New Products and Brand Extensions Flashcards
Three branding approaches available when a firm introduces a new product
- Develop a new brand
- Apply one of its existing brands
- Use a combination of new and existing
def. Applying an existing brand name to a new product in the same product category
line extension
def. Applying an existing brand name to a new product in a different product category
category extension
what are the two main categories of extension advantages
- Facilitate new-product acceptance
- Provide feedback benefits to a parent brand
describe the extension advantages: facilitate new product acceptance (8)
- Improve Brand Image
- Reduce Risk Perceived by Customers
- Increase the Probability of Gaining Distribution and Trial
- Increase Efficiency of Promotional Expenditures
- Reduce Costs of Introductory and Follow-Up Marketing Programs
- Avoid Cost of Developing a New Brand
- Allow for Packaging and Labeling Efficiencies
- Permit Consumer Variety-Seeking
describe extension advantages: provide feedback benefits to the parent brand and company (5)
- Clarify Brand Meaning
- Enhance the Parent Brand Image
- Bring New Customers into the Brand Franchise and Increase Market Coverage
- Revitalize the Brand
- Permit Subsequent Extensions
Disadvantages of Brand Extensions (8)
- Can confuse or frustrate consumers
- Can encounter retailer resistance
- Can fail and hurt parent brand image
- Can succeed but cannibalize sales of parent brand
- Can succeed but diminish identification with any one category
- Can succeed but hurt the image of parent brand
- Can dilute brand meaning
- Can cause the company to forgo the chance to develop a new brand
What are the three key aspects of understanding how consumers evaluate brand extensions
- Managerial Assumptions
- Brand Extensions and Brand Equity
- Vertical Brand Extensions
describe managerial assumptions with regards to evaluating brand extensions
- Consumers have some awareness of and positive associations about the parent brand in memory
- Some of these positive associations will be evoked by the brand extension
- Negative associations are not transferred from the parent brand
- Negative associations are not created by the brand extension
What does creating a positive image for an extension depend on? (3)
- How salient parent brand associations are
- How favorable any inferred associations are
- How unique any inferred associations are
What do the effects of an extension on consumer brand knowledge depends on? (4)
- How compelling the evidence is about the corresponding attribute or benefit association
- How relevant or diagnostic the extension evidence is
- How consistent the extension evidence is
*How strongly existing attribute or benefit associations are
horizontal brand extension
- same product
- new product category
sometimes different is better
vertical brand extension
- same brand
- same product category
being better on objective scale
two kinds of vertical brand extension
- up (deluxe)
- down (basic)
advantages of vertical branding
Simple sales proposition.
- Displaying a stat and noting that it is the best
in the market is simplest way of differentiating a product.
Free promotion in media.
- Often trade magazines and websites will write about the latest product.
Halo effect on other products in the brand’s portfolio
