Brand Strategy

Brand Strategy

A company must define its overall branding strategy, which affects all of its prod­ ucts. This strategy will also guide the branding of new products. A company has four choices when it comes to brand strategy (see Figure 1,3.4). It can introduce line extensions (existing brand names extended to new forms, sizes and flavours of an existing product category), brand extensions (existing brand names extended to new product categories), multibrands (new brand names introduces in the same product category) or new brands (new brand names in new product

line extension

categories.

Using a successful brand name to introduce

LINE EXTENSIONS. Line extensions occur when a company introduces ad­ additional items in a

ditional items in a given product category under the same brand name, such as given product category

new flavours, forms, colours, ingredients or package sizes.

under the same brand The vast majority of new­product activity consists of line extensions. A name, such as nem

company might introduce line extensions for any of several reasons. It might want flavours, forms, colours,

to meet consumers' desires for variety, or it might recognize a latent consumer added ingredients or

package sizes. want and try to capitalize on it. Excess manufacturing capacity might drive the company to introduce additional items, or the company might want to match a

Individual Product Decisions • 581

Figure 13.4

Four brand strategies

competitor's successful line extension. Some companies introduce line exten­ sions simply to command more shelf space from resellers.

Line extensions involve some risks, however. The brand name might lose its specific meaning ­ some marketing strategies call this the 'line­extension trap'. 17 In the past, when consumers asked for a Coke, they received a 6­ounce bottle of the classic beverage. Today the vendor has to ask; New, Classic, or Cherry Coke?

Regular or diet? Caffeine or caffeine free? Bottle or can? Another risk is that many line extensions will not sell enough to cover their development and

promotion costs. Or even when they sell enough, the sales may come at the expense of other items in the line. A line extension works best when it takes saies away from competing brands, not when it 'cannibalizes' the company's other

items. 1 " BRAND EXTENSIONS. A brand­extension (or brand­stretching) strategy is

brioiil extension any effort to use a successful brand name to launch new or modified products in a

Using u successful new category. Procter & Gamble put its Fairy name on laundry powder and dish­

brand name to launch a washing detergent with effective results. Swatch spread from watches into tele­

n&us or modified produce phones. And Honda stretched its company name to cover such different products

in a new category. as its cars, motorcycles, snowblowers, lawn mowers, marine engines and snow­

mobiles. This allows Honda to advertise that it can fit 'six Hondas in a two­car garage'.

A brand­extension strategy offers many advantages. First, brand extensions capture greater market share and realize greater advertising efficiency than indi­ vidual brands. 19 Second, a well­regarded brand name helps the company enter new product categories more easily as it gives a new product instant recognition and faster acceptance. Sony puts its name on most of its new electronic products, creating an instant perception of high quality for each new product. Thus, brand extensions also save the high advertising cost usually required to familiarize consumers with a new brand name.

At the same time, a brand­extension strategy involves some risk. Poorly conceived brand extensions such as Bie pantyhose, Heinz pet food and Cadbury soup met early deaths. In each of these cases the brand name was not appropriate to the new product, even though it was well made and satisfying. This problem occurs when the established brand name is launched into a very different market from the original brand and target customers in the new market do not value the brand's associations. Imagine a Pepsi single malt whiskey or Chanel galoshes?

In 1979 Levi Strauss introduced a line of men's trousers and blazers, which were marketed as 'classically tailored clothes from Levi'. A contradiction in terms? The men who bought classically tailored clothes thought so too. The range sank without trace. Levi management learnt that the 'Levi' name, although having

582 • Chapter 13 Branch, Products, Packaging and Services

an outstanding reputation in denim jeans and casual wear, was not as 'elastic' as they thought it to he.­"

A brand name may also lose its special positioning in the consumer's mind through overuse. Brand dilution occurs when consumers no longer associate a brand with a specific product or even highly similar products. Business observers, for example, have questioned the 'elasticity' of the Virgin name. Richard Branson

has extended the Virgin name, which appears on a htige range of disparate prod­ ucts, ranging from music and entertainment media shops, airlines and Internet services to personal financial services, cola drinks and bridal wear. They wonder if

Virgin may run the risk of overusing the brand's power of quality, innovation, value for money and fun, and its emotional 'take on the big bullies and give you something better' associations.

Finally, brand extensions can hurt the core values of the original product when managers get it wrong. The American Milwaukee Miller Brewing Company stuck the Miller name, synonymous with a hefty 'good­ol'­boys' brew, on its new

'Lite' beer. Miller Lite became a highly successful beer, but by muddying the sharp associations of the Miller name, the company hurt Miller High Life, the original

beer, whose sales subsequently plummeted. Miller's original beer was advertised to older drinkers on the basis of traditional American values, while Miller Lite targeted the under­24s using tongue­in­cheek endorsements from sportsmen and comics.

Transferring an existing brand name to a new customer segment or product group requires great care. The best result is one when the extension enhanees the core brand and builds the sales of both current and new products. Companies that are tempted to transfer a brand name must research whether the brand's associa­

tions fit the new product. 21

MULTIBHANDS, Companies such as Lever Brothers, Mars and Procter & niultibraiid strategy

Gamble create individual brand identities for each of their products. Lever's line

A strategy under of laundry detergents ­ Persil, Wisk, Surf, Radion, etc. ­ have distinct labels, with

a seller develops tivv or mure brands in the .same

the corporate name hardly featured. Similarly, Procter & Gamble produces at product category.

least nine brands of laundry products. These manufacturers argue that a multi­ brand strategy ­ managing a stable of brand names within the same product cat­

range branding strategy egory ­ permits finer segmentation of the market, with each brand name

A brand strategy suggesting different functions or benefits for different customer segments. whereby the firm

Another advantage is that the firm can differentiate its new products more effec­ develops separate

tively with individual brand names, while also reducing the risk of individual product range names far

brand failures harming the company's overall reputation.

different families of Some companies develop multiple brands, not for individual products, but for product.

different families of products. For example, the Japanese electronics group corporate brand strategy

Matsushita has opted to use range branding and developed separate range names

A brand strategy for its audio product families ­ Technics, National, Panasonic and Quasar. whereby the firm makes

The multibranding approach contrasts with the corporate branding its company name the

strategy. In corporate branding, the firm makes its company name the dominant dominant brand identity

brand identity across all of its products, as in the case of Mercedes­Benz, across alt of its

Philips and [leinz. The main advantages are economies of scale in marketing products.

investments and wider recognition of the brand name. It also facilitates introduction of new products, especially when the corporate name is well estab­

company and individual

lished.

brand strategy Other companies have used a company and individual branding approach to

A branding approach naming their products. This approach focuses both on the corporate and indi­ that focuses on the

company name and vidual brand names. Kcllogg's (e.g. Cornflakes, Raisin Bran, Rice Krispies, Coco I individual braiui name.

Pops, etc.) and Cadbury's (e.g Wispa, Flake, Roses, Fruit and Nut, Milk Tray, Wholenut, Dairy Milk) are supporters of this branding strategy.

Individual Product Decisions 583

NEW BRANDS. Firms that favour a milltibrand approach are likely to create a new brand to differentiate a new product, whether it is introduced into an existing or a new­product category. However, for some companies, a new brand may be created because it is entering a new­product category for which none of the company's current brands seems appropriate. For example, Toyota established a separate family name ­ the Lexus ­ for its new luxury executive cars in order to create a distinctive identity for the latter and to position these well away from the traditional mass­market image of the 'Toyota' brand name. Alternatively, a company may be compelled to differentiate its new product, and a new brand is

the best route to signal its identity. Seiko introduced a line of lower­priced watches under the Pulsar brand name, which is used as aflanker or fighter brand

aimed at customers who want a less expensive watch. Introducing new brands within a product category can be risky as each brand might obtain only a small market share and none may be very profitable. The company will have spread its resources over several brands instead of building

one or a few brands to a highly profitable level. Companies should weed out weaker brands and set high standards for choosing new brands. Ideally, the firm's brands should take sales away from competitors' brands, not from each other.