(4.2) Brand integration strategies

Question 1

Draw: Ansoff matrix to describe the source of growth for firms

Answer 1

SEE MATRIX

Question 2

Draw: Ansoff matrix to describe strategic ways to develop brand portfolios

Answer 2

SEE MATRIX

Question 3

What are the 3 ways of launching a new product and when does brand extension occur?

Answer 3

1) Developing a new brand, individually chosen for the new product
2) Applying one of the existing brands
3) Using a combination of a new brand and an existing brand
–> (2) en (3) Spreken van een brand extension als een established brand name gebruikt wordt om een nieuw product te launchen

Question 4

What is the idea of a brand extension?

Answer 4

That consumers will use their brand knowledge about the parent brand when evaluating the new product. The extension product can then capitalize on the parent’s brand equity. (Spillover effects between parent brand and extensions)
–> Ex. Tempo Tissue: perfectly soft tissues - now they bring toilet paper to the market > smart link

Question 5

What are opportunities of brand extensions?

Answer 5

For customers:
- Image spillover > reduced risk
- Variety & new consumer segments
- Positive feedback effects to the parent brand

For companies
- Reduce the risk of introducing new products
- Save costs and time for market intro and developing
- Access to retailers

Question 6

What are risks of brand extensions?

Answer 6

For consumer
- Confusion and frustration&raquo_space; empirical study by Iyengar & Lepper: more satisfied choice when beging confronted with limited array of products
- Reduced brand awareness (verdunning)

For companies
- Cannibalization = negative effects on existing products
- Resistance retailers
- Hurt parent brand image

Question 7

What are the success drivers of brand extension?

Answer 7

• Parent brand characteristics: strength of the brand
• Relation between parent brand and brand extensions: the fit!
• Brand extension’s product category characteristics > risk associated with buying unknown brands in the product category
• Brand extension’s marketing content > marketing support

Question 8

What does fit means in the context of brand extensions?

Answer 8

The relation between the parent brand and the extension product.

Question 9

What is the idea between this fit concept in brand extensions?

Answer 9

Customers build knowledge about brands, which they use for structuring and interpreting their environment.
» People tend to evaluate a new stimulus by trying to classify it as a member of an existing mental category.
» If an extension is perceived as related to the brand category - transfer of brand knowledge from parent brand to extension should be facilitated!

Question 10

What do meta-analytical findings say regarding the performance impact of brand extension fit and parent brand equity?

Answer 10

Parent brand equity and extension fit have medium positive effects on brand extension success – effect of extension fit&raquo_space; much larger than parent brand equity
!! Different effects of fit dimensions and parent brand equity dimensions

Question 11

For the types of brand extensions: what are the main distinguishments?

Answer 11

• Category of the extension
• Origin of the extension
• Direction of the extension

Question 12

Explain the types of brand extensions by category of the extension:

Answer 12

• Line extension: parent brand is used for a new product in the same product category.
• Category extension: parent brand is used for a new product in a different product category.
  » Frachise: new category but same industry.
  » Concept: new category but different industry.

Question 13

Explain the types of brand extensions by origin of the extension:

Answer 13

• Internal
• External
  » Licensing is the most prominent form
  Contractual arrangement whereby a firm (the licensee) cas use the name/logo/.. of another brand (licensor) to market its own products for a certain fee (royalty rate) –
  Easy way for growth! Gained popularity and became big business.

Question 14

What is the most famous licensor?

Answer 14

Disney - worldwide by retail sales

Question 15

What are the risks of licensing?

Answer 15

• Overexposure of the brand and a loss of control over the expected quality of the branded products whihc could damage the brand’s image.
• For licensor: strong variety - positive on average but 44% also negative returns
  »How could that be explained == contingency factors:
• ability of the licensee to generate sales
• power of the licensor to excercise control over the licensee

Question 16

Explain the types of brand extensions by direction of the extension:

Answer 16

• Horizontal: offering greater variety of the same quality level
• Vertical: exploring new levels of quality
  » General wisdom suggests: offering high Q extensions links the brand to better products and thus improved brand evaluations
  » Empirical findings: robust assymetry - higher Q extensions improve brand evaluation far more than lower Q extensions damage it

Question 17

What is the main critics on vertical brand extensions?

Answer 17

They don’t always make sense!
All airlines try low cost, they almost all fail in it

Question 18

Give examples of reciprocal spillover effects

Answer 18

Tesa: german sticky tape brand –> positive feedback effects from other glueing products.
Melitta coffee filters - start with garbage bags –> negative feedback effects on the coffee filters

Question 19

In which 2 ways can the change for the parent brand occur?

Answer 19

• Monetary: change in revenues (+/-), enhanced by high degree of category similarity between the parent brand and the extension product. Marketing support can also positively influence the effect on sales
• Non-monetary: brand attitude towards the parent brand (+/-). Special empirical findings:
• high Q parent brand is less affected by succesfull ext
• average Q parent brand is more benefiting from succesful extensions
  Extra findings:
• unsuccesful ext: high level of fit increases dilution effects
• successful ext: low level of fit increases enhancement effects
• why? diagnosticy of +/- information differs between close and far extensions