The Role of Product Feature Similarity and Brand Concept Consistency - Dissertation Example

Topic: Brand Management Lecturer: Presentation: Introduction Brand extension is a significant strategy used by businesses in marketing whereby the name of a popular brand in the market is used to market a different brand from the same company. The spin-off, which is the new product, is unlikely to be known by consumers on its own. The brand name under which it is sold may encourage consumers since they associate it with the quality of the original product. Brand extension raises the profitability of business since it deals with various products. The attitude of consumers towards a particular brand determines the success of the business in extending it. The higher the value attached to the brand, the more a business is likely to succeed in its extension. More over, the satisfaction derived from both products matters since the more related the products are in terms of utility, the more consumers are likely to accept the extended brand (Reast, 2005). For an organization that uses differentiation strategies to maintain a large market share, brand extension serves an important purpose. It helps an organization to serve a wide range of consumer’s needs. However, brand extension has various risks that it may have on the main brand. If the new products are not of standard quality, the core brand may be tarnished, and consumers may even fail to purchase any of them. It is therefore important for marketers to evaluate the consumer satisfaction in relation to the new products as well as assess the impact of the brand extension on the core brand. This would help the company to maintain the popularity of the main brand while using it to create markets for new products. This paper is a critical analysis of the purpose, implementation, advantages and disadvantages of brand extension. It highlights the brand extension applied by Coca-Cola, Unilever and GlaxoSmithKline among others which are practical examples of brand extension. Purpose of Brand Extension Brand equity is a significant aspect of product marketing since products usually move faster than others are likely to generate more profits. These are recognized in any marketing undertaking. They are popular among the customers and therefore may be used effectively to market unknown products. Brand extension can be used for new product launching (Reast, 2005). For example, an organization may develop a new product that is targeted at the same market segment. It is assumed that the consumers already understand the usefulness of the core brand and therefore are likely to associate new products with it. The familiarity of the consumers with the firm and the core brand enhances acceptance of the new product. Brand extension may also be used to market a modified product of the core brand. For example, Unilever produces various products. Initially, the company produced washing liquid, which had brand equity. However, the firm realized that washing powder would preferred by some consumers. The firm extended fairy from a liquid brand to include powder. The new washing powder gained popularity among consumers mainly because of the existing fairy brand that had brand equity. When firms identify investment opportunities in the market that have not been exploited, they can easily establish through extending their strong brands to ensure that all the needs of consumers are met by one firm (Chandon, 2004). Such strategy prevents other firms from entry in to the same market especially when the extended brand establishes. Companies such as Microsoft have used this strategy whereby they provide all that is needed in the market through brand extension thereby barring potential organizations from entry. There are opportunities for emergent companies to invest but they may not have a large market share for them to be profitable. Brand extension is also significant in the improvement of competitiveness in the market. When other organizations gain competitiveness as a result of having differentiated products in the market, an organization can also develop a variety of products and sell them under the main brand to satisfy broader consumer needs (Reast, 2005). It might take longer for newly differentiated products to be known in the market and therefore brand extension can successfully be used to market them. Brand stretching can also be used by organizations to market products in different market segments. The strong brand name is assumed to give the products in the new market segment a mark of quality, or in case of a merger or acquisition of another company. For example, Philips is a brand name that represents electronic products and has brand equity. The brand name was also used for other products targeted at different market segments when the company acquired Avent that deals with health care products. For example, the Philips brand was used for marketing products that are targeted at breast feeding women. These include breast pads and many baby care products. The same strategy is used by Yamaha, which is a strong brand for motorbikes, but it is also used for the marketing of speakers, guitars, and other products that are not associated with motorcycles. In this kind of brand extension, consumers attach their confidence to the strong Philips brand (Chandon, 2004). They tend to view the products of the newly acquired firm being as strong as the main brand that has strongly established in the market. Implementation of Brand Extension It is important for firms to exercise caution when implementing brand extension to avoid deteriorating the brand equity of the core brand. It is important to take in to consideration the brand relationships. This gives the marketers a view of the relevance of extending a particular brand since it would not be useful for the organization to extend a brand without a clear view of the benefits that will be accomplished. There needs to be a critical evaluation of the relationship between the firm’s brand and those of competitors, as well as the consumers’ views regarding the brands. This assessment is important because there is a likelihood of failure if the new products in the market do not match the brand under which promotion is to be conducted (Reast, 2005). It is important to note that consumers are usually sensitive regarding the brand. Even if the products match precisely to the customers’ needs, the brand extension may not attract them to purchase if the core brand is not among their preferred brands. The new products need to be matched with the most appropriate brand that maintains the confidence and generates the willingness to purchase. Consumer research is significant in establishing the strategic fit of products in regard to consumer satisfaction. This is accomplished through interviews and other research activities that get the firm to understand the consumer preferences for the purpose of effective strategizing on brand extension. It helps in identifying the links that exist between the consumers and the products in the various brand categories (Shimp, 2003). The consumer preferences are associated to the brands, which enables the marketers to identify the various alternatives that can be used for effective brand extension. These alternatives are carefully selected and arranged in a manner that represents the benefits that consumers derive from the top most to the bottom. The perceptions of the customers regarding the brands are important since it portrays which are the most preferable brands to be extended to match their needs. This allows the firm to analyze the relevance of brands so that the needs of customers can be met with the use of the least efforts to persuade them to purchase the new products. Maintaining relevance is important as it helps in reducing confusion among the consumers. They should be able to associate the new product with the original brand (Pickton & Broderick, 2005). This is accomplished by firms ensuring that new products are placed in the same category as the original product. For example, Lucozade as the main brand of GlaxoSmithKline was used for health purposes to help weak people to recuperate and gain energy and appetite quickly. The brand was extended for the Lucozade that is used as an energy drink and has also been extended further for use in sports (Chandon, 2004). The relevance in this case is the fact that the brand extension is mainly focused on products that are meant for people who need to restore their health and energy. The core brand that the firm chooses for extension also needs to be recognized in the market. In the absence of recognition, the end result will be similar to the introduction of a new product in the market. The customers need to recognize the new brand in relation to the core brand. Without establishing a link, they may not consider it as having the same qualities as the main brand and the superiority of the parent brand may not play a role in promoting the new products. For example, when Coca-cola introduces new drinks in the industry, they are recognized by consumers and they can easily be sold under the Coca-Cola brand that is recognized (Coca-Cola Company, 2003). Transferability of the skills that help in maintaining good quality in the products is important to ensure that the new products do not deviate from the parent brand in regard to consumer satisfaction. Brand extension also needs to be credible, which helps in the maintenance of a strong image among the consumers (Shimp, 2003). They mainly focus on the nature of the products to visualize whether it is possible for them to accomplish the utility of their money. If the products are unrealistic, it is unlikely that consumers are going to gain the confidence to purchase them. Credibility is therefore a major factor that firms need to consider when they extend their brands. In general, it is important for organizations to apply a consumer focused approach when implementing brand extension since in essence; it is the customers’ interest in a firm’s products that determines its profitability. Implementation also requires laying out guidelines that clearly indicate the procedures that will be followed in to accomplish brand extension (Pickton & Broderick, 2005). For example, all the workable strategies need to be highlighted. These are developed from the evaluation process as well as from the consumer research. The reasons for settling on the selected strategies need to be highlighted so that the managers will be able to visualize what actions are effective and which ones are not. The steps followed in the implementation of brand extension need to be undertaken through prioritization to ensure that the most important tasks are accomplished first. Positioning of the new product needs to be strategic to ensure that only the most popular brand is extended. This involves the process of analyzing the operating environment to ascertain that the brand is competitive. If there are threats to the brand, it would be risky to position the new product in it (Sjodin & Torn, 2006). On the other hand, the brands that have opportunities for expansion in the market are better placed for extension. The new products need to be placed in the brand that that has a differential advantage in the market. Advantages of Brand Extension Firms that engage in brand extension usually are at an advantage in regard to the distribution of new products. Since there are many players in the distribution process from the producer to the consumers, there is always need to ensure that distributors of the products are confident in dealing with the new products (Keller, 2001). The same case applies to the retailers. They mainly deal with the products that they have confidence that consumers will purchase. When firms extend their brands to accommodate new products, they build confidence among the distributors and who on the other hand supply the extended brand to the retailers. For example, since consumers are used to Coca-Cola drinks, the retailers can comfortably convince the consumers that the new products have a similar value to the original brand. The main theme in this case is developing confidence among consumers in regard to using the products from the firm through making them seem familiar (Coca-Cola Company, 2003). Since the brand chosen is of superior quality through the selective identification, it is likely that the consumers do not view the new product as unusual in the market. Rather, they view the products as an addition to the already existing ones and therefore the marketability of the products is enhanced (Keller, 2001). It also helps the firm to counter competition from similar industries. For example, if Pepsi introduces a new beverage in the market that may attract more consumers in a certain segment, Coca-cola can easily counter such competition through using its strong brand to introduce a product that satisfies the needs of its consumers, thereby preventing them from substituting the firm’s products for its competitor’s (Coca-Cola Company, 2003). Without brand extension, it is not easy for a new product to establish and become competitive while there are substitutes. In other words, brand extension helps to protect a firm’s products from the threat of substitutes. When the new product is introduced in to the market under a competitive brand, there is a tendency of consumers’ motivation to try the new product. This is an important aspect of marketing since it helps to generate consumer loyalty especially when the quality of the products is of superior quality than those of competitors. It is a strategy for awareness creation in regard to a firm’s products. Brand extension is important in reducing the cost of advertising and promotion because consumers are already aware of the core brand (Sjodin & Torn, 2006). The initial advertisement of the brand covers the new products sold under it. Developing a new brand is also a costly venture for firms. Brand extension saves organization from the need of developing new brands. It also preserves efficiency in packaging since the new products are packaged in the same manner as the original brand. More over, the consumers of the firm’s products usually have a wide range of products to choose from. Brand extension also revitalizes the diminishing image of the original brand. Consumers in most situations are attracted to an innovative firm whereby they are presented with innovative products that they believe are an advancement of the old brand. The new products make the old brand to reappear or become more frequent than before in the market. With the understanding that the new product has an added value, they are likely to purchase more and in the process, the brand maintains its position in the market (Park et al. 1991). Apart from improving a firm’s competitiveness in the market, brand extension is also a strategy to prevent other firms from establishing in the market. For example, when a firm extends its brand to cover virtually all areas of consumer demand, other organizations fail to get an opportunity to invest in the market. Many firms use this strategy as the barrier to entry for emerging organizations. On the other hand, it is also an important entry strategy since it allows a firm to penetrate the core areas in the market to serve the needs of consumers where competitors have not made efforts to do so (Pickton & Broderick, 2005). Disadvantages of Brand Extension Brand extension has various disadvantages to the success of an existing brand. The strength of its image might be lowered as a result of low quality products of the new products. Brand equity is the strength of a firm, and using the brand to market new products may tarnish this image when consumers are dissatisfied with the new products sold under it (Chen & Chen, 2000). An organization may be faced by a change in the consumer’s perception associated with brand extension. This problem is mainly experienced through implementing many extensions to a brand such that consumers become confused in regard to making a choice of what is good for them. This confusion may be experienced when consumers purchase a particular product having in mind a particular taste of the original brand (Reast, 2005). When the consumer is unable to differentiate the products due to too many extensions, they are likely to give up since they can not get the satisfaction they need. There is the likelihood of the new products outperforming the parent brand. This usually happens when the firm concentrates so much on the marketing of the new products more than they do for the original brand. It might be strategically positioned than the parent brand, which leads to the failure of accomplishment of the initial goals. Shimp (2003) observes that the dents caused on the original brand can not be equated to the benefits accrued by the organization from the new products. More over, further brand extension may not be possible since the original brand equity is lost. Although brand extension generates confidence among distributors, retailers may be reluctant to purchase the extended brand for fear of making losses. This may be costly for the firm and may also affect the parent brand. Conclusion Brand extension is a significant marketing practice that allows a business to use an already established brand to promote a new product. This has been significant in reducing the costs associated with establishing a new brand, which might be costly for an organization. Brand extension has been significant to the success of various organizations such as Coca-Cola, Unilever, GlaxoSmithKline and many other organizations that utilize their strong brand equity to introduce new products in the market. Implementation of brand extension requires substantial consumer research as well as analysis of the extendibility of the brand. It is important that the brand that is extended belongs to the same category as the parent brand. More over, it is important that the consumer preference for the parent brand be high so that the new products can effectively support its promotion. Consumers need to be the main focus for the firm that needs to extend the brand. Brand extension has several advantages and disadvantages. It helps in the reduction of the costs of launching new products. On the other hand, the new products are marketed through the use of the already popular brand in the market and therefore it is easy to create awareness in regard to its presence in the market. More over, distributors gain confidence due to the fact that the brand is already established in the market. However, brand extension can also damage the existing brand as a result of poor quality in the new products. Consumers can also be confused especially when there are many extensions on the same brand. The parent brand may loose its identity in the market if the new products outperform it. In general, brand extension is significant for the competitiveness of a firm, but its implementation needs to be conducted carefully to avoid the various disadvantages associated with it. References Chandon, P. 2004. “Innovative marketing strategies after patent expiry: The case of GSK’s antibiotic Clamoxyl in France”. International Journal of Medical Marketing, Vol. 4, pp 174–177.  Chen, C.H. Chen, S.K. 2000. “Brand dilution effect of extension failure - A Taiwan study”. Journal of Product and Brand Management. 9 (4), p243-254. Keller, K.L. 2001. “Building customer-based brand equity”. Marketing Management, Vol. 10,2 pp 14-19. Park, C.W., Milberg, S.J. and Lawson, R. 1991. “Evaluation of brand extensions: the role of product feature similarity and brand concept consistency”, Journal of Consumer Research, Vol. 18, 2 pp. 185-93. Pickton, D. & Broderick, A. 2005. Integrated Marketing Communications. 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