2 Extend Or Not
- 1. To extend or not… the dilemma A Presentation by Sani Malik
- 2. Agenda Extensions – What are they! Think! Before You Extend Recommendations
- 3. Opening thoughts… There’s too many products all doing the same thing from my favorite brand, which on do I choose?
- 4. EXTENSIONS! What & Why?
- 5. Launching a new product is a risky endeavor because of the high costs of introduction and the low probability of success. One increasingly popular strategy for lowering the costs and improving the odds of success is to extend a well-known brand name to a new product
- 6. The use of existing brand names to launch new products involves at least two strategic options :- line and brand extensions
- 7. Line extensions occur when the original brand name is extended by modifying features (such as flavors, sizes, or varieties) within the existing product category (e.g., Diet Pepsi or Lucozade Boost Apple)
- 8. Brand extensions take place when the brand name is used to enter a completely different product category (e.g., Jagal detergent or Sterling computers).
- 9. extensions tend to reduce the risk associated with new product development because upon seeing the extension consumers immediately have an instant recognition of the brand name will be more likely to try it.
- 10. However two potential threats do exist. If the new line extension fails to satisfy; consumer’s attitudes toward other products carrying the same brand name may be damaged and 2. there is the potential for intra-firm competition between the parent product and the line extension, or between two or more line extensions.
- 11. A classic example of an extension failure , was when a huge company like Coke Cola launched the “New Coke” in 1985, the extension immediately conflicted with consumer’s perception and not only did the extension not succeed but it resulted in a drop in sales and declining market share for the original Coke
- 12. However, if properly executed extensions can work, a typical example of this would be the 1982 launch of Coca-Cola’s Diet Coke, Indomie Noodles and Marlboro range of cigarettes
- 13. THINK….. BEFORE YOU EXTEND
- 14. A critical success factor for any line extension are its newly added features; these features must be relevant and resonate well with the target consumer 1
- 15. New Attributes ! Are the newly added attributes relevant to the target consumer?
- 16. 1) It is important that extensions should not perceived to be substitutes to the existing brand 2) It is also important for consumers to feel as the line extension is positioned in a different way 2
- 17. RECOMMENDATIONS
- 18. Less alcohol Different Shape + Design Differentiation It is of paramount important that extensions are clearly and not ambiguously distinguished from their parent brand; differentiation should be based on attributes that are relevant and of perceived value to the target consumers, be it tangible or intangible. Smaller Bottle
- 19. Positioning The positioning of the extension should be clearly distinguished from that of its parent brand
- 20. Proposition + Promise Just as the position tells consumers what the extension represents amongst other brands within the same segment, the proposition will represent the kind of satisfaction the extension promises (different from that of the parent brand) after the consumer interacts with it
- 21. A brand extension is not for every company and managers should be careful when adopting one Successful brand line extensions are simply new branches on the main plant In order to harness the power of the overall brand, line extensions have to make sense, be part of the long term plan and reflect the core images and message of the brand Will an Extension work for YOU
- 22. Thank You
Editor's Notes
- #6: Extensions occur when a company decides to use an existing brand name to launch a new product. This is done because extensions of already established brand names lower the costs and improve the odds of success
- #7: The use of existing brand names to launch new products involves at least two strategic options - line and brand extensions
- #8: Line extensions occur when the original brand name is extended by modifying features (such as flavors, sizes, or varieties) within the existing product category (e.g., Diet Pepsi or Lucozade Boost Apple)
- #9: Brand extensions take place when the brand name is used to enter a completely different product category (e.g., Jagal detergent or Sterling computers).
- #10: extensions tend to reduce the risk associated with new product development because upon seeing the extension consumers immediately have an instant recognition of the brand name will be more likely to try it.
- #11: As a result of this, promotional costs are much lower for a line extension than for a completely new product. However two potential threats do exist…. First, if the new line extension fails to satisfy consumers; consumer’s attitudes toward other products carrying the same brand name may be damaged and secondly, there is the potential for intra-firm competition between the parent product and the line extension, or between two or more line extensions. …… is it possible to have image to represent this…(show image of man thinking coke vs diet coke)
- #12: A classic example of an extension failure, was when a huge company like Coke Cola launched the “New Coke” in 1985, the extension immediately conflicted with consumer’s perception and not only did the extension not succeed but it resulted in a drop in sales and declining market share for the original Coke. Also in the United States 7-Up lost market share when it added brand variations such as 7-Up Gold.
- #13: However, if properly executed extensions can work, a typical example of this would be the 1982 launch of Coca-Cola’s Diet Coke; today Diet Coke is the third most popular cola drink in the United States. Gillette razors and shaving cream are further examples of a successful extension.
- #14: So why werent people drinking the product there had to be some kind of explanation. To further probe I looked up extension best practices basically what requirements needed to be met for an extension to be successful. I found a lot of information from different authors/ publishers and I managed to summarize the into two main points that form the basis of my clonclusion
- #15: They explain that since line extensions share most attributes with the parent brand except for one or more features, it could be regarded as all extensions would succeed. Further on the authors say that customers pay more attention to the new features and when they evaluate the line extensions they will rely heavily on the features instead of the affect from the original brand. Even though previously mentioned factors are important to examine, customers will rely on added features, state the authors
- #16: Did consumers value the newly added features and were these features enough to appeal to the stout drinker ? The Research showed that consumers mostly in the North and Middle belt were drinking stronger flavored beers. Was this enough to take the findings of this research and make a National brand out of it, especially on the back of a premium beer that was battling with the issue of a bad hangover
- #17: They found that customers tend to buy line extension products when they already know the brand and therefore feel encouraged to buy the brand, otherwise there would be no need to use an existing brand name if customers would not buy from the parent brand if their product line was extended.
- #19: It is of paramount important that extensions, especially within the beer category are clearly and not ambiguously distinguished from their parent brand; differentiation should be based on attributes that are relevant and of perceived value to the target consumers, be it tangible or intangible. Successful differentiation can only take place if one offers something that is perceived as relevant and of value
- #20: In positioning lagers extensions; brands should after identifying who their target consumer is determine what is important to these groups of people vis a vis the category and then own that territory in the mind of the consumer. The use of relevant pictures and text in communication can further reinforce the position the brand has chosen. In positioning the Gulder Max beer a number of alternative areas could have been exploited such as quality… Gulder Max…The king of beers, Taste: Gulder Max…. nothing tastes better, Lifestyle: Gulder Max… Swagger time. All of these could have served to create a unique position for the brand in the minds of its target consumers; positions which the audiences could relate to.
- #21: It is also very important that an extension has a unique proposition that is clearly developed and defined; this will aid in the development of communication for the brand and also giving the extension an identity of its own. The proposition is important because it is the way the brand is presented to the target audience. Just as the position tells consumers what the extension represents amongst other brands within the same segment, the proposition will represent the kind of satisfaction the extension promises after the consumer interacts with it. Some examples of propositions within the beer category include Budweiser (be part of the crowd that “gets in"), Miller High Life (keep everything in perspective), Coors (drink Coors and be original).