Brand extension

Naveed Bashir MB-11-26
Nauman Sabir MB-11-32
Aftab Baloch MB-11-36

What is Brand Extension
Brand extension involve using the name of
existing brand to introduce the new
product category.
Martinez, Montaner & M. Pina (2009). Brand extension feedback, the role of advertising:
Journal of Business Research

Conti….
Brand extensions are one of the most heavily-researched
and influential areas in marketing. Brand extension directly related
with Parent Brand.
Volcker & Sattler (2006) found that fit between the parent brand and
an extension product is the most important driver of brand extension
success.
Reddy.M, Terblanche, Pitt.L & Parent.M (2009). How far can luxury brands travel? Avoiding the
pitfalls of luxury brand extension: Science Direct

 Brand extension is a popular Branding strategy to enter in the
new product category.
 Brand extension strategy is advantageous because it reduce the
cost of new product introduction and enhanced the probability of
new product.
Swaminathan. V (2009). Sequential brand extensions and brand choice behavior: Journal of Business
Research

Brand Extension build and communicate strong brand
positioning, enhance awareness and
quality associations, and increase the probability of trial
by lessening new product risk for
Consumers.
Dens. N & Patrick De (2010). Attitudes toward the extension and parent brand in response to
extension advertising: Journal of Business Research

Brand Extension Process
• Major Brand Extension Strategy Decisions:
Product Brand
Brand
Equity
Brand
Positioning
Brand
Development
Brand
Extension
Name
Selection
Success/Failure
of Extension
Sponsor-
ship
Advertise-
ment

Product
 Commodity offer for sale.
 Non familiar goods or services.
 An artifact that has been created by someone or
some process.
 The set of elements common to two or more sets

Brand
 Familiar product
 Brand is the name, term, sign, symbol, design and combination of them
or other characteristic that identify the product and distinguished it
from other.
 Brand could be tangible and intangible.

To maintain competitive advantages two thing are important.
Sustain
Change
Product Brand

Brand vs. Product
 Companies Make Products and Consumers Make Brands
 Products Can Be Copied and Replaced but Brands Are Unique
 Products Can Become Obsolete but Brands Can Be Timeless
 Products Are Instantly Meaningful but Brands Become
Meaningful over Time
 Brand has different type of association as compare to the
product.

Brand Equity
 A measure of the brand’s ability
to capture consumer preference
and loyalty.
 The difference between the
market value of a Product and the
claims held against it.

Brand Positioning
The act of designing the company’s offering and image in
such a way that it occupies a distinctive place in the minds
of customers.”
A brand can be positioned on the basis of:
 Product attributes
Benefits
Beliefs and values

Brand Development Strategies
Line
Extension
Brand
Extension
Multi-brands New Brands
Product category
Existing New
BrandName
Existing
New

New Brands
 New brand name
 New product category
Example:
Olper’s milk introduced a new product category of juices
with a new brand name of Olfrute

Multi-brands
 New brand name
 Existing product category
Example:
Unilever has multi-brands in the same product category of shampoos
Such as Dove, Sunsilk, Lux etc.

Line Extension
 Existing brand name
 Existing product category
Example:
Servis shoes has different range of shoes for different
people. This strategy is called line extension.

Brand Extension
 Existing brand name
 New product category
Example:
Servis shoes have extend their brand by adding a
new product category of Servis Tyres & Tubes.

Conti….
 Brand Extension also called Brand Stretching is a marketing strategy in which
a firm marketing a product with a well-developed image uses the same brand
name in a different product category. The new product is called a spin-off.
 A brand's "extendibility" depends on how strong consumer's associations are
to the brand's values and goals
 In the 1990s, 81% of new products used brand extension to introduce new
brands.
 In the 2009s, 90% of new products used brand extension to introduce new
brands.

Advantages
 Cost reduction in introduce new brand
 Customer are familiar with the parent brand
name.
 Low risk strategy to introduce the new product
 Probability of success are higher
 Increase Profitability

Disadvantages
 Higher the risk to dilute the Parent Brand image
 Poor choices for brand extension may dilute and deteriorate the
core brand and damage the brand equity
 The failures of brand extension are at higher rate than the
successes
 Negative association and wrong communication strategy do
harm to the parent brand even brand family

Factors of Brand Extension
Factors which making ease in Brand Extension,
Situational Involvement
Consumer Mood
Brand Breadth
Parent Brand Category Dominance
Competitor Characteristics
Perceived Fit or Congruency Between An Extension & The
Parent Brand
Dens. N & Patrick De (2010). Attitudes toward the extension and parent brand in response to
extension advertising: Journal of Business Research

Name Selection
 The brand name is a very important brand element, and may
heavily influence the way a brand perform.
 Brand Names are the key Brand Equity generators because they
affect recall and recognition,
 Selecting a brand name is
crucial part of branding
Olavarrieta. S, Torres & Barra.C (2009). Derived versus full name brand extensions: Journal of
Business Research

Conti…
According to the author there are two ways of selecting a name
for new product.
Full name brand extension.
Derived name brand extension.
Olavarrieta. S, Torres & Barra.C (2009). Derived versus full name brand extensions: Journal of
Business Research

Full Brand Name Extension
Most brand extension studies to date assume that brand extensions use the full
Original Parent Brand Name.
Example:
Oral B tooth brush may extend to Oral B dental floss or to Oral B mouth wash.
Reason:
Use the equity of the Parent brand in a new product category
To facilitate consumer acceptance and brand association transfer
Olavarrieta. S, Torres & Barra.C (2009). Derived versus full name brand extensions: Journal of Business Research

Derived Name Brand Extension
 In this method company perform sub-branding process in which consumers
have the parent brand name as a cue, while companies introduce a new name.
 There are Three different types of derived brand extensions way are,
a) The use of a part of a name combined with an identifier of the extension
product .
( Nestea, NesCafe & Kodacolor Film)
a) The use of a part of the brand name combined with a general concept
(Nesquick)
a) The nickname derived brand extension
(CAT vs. Caterpillar or TED air shuttle services of UNITED)

Full vs. Derived Brand Extension Name
firms use derived or partial brand extensions instead of full
brand extensions because,
may be convenience and practicality like Customer cannot
have ultra-long names.
may be psychological appeal and effectiveness like probably
partial names, abbreviations, or nick names such as CAT for
Caterpillar.

Brand Sponsorship
Parent Brand adopt Sponsorship way to provide the Financial resources to
make Brand Extension in best form.
3 Sponsorship Options:
 National brand
 Licensed Brand
 Co-brand product

National Brand
“A brand sold out under its own unique brand name.”
Example:
(Lay’s Chips)

Licensed Brand
“A brand name or symbol licensed with a name which was previously
created by other manufacturers, or the names of celebrities, or characters
from popular movies and books.”
Example:
Kellogg’s
“Tony the
Tiger”(1957)
(Character Logo)

Co-branding
“Using the established brand names of two different companies on the
same product.”
Example:
Motorola Ferrari co-branding

Advertisement
 With the Brand Extension, parent company need to create the
awareness among the customers.
 companies may apply different communication strategies to
increase perceived fit and, consequently, consumer acceptance.
 The best communication strategy is “Advertisement”.

Conti…
Brand
Extension
Brand
Extension
Initial
Brand
Image
Initial
Brand
Image
Advertise
ment
Advertise
ment
Brand
Loyalty
Brand
Loyalty
Final
Brand
Image
Final
Brand
Image
Brand
Awareness
Brand
Awareness
Martinez, Montaner & M. Pina (2009). Brand extension feedback, the role of advertising: Journal of Business Research

Appeals
There are two common appeals use in the Advertisement
 Informational Advertisement Appeals
 Transformational or emotional advertising appeals

Informational
Informational advertising provides strictly information about the advertised
product and/or brand. This appeal shows the perceived fit between parent
brand and new brand name.
Dens. N & Patrick De (2010). Attitudes toward the extension and parent brand in response to extension advertising: Journal of Business Research

Transformational or emotional
Transformational appeals typically contain less information but picture positive
sensorial, social, or emotional aspects of one's experience with the focal item
being promoted.
Dens. N & Patrick De (2010). Attitudes toward the extension and parent brand in response to extension advertising: Journal of Business Research

Success & Failure of Extension Brand
 Success and Failure of Brand Extension base on the application of
all these strategies. If Parent company able to apply these in
successful way then extension been successful and vice versa.
 According to the survey 90% new product in the in the market are
in the result of Brand Extension. More then 50% are fail due to the
bad strategy application.

Introduction
•Service Industries Limited (SIL) is one of large network working in Pakistan.
•SIL employees more then 6000 and manufactured world class Shoes, Tyres,
Tubes and Rubber production facilities in Gujrat and Muridke.
•Now SIL has over all PKR 12 Billion revenue per year.
Naveed Bashir 38

Conti…
•Today the group is Pakistan’s largest footwear manufacturer and exporter in
German, Italy, UK and French markets.
•With the growing portfolio of brands and nationwide network SIL touches the
millions of life daily.
Naveed Bashir 39

Brand Development Strategies
Line
Extension
Brand
Extension
Multi-brands New
Brands
Product category
Existing New
BrandName
Existing
New
Naveed Bashir 40

Servis Brands
The Company runs its footwear retail business under ‘Servis’ brand. It has also
established some of the most loved footwear brands includes Don Carlos,
Cheetah, Calza, Liza, Skooz and Toz.
Naveed Bashir 41

Brand Extension
• Existing Brand Name
• New Product Category
Example:
Servis shoes have extend their brand by adding a new product
category of Servis Tyres & Tubes.
Naveed Bashir 42

• Lipton Alps mint and
Eucalyptus
• Forest Fruit

• Caramel Tea
• Ice Tea
• Black Kiss

• Peppermint
• Herbal Tea
• Green Tea Intense
Mint

• Tea & Honey
• Infusion Chamomile
• Blue fruits

• Decaffeinated
• Lemon & Ginger
• Chamomile

• Finest Earl Grey
• Rooibos
• English
Breakfast

Nike
 NIKE, Inc. is the world’s leading innovator in athletic
footwear, apparel, equipment and accessories.
 Brand Valued $10.7 billion
 headquartered near Beaverton, Oregon
 Fortune 500 companies
 employed more than 44,000 people worldwide

Nike
 Nike first products was track running shoes
 Now Nike produces a wide range of sports equipment
 wide range of sports, including track and field Shoes
 jerseys
 Shorts
 Cleats
 base layers
 baseball
 ice hockey
 Tennis
 association football (soccer),
 Lacrosse
 Basketball
 cricket.

Nike Air Max
• Nike Air Max is a line of shoes first released by Nike, Inc. in 1987.

Air Huarache
• Additional product lines were introduced later,
• such as Air Huarache, which debuted in 1992.

Nike 6.0
• The most recent additions to their line are the Nike 6.0,

Nike Brands
 Nike markets its products under its own brand, as well as
Nike Golf
Nike 6.0
Nike Pro
Nike+
Air Jordan
Nike Skateboarding
 and With some subsidiaries

Nike +
• Nike And Apple
• Monitor Performance with Radio Ferquency

Nike Acquisitions
• First acquisition was a footwear company
“Cole Haan” in 1988

Bauer Hockey
• Buy Bauer Hockey in 1994

Hurley International
• Hurley International in 2003

Converse
• Paid $309 million to acquire Converse

Starter Clothing
• acquired Starter in 2004

Acquisitions
• In Order to focus on their Core
• Sold Starter in 2007 and Bauer Hockey in 2008.
• Nike sold Umbro in 2012 and Cole Haan in 2013
• As of 2013, Nike owns two key subsidiaries Converse Inc. and
Hurley International.

Brand extension

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