Managing Product Extensions

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Managing Product Extensions

• Professor Carl Mela
• BA 460 Product Management
• Fuqua School of Business

• Brand Management System
• On Building A Brand
• Managing Across Brands

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Agenda

• Why Extend?
• Problems With Extensions
• When to Extend?
• How to Extend?

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Brand Extensions

• Across lines across categories
• 81 of All New Products

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Why Extend?

• Facilitate new product acceptance
• Reduced risk to consumers and trade
• More efficient promotions
• One stop solutions
• Variety seeking and multiple segments
• Trading up / converting
• Scale economies
• Usurp shelf space / please trade
• Benefits parent brand and firm
• Enhance image
• Attracts new customers

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Problems with Extensions

• Effects on Brand
• Retailer resistance
• Failure hurts parent brand
• Weakens associations of parent
• Forego chance to develop new brand
• Cannibalization
• Reduced focus on star brands

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Problems with Extensions

• Effects on Consumer
• Confuse customers
• Disturb loyalty patterns built over years
• Effect on Firm
• Copy catting by other brands
• Costs (inventory, time, production)

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When to Extend

• The parent brands associations are salient,
  favorable, and unique
• There is a fit (benefits, technology, etc.)
  with the parent brand
• and Parent is not too prototypical (e.g.,
  detergent w/ Clorox bleach)

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How to Extend

• 1. Ascertain what consumers know and like about
  parent brand.
• 2. Identify possible pertinent extensions
• 3. Evaluate extensions
• Assess what associations port to extension
• Assess relevant internal (fit) external (e.g.,
  competition) factors
• 4. Develop marketing programs brand elements
• 5. Measure success and effect on parent

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How to Extend
Super-Brand Comfort Inn adds Sleep and Quality
Brand Bundling e.g., Ingredient Brands
Brand Bridging e.g, Endorsement
Parent Brand
Brand Hierarchy
Sub-Brand e.g., flavors
Ingredient Hierarchy
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Summary

• Brand Extensions
• Very alluring
• Cheap, effective
• But be wary
• Adverse effects on parent brand