1. NEW PRODUCTS AND
BRAND EXTENSIONS
By
Navneet Agrawal

2. Overview
 New Product & Brand Extension
 Advantages
 Disadvantages
 How Consumers Evaluate
Extensions?

4. What Is A “Brand”
 A BRAND is symbolic embodiment of
all the information connected to a
Company, Product or Service.
 It serves to create associations and
expectations from products made by a
producer, in the mind of the consumer.
 The key objective being “to create a
Relationship of TRUST with its
consumers”.

5. New Product & Brand
Extensions

6. New Product –Branding
Decisions
 A new brand – individually chosen for
the new product.
 An existing brand name applied in
some way.
 A combination of a new brand with an
existing brand.

7. BRAND EXTENSIONS
 A Brand Extension occurs when a
firm uses an established brand name
to introduce a new product
(approaches 2 or 3)
 When a new brand is combined with
an existing brand (approach 3), the
brand extension can also be a sub-
brand.

8. BRAND EXTENSIONS
 An existing brand that gives birth to a
brand extension is the parent brand.
 If the parent brand is already
associated with multiple products
through brand extensions, then it may
also be called a family brand.

10. LINE EXTENSION
 The parent brand is used to brand a
new product that targets a new market
segment with in a product category
currently served by the parent brand.
 A line extension often adds a different
flavor or ingredient variety, a different
form or size, or a different application
for the brand.

11. Coke’s Line Extension

12. Head
&
Shoulder
’s
Extensi
on

13. CATEGORY EXTENSION
 The parent brand is used to enter a
different product category from that
currently served by the parent brand.

14. ITC’s Category Extension

15. Why Brand Extensions?
 Leveraging brand equity/value by
introduction of logical & complementary new
product categories
 E.g HP
 Product Innovation to surpass consumer
expectations
 It increases awareness of the brand name
 Increases profitability from offerings in more
than one product category.(widening the net
to catch new consumers.)
 It’s a great way to reinforce a brand, reach
out to new customers, create a BUZZ

17. Advantages Of Brand
Extensions
 Improve brand image
 Reduce risk perceived by
Customers
 Permit consume variety-seeking

18. Advantages Of Brand
Extensions
 Clarify brand meaning
Brand Original Extension New Brand
Product Products Meaning
Weight Fitness Low-calorie Weight loss
Watchers Centre foods &
maintenance
Sunkist Oranges Vitamins, Good health
juices
Kellogg’s Cereal Nutri-grain Health
bars, Special snacking
K bars
Aunt Jemima Pancake Syrups, Breakfast
mixes frozen foods

19. Advantages Of Brand
Extensions
 Increase the probability of gaining
distribution and trial
 Increase efficiency of promotional
expenditures
 Reduce costs of introductory & follow-up
marketing programs (save 40-80%)
 E.g. Apple iPods
 Avoid costs of developing a new brand
 Allow for packaging & labeling
efficiencies

20. Advantages Of Brand
Extensions
 Enhance the parent brand image
 Bring new customers into brand
franchise and increase market
coverage
 Revitalize the brand
 Permit subsequent extensions

22. Disadvantages Of Brand
Extensions
 Can fail & hurt parent brand image
 Xerox Computers-synonymous with
copiers & no one believed they could
make computers
 Can succeed but cannibalize sales of
parent brand
 Amul Butter-”reduced salt butter”
is slowly eating up Amul normal butter

23. Disadvantages Of Brand
Extensions
 Can succeed but diminish
identification with any one category
 Can succeed but hurt the image of
parent brand

24. Disadvantages Of Brand
Extensions
 Can confuse or frustrate
consumers
 Can encounter retailer resistance
 Can dilute brand meaning
 Can cause the company to forgo
the chance to develop a new
brand

25. When are Brand Extensions
Appropriate?
 When Prior Brand equity exists
 Consumer must see some
“connection” between the proposed
extension and the parent brand.
 The proposed extension contributes to
and reinforces the overall brand equity
of the parent brand.

27. Conditions For Evaluating
Consumer’s Brand Extension
 Consumers have some awareness &
positive associations about the parent
brand
 At least some of these positive
associations will be evoked by the
brand extension
 Negative association are not
transferred from the parent brand
 Negative associations are not created
by the brand extension

28. Evaluating Brand Extension
Opportunities
Define actual & desired consumer knowledge
Identify possible extension candidates
Evaluate potential of the extension candidate
Evaluate potential candidate feedback effects
Consider possible competitive advantages & reactions
Design marketing campaign
Evaluate extension success & effects on parent brand
equity