidence is 1. Successful brand extensions occur when the parent brand is seen as having favourable associations and there is a perception of fit between the parent brand and the extension product

2. There are many bases of fit: product-related attributes and benefits as well as non-product related attributes and benefits related to common usage situations or user types

3. Depending on consumer knowledge of the product
categories, perceptions of fit may be based on technical or manufacturing commonalities or more surface considerations such as necessary or situational complementarity 4. High-quality brands stretch farther than average-quality brands, although both types of brands have boundaries

5. A brand that is seen as prototypical of a product category can be difficult to extend outside the category

6. Concrete attribute associations tend to be more difficult to extend than abstract benefit associations 7. Consumers may transfer associations that are positive in the original product class but become negative in the extension context

8. Consumers may infer negative associations about an extension, perhaps even based on other inferred positive associations

9. It can be difficult to extend into a product class that is seen as easy to make 10. A successful extension can not only contribute to the parent brand image but also enable a brand to be extended even further

11. An unsuccessful extension hurts the parent brand only when there is a strong basis of fit between the two

12. An unsuccessful extension does not a prevent a firm from backtracking and introducing a more similar extension 13. Vertical extensions can be difficult and often require sub-branding strategies

14. The most effective advertising strategy for an extension is one that emphasises information about the extension (rather than reminders about the parent brand)

15. Individual differences can affect how consumers make an extension decision, and will moderate extension effects

16. Cultural differences across markets can influence extension success Questions? Comments? Grievances? Advantages & Disadvantages
of Brand Extensions Quiz time! Jaguar:

a. Tata Motors

b. General Motors

c. Nissan

d. Chang'an Automobile Group Audi

a. Ford Motor Company

b. Toyota Motor Corporation

c. Fiat S.p.A.

d. Volkswagen AG KFC

a. Yum! Brands

b. IHOP

c. Brinker International

d. Burger King Victoria's Secret

a. Gap Inc.

b. Limited Brands

c. Playboy Enterprises

d. Wonderbra Crayola

a. Hasbro

b. Hallmark

c. Glidden

d. Staedtler Name the parent brand or holding company of ...
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