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Brand Management

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Brand Management (MKT624)
VU
Lesson 24
POSITIONING ­ THE BASE OF EXTENSION
Introduction
After having learnt what extensions are, the difference between line extension and brand
extension, and the positive and negative sides of extensions, we now move on to the
fundamentals of positioning that should be the bases of undertaking extensions. This discusses
the "how" part of extensions. The lecture then emphasizes the strategic deliberations that we
must have before extensions and relates those with a couple of examples for clarity.
Positioning as the key for extension
Positioning being central to brand strategy is at the core of extensions. The three components
of positioning in the form of the definition of business, the target market, and the point of
difference are the guidelines for positioning1. Whatever extensions that we may be considering
have to stem either from one or a combination of these three fundamental components of
positioning. Let's discuss them one by one.
Extending your target market
This extension is all about defining new segments that are going to be served by a product
with features differentiated from the basic product. A bicycle manufacturer getting into
manufacture of mountain bikes is extending the target market. A jeans manufacturer getting
into comfortable and fashionable dress pants is again extending its target market of jeans.
We may have been considering such examples before, but they were restricted only to the
understanding of what extensions are. Here, the emphasis is on understanding the rationale
for such extensions.
Extending the definition of business
Extension of segments or target market automatically leads you to extend your business
definition. Obviously, you now want to operate in more than one segment, which requires
that you extend definition of your business. Getting into more segments, in other words,
means redefining the scope of the market within which the company plans to operate in a
bid to satisfy more than one need with more than one offering.
Extending the target market cannot be viewed in isolation of extending the overall business.
Going back to the examples of bicycles and jeans, their manufacturers have to redefine the
overall businesses with emphasis on a larger scope.
Extending your point of difference
In order to make extensions meaningful, improved features with convincing benefits have
to be offered to customers. Small improvements are taken for granted by customers, who
expect you to keep making those for the sake of contemporariness.
Meaningful improvement with an attempt to address a different need, however, justifies an
extension of the existing product. Every time you come up with a new formula of packaged
yogurt (fat-free, high-calcium, or fruit formula) you are improving the point of difference
and hence deserve to extend the brand. The improvement can also be in package size to suit
customer needs at different occasions. A pack of yogurt to be served with in-flight meals
has to be smaller and ergonomically designed keeping in view the occasion. This refers to
"brand for when" and "brand for whom".
Each time a chip maker comes out with a faster chip, it extends the benefit and hence the
point of difference. The point of difference, in other words, relates extra benefits that you
offer your customers.
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Brand Management (MKT624)
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It is obvious that extending the brand on the basis of extension of the target market, overall
business, and the point of difference relates to line extension. When we consider extending
(diversifying/stretching) the brand into new areas, we extend the entire positioning. It is new
position. The concept is graphically illustrated for clarity.
Figure 30
Extending the entire
Brand Positioning ­ key to Brand Extension
positioning
The examples of oil
filters
manufacturer
getting
into
rice
husking, or a company
of shoes getting into the
area of foods explain
Extend Target Market
Extend Overall Positioning
this concept. It is risky,
(Line extension)
(Brand extension)
but if done with the
right
strategic
deliberations,  it  can
make a company follow
the
true
portfolio
Extend
Extend
approach to managing
its brands. What bears
importance here is the
need to add to image
capital and not diminish
Extend
Extend Point of Difference
Definition of Business
it. Diversification must
(Line extension)
(Line extension)
give the brand strength
and  supplement  the
overall brand picture.
The next step is to learn
"when" part of the extension exercise. This relates to "when" part of extensions.
When should you extend your brand?
Brand extension is a very sensitive area that takes on highly strategic proportions. An
extension should come by only with a strategic rationale supporting it. It must be
undertaken to add strength and value to the brand and not diminish those. Therefore, before
undertaking an extension, we must make some strategic deliberations relating the following
factors. We must make sure that the extension
1. Is consistent with the brand vision.
2. Upholds the overall brand picture.
3. Is consistent with overall positioning
1. Consistency with brand vision
Vision tells you where you are and where you want to reach. You are clear about the
financial gap that you have to fill. New introductions have to be undertaken in that
light keeping in view the bases of positioning. It was during development of the
company vision and in turn the brand vision that you determined any related (line
extension) or unrelated (brand extension) areas that you planned to enter. You did
that in the light of existing brand strengths and weaknesses. That vision must lay the
foundation for decisions relating extensions.
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Fast food Brand XYZ example
If the vision is all about restricting ourselves to the lunch market, then we may
get into a few more entries in segments right and left of the one we chose to
stage our debut. Refer to figures 10-12, lecture 7.
If the vision calls for getting into the fast food by targeting the lunch market as
just the starting point, then extensions could take on different forms.
You may like to get into related lines like fried chicken, when you put up
restaurants that will gradually redefine your target market and overall business.
Razor blades and shave market example
A company in the market of shaving blades may define its business as the blades
market. The moment it envisions getting into shave creams, balms and other
related products, it must translate that vision into creating brand extensions that
are consistent with the vision.
The company is redefining its business as the one from blades to the one in
personal care items. The redefinition is through extension by target market, but
essentially necessitates changing the entire positioning for different products it
plans to introduce.
2. Extension must uphold and strengthen brand picture
We know the image of our brand and the contract it fulfills and also the fact where
our brand stands against competition. Knowing this picture, we should not go wrong
in extending our brand. In other words, if we have created the right brand picture it
almost guarantees right kind of extendibility.
3. Consistency with overall positioning
The price, the target audience, the distribution, and the quality factors must form a
position that offers extendibility possibilities. Any abuse of one or more of the
factors amounts to deviating from the original position of the brand. To make sure
that there are consistencies between overall positioning and brand extensions, we
have to make sure that the extensions do not
·  detract customers from what the parent brand stands for
·  confuse the customers in making their choice (meaningful differences)
·  cannibalize your current brand
A few more deliberations: Basically, these refer to things that should be avoided.
1. Not to have a narrow vision
Some companies keep the brand locked up in a way that they define its scope in too
narrow-minded a way. They forget that brands are broad-minded creatures that have
a caring character in that they like to respond to changing needs and in the process
add value to themselves and the companies2. The result is that the brand's real
potential never blooms and it either becomes static not adding to the companies
strategic goals or declines and goes into the records of history as the one that was
killed for not getting an extension. The following example illustrates this thinking to
the benefit of all of us.
Managers responsible for "Maggi" at Nestle, Switzerland thought that the image of
their brand was old and they needed to launch further introductions with little
connection to Maggi. They locked the brand and its potential in the sense that
Maggi could not cover latest and modern products3. This is what they thought and
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not the market. They had forgotten that brands stay alive by continuously
responding to the changing expectations of their customers.
By disassociating new introductions with Maggi, they only reinforced Maggi's old
image. They had forgotten that a brand proves its modernity by creating and
offering new and modern products from time to time. They got caught into the
product life cycle and failed to realize that brand building is a long gradual process.
The vision for the brand should not be narrow to the point that the future becomes
hostage to too much focus on the past, as the case has been with Maggi. The present
must be given importance to determine brand's potential to stay up-to-date. Failing
this, it cannot enter the future with energy and zeal.
A manufacturer of spark plugs staying too much focused on the existing line of
business cannot grow beyond a certain point by not going into other accessories.
The vision should also not be broad to the point that a company stretches it in all
directions. A brand cannot be everything to everybody. The same manufacturer of
spark plugs should avoid, by all logic, getting into foods.
2. Awareness and reputation of the parent
These two always provide an advantage and have to be present at the same time.
Absence of one may harm the brand. Levi's experience demonstrates that despite
having high awareness, its reputation for blue jeans did not transfer into formal
clothing4. The lesson is to be sensitively careful to extendibility if one of the factors
does not seem to be working in favor of the brand. Do not do it if you are not 100%
confident.
3. Brand essence should be applicable
Extension of overall business in certain situations stems from a common
denominator. Bic's brand essence is all about small disposable items like ball point
pens, disposable lighters, and disposable razors. The denominator in this case is
disposability that gives Bic a position of similarity across the categories of writing
instruments, lights, and shaving. When Bic got into perfumes, it failed. The
character of perfumes did not have the element of disposability. The lesson here is
not to go against the essence of your brand, especially if the essence is very strong5.
Bibliography:
1. Scot M. Davis: "Brand asset Management ­ Driving Profitable Growth through
Your Brands"; Jossey-Bass, a Wiley imprint (129)
2. Jean-Noel Kapferer: "Strategic Brand Management ­ Creating and Sustaining
Brand Equity Long Term"; Kogan Page (263-264)
3. Jean-Noel Kapferer: "Strategic Brand Management ­ Creating and Sustaining
Brand Equity Long Term"; Kogan Page (264)
4. Geoffrey Randall: "Branding ­ A Practical Guide to Planning Your Strategy";
Kogan Page (60)
5. Geoffrey Randall: "Branding ­ A Practical Guide to Planning Your Strategy";
Kogan Page (60)
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Table of Contents:
  1. UNDERSTANDING BRANDS – INTRODUCTION:Functions of Brand Management, Sales forecast, Brand plan
  2. INTRODUCTION:Brand Value and Power, Generate Profits and Build Brand Equity
  3. BRAND MANIFESTATIONS/ FUNDAMENTALS:Brand identity, Communication, Differentiation
  4. BRAND MANIFESTATIONS/ FUNDAMENTALS:Layers/levels of brands, Commitment of top management
  5. BRAND CHALLENGES:Consumer Revolt, Media Cost and Fragmentation, Vision
  6. STRATEGIC BRAND MANAGEMENT:Setting Objectives, Crafting a Strategy, The Brand Mission
  7. BRAND VISION:Consensus among management, Vision Statement of a Fast Food Company, Glossary of terms
  8. BUILDING BRAND VISION:Seek senior management’s input, Determine the financial contribution gap
  9. BUILDING BRAND VISION:Collect industry data and create a brand vision starter, BRAND PICTURE,
  10. BRAND PICTURE:Brand Value Pyramid, Importance of being at pinnacle, From pinnacle to bottom
  11. BRAND PERSONA:Need-based segmentation research, Personality traits through research
  12. BRAND CONTRACT:The need to stay contemporary, Summary
  13. BRAND CONTRACT:How to create a brand contract?, Brand contract principles, Understand customers’ perspective
  14. BRAND CONTRACT:Translate into standards, Fulfill Good Promises, Uncover Bad Promises
  15. BRAND BASED CUSTOMER MODEL:Identify your competitors, Compare your brand with competition
  16. BRAND BASED CUSTOMER MODEL:POSITIONING, Product era, Image Era, An important factor
  17. POSITIONING:Strong Positioning, Understanding of components through an example
  18. POSITIONING:Clarity about target market, Clarity about point of difference
  19. POSITIONING – GUIDING PRINCIPLES:Uniqueness, Credibility, Fit
  20. POSITIONING – GUIDING PRINCIPLES:Communicating the actual positioning, Evaluation criteria, Coining the message
  21. BRAND EXTENSION:Leveraging, Leveraging, Line Extension in detail, Positive side of line extension
  22. LINE EXTENSION:Reaction to negative side of extensions, Immediate actions for better managing line extensions
  23. BRAND EXTENSION/ DIVERSIFICATION:Why extend/diversify the brand,
  24. POSITIONING – THE BASE OF EXTENSION:Extending your target market, Consistency with brand vision
  25. DEVELOPING THE MODEL OF BRAND EXTENSION:Limitations, Multi-brand portfolio, The question of portfolio size
  26. BRAND PORTFOLIO:Segment variance, Constraints, Developing the model – multi-brand portfolio
  27. BRAND ARCHITECTURE:Branding strategies, Drawbacks of the product brand strategy, The umbrella brand strategy
  28. BRAND ARCHITECTURE:Source brand strategy, Endorsing brand strategy, What strategy to choose?
  29. CHANNELS OF DISTRIBUTION:Components of channel performance, Value thru product benefits
  30. CREATING VALUE:Value thru cost-efficiency, Members’ relationship with brand, Power defined
  31. CO BRANDING:Bundling, Forms of communications, Advertising and Promotions
  32. CUSTOMER RESPONSE HIERARCHY:Brand-based strategy, Methods of appropriations
  33. ADVERTISING:Developing advertising, Major responsibilities
  34. ADVERTISING:Message Frequency and Customer Awareness, Message Reinforcement
  35. SALES PROMOTIONS:Involvement of sales staff, Effects of promotions, Duration should be short
  36. OTHER COMMUNICATION TOOLS:Public relations, Event marketing, Foundations of one-to-one relationship
  37. PRICING:Strong umbrella lets you charge premium, Factors that drive loyalty
  38. PRICING:Market-based pricing, Cost-based pricing
  39. RETURN ON BRAND INVESTMENT – ROBI:Brand dynamics, On the relevance dimension
  40. BRAND DYNAMICS:On the dimension of knowledge, The importance of measures
  41. BRAND – BASED ORGANIZATION:Benefits, Not just marketing but whole culture, Tools to effective communication
  42. SERVICE BRANDS:The difference, Hard side of service selling, Solutions
  43. BRAND PLANNING:Corporate strategy and brands, Brand chartering, Brand planning process
  44. BRAND PLANNING PROCESS:Driver for change (continued), Brand analysis
  45. BRAND PLAN:Objectives, Need, Source of volume, Media strategy, Management strategy