Group 7 Inderpree t Singh Nitin Sachdeva Vivek Pandey Shreya Ghai Anshubhi Karolia

Launching brand and line extensions has become a popular growth strategy, particularly in mature fast-moving consumer goods (FMCG) categories. With the huge costs and risks involved in launching new brands, many of which fail, extending an existing brand is seen by many as a more cost efficient and lower risk method of launching new products

Brand and Line Extensions

Brand Equity Concept.

Brands Equity has an impact on the success of Extensions.

Extensions in turn have an impact on a Brands Equity.

To understand how successful extensions come to market.

To explore the managerial processes that lead to the launch of successful brand and line extensions.
Establish the role that brand equity considerations have in the decision process.

The output is a process model of extension development which is in contrast with traditional new product development models.

The conclusion is that bringing new products onto the market as extensions should be viewed more as a process of brand development than new product development.

1.

Traditional product plus definition : Branding as an addition to the product.

The brand is seen primarily as an identifier. The new product development processes typically found in textbooks, the branding decision is one of the last decisions to be made.

2. Holistic view : The focus is on the brand itself, which encompasses much more than just the product.

Considered to be the sum of all elements of the marketing mix: product is just one element, alongside price, promotion and distribution. The promise of the bundles of attributes that someone buys and that provides satisfaction. The attributes that make up a brand may be real or illusory, rational or emotional, tangible or invisible

Holistic view seems more relevant to the current environment dominated by brand and line extensions, as it takes into consideration all the different product lines which come under a single brand umbrella, i.e. a brand is made up of all its brand and line extensions, and the marketing activities that surround them, in addition to the original product line.

New

Existing

New

Brand Name
Existin g

New Brand

Flanker

Brand Extension

Line Extension

The launch of a new range of flavors by the premium ice-cream brand Haagen-Dazs (i.e. Same brand, same category) was labeled the

In contrast, the launch of P&Gs Oil of Ulay Hydra-Gel, a moisturizer like the original range of products (i.e. also same brand, same

A brand extension means using a brand name successfully established for one segment or channel to enter another one in the same broad market. Brand stretching means transferring the successful brand name to quite different markets.

A brand extension strategy is any effort to extend a successful brand name to launch new or modified products or lines.

- Kotler

Brand extensions involve the use of an established brand name to enter a new product category (Aaker and Keller, 1990). Examples include Sonys mobile telephones (vs. televisions and stereos), Virgin cola (vs. records and airline) and Persil dishwashing liquid (vs. Clothes detergent).

Line extensions, in contrast, involve the use of an established brand name for a new offering in the same product category (Reddy et al., 1994). Examples would include Diet Coke, Ariel

Factors affected

Benefits provided

Efficiency benefits

Low cost for awareness. Lower cost to achieve target. Communication efficiencies as profile of whole brand lifted. Higher acceptance. Strengthening of brand position. Creation of mega-brand (increased bargaining power with retailers). Effective defense against rivals.

Effectiveness benefits

Factors affected Risks to the extension

Risks associated Lack of funds allocated to launch (benefits overestimated) Overestimation of benefits Poor fit with existing brand Brand dilution Cannibalization of existing lines Intertwined reputations of various lines Logistics/manufacturing inefficiencies

Risks to the brand

Consumers acceptance of a brand extension increases if The parent brand is perceived as being of high quality. There is a perception of fit between the new product category and the brand. Here ,fit relates to product feature similarity (attributes, usage occasions, etc.) and brand concept consistency, i.e. unique abstract meanings. If the product is difficult to make and some expertise is needed.

Success of line extension is positively related to The strength of the parent brand, Similarity to other items in the parent brand, The amount of advertising and promotion support.

 Brand equity is the aggregation of all accumulated

attitudes and behavior patterns in the extended minds of consumers, distribution channels and influence agents, which will enhance future profits and long term cash flow. It follows the holistic approach to branding,

It distinguishes the asset from its valuation.

Two distinct approaches to the definition and measurement of brand equity Bottom line or financial evaluation approaches- focus more on the value of the brand asset. consumer-based approaches - focus more on the asset itself

(1) Idea generation, (2) Idea screening, (3) Concept development and testing, (4) Marketing strategy development, (5) Business analysis (financial), (6) Physical product development (includes branding decision), (7) Market testing, (8) Commercialization.

The most successful new product innovators:

Make a consistent commitment of resources to new product development; Design a new product strategy that is linked to their strategic planning process; Establish formal and sophisticated organizational arrangements for managing the new product development process.

According

to past studies of Cooper and Kleinschmidt of new product success , of 200 moderate to high technology new product launches common success factors are : superior product products with a high product advantage succeeded 98 percent of the time.
Unique Process

oriented - having a well-defined product concept prior to development, achieving technological and marketing synergy.
Ensuring

quality execution at all stages of the process.

In electronics industry the results suggested that success was greater when there was: a deeper understanding of customer needs, a higher performance-to-cost ratio, an early introduction relative to competitors, a high contribution margin, greater cross-functional teamwork during the development process, more time spent announcing and launching the product and greater top management support for the project.

How FMCG extensions are brought to market? How do managers successfully extend FMCG brands? What are the main drivers behind line and brand extensions? How are extension decisions integrated with the routine planning process? What are the key decision criteria for extension decisions? What data are used in extension forecasting? Who are the key players involved in the

In this study a number of cases were examined using the same unit of analysis, i.e. a single brand or line extension and the decision process associated with its launch. Such a multiple case design. Achieving similar results for each case suggests replication,akin to achieving similar results over a number of experiments

11 cases were studied They were selected on the basis of being successful line or brand extensions launched over the past years. They were chosen from FMCG sector only to study the replication. They were also selected on the basis of access.

In-depth interviews were conducted with the brand/marketing manager or other key executive responsible for the launch, The data for each case were collected with the assistance of The Boston Consulting Group (BCG). Senior BCG consultants identified possible cases, made approaches and conducted the interviews.

Interview structure
(1) Category/brand definition and background: category background, description of extension concept and original brand, success of launch. (2) Company policy/philosophy on brand and line extensions. (3) Description of the extension development process: source/driver of idea, key roles in the extension process, decision process methodology/criteria.

(4) The planning process. (5) Conclusions: What would you have done differently? What was the key to success? What was the key motivator behind launching the extension? (6) Decision process flow chart.

The drivers of extension varied widely. As a result of market research conducted as part of a standard category review. It revealed a consumer need that the current brand (and the firms other brands in the category) could not meet. In two cases, the extension was driven by competition. In one of these, management had observed a firm in another category extend its brand into their own category with a product that had lower efficacy than their own, but was succeeding largely because of cosmetic benefits.

Some extension were technology driven, as from firms R&D came new technologies which were first matched to consumer needs, and then matched to an existing brand.

There were some other drivers too :Exploit fully an existing brand name Widen the applications of a particular product. To fill production capacity

Brand & line extentions can be successfully used as part of either the growth strategy or defensive strategy
Brand & line extentions are driven by a variety of factors of which consumer need, competition and technology are most prominent

The process used to plan and develop extension was independent of the official planning process which develops financial information and budgets. In some case cross functional teams were put together for a project and headed by a category manager. In another case, the process led by the brand manger was totally ad hoc, with the project being developed almost by the marketing and technical staff. In most cases extension entered into formal planning process once the extension had been

Official planning process is too rigid and standardized to incorporate high levels of uncertainty, creativity and change involved in extension projects. Therefore planning process are not geared to handle brand and line extension until the extensions are fully developed.

Decisions are made depending upon the type of data, mangers collect and analyze. Two sets of decision criteria emerged in all 11 cases. Brand equity Protecting the brand image Needing a strong original brand Leveraging the brand not to dilute the brand Financial

1.

2.

Two major sources of data were used for forecasting Consumer Research:- These tests provided managers with an an indication of consumer expectance. Company Experience:-Experience from launch in one country is used to forecast the response of the extension in another country.

In all 11 cases, three functions played key roles:

Marketing R&D Sales

In all but one case, the extension process was led exclusively by the marketing function Brand Manager, Marketing Manager

In only one case, R&D played the key role in developing the product, but then handed it over to marketing to brand it and bring it to market. (extension was primarily technology driven) In all but one case, the sales function was brought into the process at the end to deal with launch issues such as promotions and presentations to the trade. Thus, though important, sales involvement generally appears to be late in the process.

Marketing, R&D and eventually sales are the key functions involved in developing extensions.

The extension development process is led by the marketing function unless the extension is technology driven.

Antecedents:

This model does not start with the traditional idea generation stage but looks more specifically at the strategic and other drivers of extensions. It recognizes that ideas are prompted by stimuli within the firm (growth or defensive objectives) and outside the firm (consumers and competition).

Brand equity:

This model also reinforces the holistic approach to branding vs. the product plus view, i.e. the branding decision is the first decision made rather than one of the last. The result is that brand equity related issues such as equity enhancement, dilution etc. are key considerations early in the extension development process. This suggests an enhanced concept of brand equity fit that includes not only the standard elements of fit such as feature similarity and conceptual consistency but also brand specific associations and issues of quality, all of which contribute to the brand equity asset.

Marketing leadership:

It follows that if brand considerations are paramount, the process will be led by the marketing function. Brand development is of primary concern to brand and category managers and it is they who lead R&D in the development process. In this way the process is one of brand development as opposed to product development.

Planning:

It is relatively informal and occurs outside the formal planning process. Based on the comments by respondents, it may be that more formal procedures could actually hinder the process. The impetus for extensions often comes from unanticipated consumer and competitive developments, for which flexibility to respond in creative and novel ways is key.

The drivers of extensions are many and shortterm pressures can diminish the opportunity for reflection on exactly why the extension is being launched and whether more could be achieved for the new product and the brand itself. Brand equity is a key consideration throughout extension decision making but not always explicitly. The question is what the brand can do for the new product rather than what the new product

Brand and line extensions have become the main way of launching new products in most FMCG categories. The fact that the branding decision is effectively being made first signals a departure from the traditional view of new product development in which product ideas were developed and then branded.