HBR case study

1. HBR CASE STUDY

2. An Overview of the case
Chateau de vallois , is a family owned wine producing estate in the Bordeaux region
of france . It has a long term track record in quality and reputation . Gaspard de
Sauveterre , owner of the company , comes in dilemma by the proposal of her grand
daughter ,Clare de Valhubert. She wanted the company to enter the “ affordable
luxury “ market by producing a new wine which could be sold directly to the
consumers .The CEO & the Estate Manager of the company were traditionalists by
thoughts and thus didn’t support her idea because they feared about :
• Loss of Brand reputation and degradation of Brand equity by bringing out another
wine .
•Production of the new wine would cost them much operating expenses .
•Loss of contracts/relationships with the distributors .
Moreover they did not have more grapes to produce a third wine , so they would need
to grow them some where else or buy them . But Clare was all looking at the positive
side and believed that with this wine they could attract the Younger people to drink
their wine and thus expand the brand reach .
These conflicting thoughts puts the owner Gaspard in dilemma .

3. Thus the case represents two sides of
Brand Extension

4. POSITIVE SIDE OF BRAND EXTENSIONS
1) Leveraging Brand Equity /Value by introducing
logical & complimentary new product categories
2) Product innovation to surpass Consumer
expectations
3)Increases awareness of the Brand name .
4)Increases profitability from offerings in more than
one product category
5)A great way to create a BUZZ among people

5. NEGATIVE SIDE OF BRAND EXTENSIONS
1) Can Confuse or frustrate consumers
2) Can encounter resistance from retailers .
3) Can increase too much operational expenses .
4)Can succeed but cannibalize sales of parent brand
or as mentioned in the case ‘eat up’ the parent
brand .

6. Some examples of Brand Extensions
from Indian origin
Here we will present small case studies on the following
Indian companies & their brands :
NESTLE MAGGI
BPCL SPEED
HLL
RECKITT BENCKISER DETTOL
COCA COLA COCA-COLA

7. 1
Maggi is an over 100 years old Nestle brand of instant soups ,
stocks , bouillons , ketchups , sauces, seasonings and instant
noodles .
Maggi comes to India : Maggi noodles was launched in
early 1980s.At that time there was no competition to the
brand . But , Maggi had to fight hard to be accepted by Indian
consumers with their hard-to-change eating habits .Thus , in
initial years , Nestle promotional activities for Maggi included
schemes offerings gifts in return for empty noodles pack
.Gradually sales promotions like these became a crutch for
Maggi noodles sales .Maggi associated itself with the
mainstream television program and advertised heavily on kids
programs and channels
MAGGI

8. MAGGI ‘s Brand
ExtensionIn order to stretch Maggi’s Brand to include Indian Ethnic foods , the company tied
up with a pune based “ chordia foods “ to launch pickels under the year 1995.The
company saw a lot of untapped potential in the market for ready to use south
Indian food .So the company tied up with a chennai based food company to
market popular south Indian food preparation .
In 1996, products from these two ventures received lukewarm response from the
market .Analysis showed that the reason for the failure was Nestle seemed to be
particularly bad at dealing with traditional product categories . Maggi noodled
performed badly in 1996 .Adding to the failures list was the failure of MAGGI
Tonight’s special , a range of cooking sauces aimed at providing ‘restaurant like
taste ‘ in the food cooked at home .
Maggi launched ‘ Maggi Macroni ‘ in July 1997 .According to the analysts, it was
launched partly to deal with the growing popularity of competing noodles brand
Top Ramen . The company expected to repeat the success of Maggi noodles &
Maggi Macaroni . Maggi Macaroni’s launch was baked by a multi-media
advertising campaign including radio, television, outdoors and print media with
the tagline ‘ Tum Roz Baby ‘. Due to failure , Nestle had to withdraw Maggi
Macaroni completely from the market .

9. MAGGI ‘s Brand
ExtensionNestle had not recovered completely from the Macaroni’s dismal performance
when it realized that Knorr had dethroned Maggi as a leader in the soup segment .
The only saving grace to Maggi were its ketchups and sauces which seemed as
‘rare successful extensions ‘ for Maggi . These products were supported by a
popular advertisement campaign for the Maggi hot & sweet sauce brand . The
humorous advertisements featuring actors Pankaj Kapoor & Javed Jafri used the
tagline ‘ Its different ‘. However during mid 1997 , HUL began advertising its Kissan
range of sauces exclusively . Nestle responded with a higher weight on advertising
and differential pricing . Maggi was able to hold on its own market share but the
operational expenses increased considerably .

10. Learning from Maggi’s case
1) Positive effect : Brand Extension has favored MAGGI to
move ahead of its competitors and increase its share in the
consumer market .
2) Positive effect : Brand Extension has favored MAGGI to
come up with more innovative solutions for its products and their
positioning .
3) Negative effect : Brand extension led to over-increased
operational expenses on the company and also affected the
relationship with the supply chain .
4) Negative effect : Due to excess focus on Brand extension, it
had to completely withdraw some of its products like Maggi
Macaroni from the market , due to the fear of Brand erosion due
to this failing category .

11. 2 SPEED
The launch of Speed-Bharat Petroleum Corporation Limited’s “ high-
performance petrol “ with multi functional additives that promised to improve
engine performance and fuel efficiency , and to reduce emission and
maintenance costs –in 2002 ushered in an era of value-added , branded fuels
in India .Prior to this , petrol was essentially a commodity product in India .
It was sold at a higher price than regular price . That it was sold through the
regular BPCL petrol pumps was heavily promoted during the launch phase .
The success of Speed prompted other public sector oil majors including the
Indian Oil Corporation & Hindustan Petroleum Corporation to launch their
own branded premium fuels . The demand for premium branded fuels has
been sustained by the growing population of modern cars . Although the
branded premium fuel segment has come of age in India , BPCL-the pioneer
in this segment –has maintained its brand reputation in this category .

12. Learning from Speed ’s case
•Its an example of Brand Extension by BPCL
•It was heavily promoted during the launch phase
which says that a successful Brand extension
requires heavy promotions to let the market
acknowledge the features/benefits of the product
.
• Success of a Brand extension induces
competition like the one induced by Speed
prompting other public sector oil majors .

13. 3
HINDUSTAN LEVER
LIMITED
In 2005, Hindustan Lever Limited (HLL), the Indian subsidiary of Unilever,
was the country's largest fast moving consumer goods (FMCG) company.
HLL's portfolio of brands included Lux, Lifebuoy, Liril, Surf, Ponds
Vaseline, Vim, Clinic All Clear and Axe. Most of these brands had been
market leaders for several years in their respective product categories. Over
the years, HLL had extended many of its popular brands with varying degree
of success. Some extensions like Clinic All Clear anti-dandruff shampoo to
hair oil category had been successful, while others like Ponds Toothpaste had
been a dismal failure. M S Banga , Chairman HLL explained: "I believe that
each extension must strengthen the core and the core must remain unchanged.
When the core of the equity is in one direction and the product extension is in
another and you graft the two, you are unlikely to succeed. The set of
peripheral or extended values can be changed over time.

14. In the early 2000s, as HLL struggled to generate growth, brand extension
became an important strategic option. HLL extended its popular brands into
the premium segment to increase its profits. By early 2003, HLL had
launched a number of brand extensions with varying degrees of success.
In 2003, in what seemed to be in response to intensifying competition in
several segments, HLL decided to strengthen its already overwhelming
presence in the talcum powder category where its brand, Ponds Dreamflower,
was already the market leader. HLL also extended Lifebuoy, Vaseline and
Fair& Lovely to Talc category.

15. Q1: Was HLL really able to
manage its Brand
extensions ?
Q2: What kind of view is
required to let the
company dare to extend
its lines despite the fear of
getting its core value
disrupted due to this ?

16. Answer to Q1 : Brand extension or 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 .
HLL believed in Brand extension in such a way that its core
value doesn’t get harmed and in fact, the extension should
strengthen the core .
Many of their product line and category extensions were
successful in the market ,earning advantage to the company’s
shares & position in the market .
While some other saw a dismal future like Ponds toothpaste

17. Answer to Q2 : There exists 2 kinds of views :
INNOVATIVE VIEW TRADITIONAL VIEW
#)Allowing the brand to extend its
line/categories by giving innovative
solutions and believing that it
would help the company to attain
greater market values .
#)Innovators are technology
enthusiasts ; they are venturesome
& enjoy tinkering with products &
mastering their intricacies. In return
for low prices, they are happy to
conduct alpha & beta testing and
report on early weaknesses.
#)Reluctant to take risks of
extending the brand due to fear of
damage of existing Brand equity .
#)Traditionalists are always
concerned about the increased
operational expenses , fear of
consumers’ aggression towards a
failed extension , extra load of
managing the supply chain and
other such problems which they
might face if they want to
successfully extend their brand .

18. CATEGORIZATION
THEORYLet me explain you
Researchers tend to use “categorization theory” as their fundamental
theory to explore the effects of brand extension. When consumers are
faced with thousands of products to choose amongst, they are not only
initially confused, but try to categorise by brand association or image given
their knowledge and previous experience. A consumer can judge or
evaluate the extension product with his or her category memory.
Consumers categorise new information into specific brand or product
class label and store it.This process is not only related to consumer’s
experience and knowledge, but also involvement and choice of brand.If
the brand association is highly related to extension, consumer can perceive
the fit among brand extension. Some studies suggest that consumer may
ignore or overcome the dissonance from extension i.e. perceived misfit
with parent brand is ignored, and does not cause dilution of parent's brand
equity

19. MANAGING BRAND
EXTENSIONS
Managing Brand Extension is all about
doing right moves at the right time . It
requires strategic & creative thinking of
the management team of the company .
It also requires the co-operation of the
distributors and retailers . And most
importantly , company needs to ensure
Consumer satisfaction .

20. DETTOL :MANAGING BRAND
EXTENSIONS
Dettol’s target market :
The target market for Dettol Soaps is all households
(primarily mothers) who can afford buying soap and
want to fulfill everyday need , that provides them and
their family 100% anti-bacterial solution –complete
protection from all germs/bacteria and cleanliness
from dirt/grim .

21. Why the Brand was not accepted
as strongly ?
Consumers are open to the idea of using Dettol soap
when they faced extreme dirt conditions . Hence, it
was felt that Dettol soap needs to be positioned for
occasions that are special , but not rare in everyday
life. These could be based on the exposure to dirt,
germs , pollution ,heat , sweat , etc .

22. FAILING BRAND EQUITY
If major product has certain core properties , then consumers
develop a certain expectation from its products as well.
Since consumers associate the brand Dettol so strongly with
its Antiseptic properties , its extension into the Skin care
segment has not been very well received .
Dettol Antiseptic liquid is also popular as a floor disinfectant
& for washing clothes, hence associating soap & body wash
with the same brand name discourages customers from using
these products .

23. DETTOL’S REPOSTIONING
“Dettol, a Power brand from the
portfolio of Reckitt Benckiser
has come up with new Dettol
Re-energize soap with the
freshness of orange and Dettol’s
trusted germ protection. The
unique formulation not only
protects you against germs but
also leaves you feeling healthy,
fresh and re-energized.”

24. Consumers are always looking for a unique aspect within their daily
regime, some special freshness that brings a special energy in
everyday life. Mr. Chander Mohan Sethi, Senior Vice
President– South East Asia, Reckitt Benckiser, adds “Innovation
is key at Reckitt Benckiser, and our aim is to provide the consumer
new formulations and new products every single time. Dettol Re-
energize is another offering from Dettol that I am confident would
not only provide the Dettol’s trusted protection from germs to its
users but also keep them refreshed and energized everyday.”
This change and such promises by the
Brand Managers helped Dettol put its
strong hold in Indian maket yet again.

25. DETTOL’S
PORTFOLIO

26. CONCLUSIONS FROM DETTOL’S
CASE
1)To capitalize on Brand equity of Dettol , it should position
its Brand extensions well & manage them , also working on
time to time innovations .
2)Dettol’s benefits & features are very well received among
the customers , now it should move up towards the values &
emotions in the Brand value pyramid .

27. INNOVATION IMPERATIVE
A company who is motivated to create new
innovations time to time and is focused on
operational management simultaneously is said
to have Innovation Imperative .

28. A case on the Innovative Imperative : W.L.Gore
Best known for its GORE-TEX high-performance fabrics, W.L. Gore has
introduced breakthrough products as diverse as guitar strings , dental floss,
medical devices, & fuel cells. Several principles guide its new-product
development . First , it works with potential customers . Second , it lets
employees choose projects and appoints few product leaders and teams .Gore
likes to nurture ‘passionate champions ‘ who convince others a project is
worth time & commitment . The development of fuel cell rallied more than
100 of Gore’s 9,000 research associates . Third , Gore gives employees “
Dabble team “ . All research associates spend 10 percent of their work hours
developing their own ideas .Fourth , Gore knows when to let go , through
dead ends in one area can spark innovation in another : Elixir acoustic guitar
strings were the result of a failed venture into bike cables .Even successful
ventures may need to move on .

29. Basic understanding from this case :
1 A company should give more focus on internal
management and higher bench should make
their work transparent before the lower bench

30. 2 Working with Potential customers

31. 3 Maintaining a research atmosphere in the
company and allowing open discussions with
the employees

32. COCA COLA ‘S case on Brand
Extension

33. Coca-Cola, one of the world's largest soft drink
manufacturers became famous for its flagship product
Coca-Cola. Coca-Cola adopted different marketing
strategies and built a strong brand among the consumers.
But the company was faced with stagnating sales in the
1980s due to shift in consumer preferences from
carbonated drinks to healthy drinks like juices and green
tea. With an aim to attract health conscious consumers
Coca-Cola introduced fortified carbonated drinks
terming them as 'sparking beverages'. To strengthen its
efforts to gain competitive advantage in this emerging
segment, Coca-Cola initiated a new marketing campaign
for its new product 'Coke Zero' and simultaneously
launched 'Diet Coke Plus'.
AN OVERVIEW

34. 1886
Coca-Cola got invented by Colonel John
Pemberton. Coca-Cola then became widely available,
sold as a medicine at soda fountains across the US,
with Pemberton claiming it could cure ailments including
impotence, headaches and dyspepsia.1982
Coca-Cola creates its first brand extension after nearly a
century of existence. Diet Coke is born - a sugar-free
version of its flagship product, launching in the US in
August, and created using sweeteners aspartame and
saccharin.
Diet Coke’s advertising uses slogans that include its
most famous, "Just for the taste of it!", with TV ads
featuring the "Diet Coke hunk".
After 1982, several Diet Coke variants are rolled out,
1983
Caffeine Free Coca-Cola launches, but only in the US.

35. 1985
Coke causes controversy in 1985 and beyond when it
changes the formula of its core Coca-Cola product and
rebadges it "New! Coke", referring to the product as the
"new taste of Coca-Cola". This remains in place until
1992, when it is renamed Coca Cola II.2001
Coca-Cola Lemon becomes available in various
markets, including the UK, until 2005.
2002
Coca-Cola Vanilla is launched in the US and UK, among
other markets, before being discontinued in 2005.
However, it is brought back by popular demand in 2007,
and renamed Vanilla Coke.
2005 Coke Zero - a no-calorie variation of Coca-

36. 2007
Diet Coke Plus is unleashed on the public - a Diet
Coke formulation laden with vitamins and minerals.
2013
Coca-Cola Life is launched in Chile and Argentina,
as a trial ahead of a wider global roll-out.
2014

37. BRAND PYRAMID of the company

38. RELATING TO THE CASE
Claire’s innovative proposals
Running advertisement campaigns and doing
marketing research , to adapt quickly to the
changing tastes by changing the flavors they
offer
1

39. 2 Setting up websites to allow consumers
to order directly

40. Attracting Younger consumers by a
branded wine
3

41. But what about the bad times ?When the
harvest is not good and the production
capacity can not meet the requirements
of a THIRD wine ………
But Claire had
the solutions
for that

42. 1. We would produce
atleast one million
bottles for which we’d
have to buy grapes .
2. Capitalizing on the
brand by buying land
overseas & making wine
for the younger people
somewhere else
3.Managing our
distribution channels

43. BRAND EXTENSION SCENARIO IN INDIA

44. "These slides were created by Jalaj Garg(IIT-
Guwahati), as part of an internship done under the
guidance of Prof. Sameer Mathur
(www.IIMInternship.com)"