Brand Extension

There are two ways of launching a new product into the market. One is known as Line Extension i.e. use of an established brand name for a new product in the same category.  New product differs from actual parent product in size, colour or packages. So when Sun Silk introduced Sachets in the market that is known as Line extension.

On the other hand, brand extension refers to when the established brand is used to launch a new product in a brand new category e.g Kingfisher used brand extension to launch Kingfisher airlines.  Other most successful brand extension is of ITC, the most reputed brand in the tobacco industry has extended itself into almost any other product category like cosmetics, Match box, Staples, hotels etc. Dettol is another successful example of brand extension. Originally an antiseptic company, Dettol now sells shaving creams, soaps etc.

However, normally new product development is not so easy task. According to Booz-Allen and Hamilton, more than 30-35% new products fail. Therefore, marketers take care of everything while introducing new products into the market.  

 

Successful brand extensions have positive effect on the parent brand. There are six different types of brand extension.

1.      The Next Step, an evolutionary brand extension

2.      The Sequel, more than that of evolutionary. In this product is re worked, re designed, re manufactured and re marketed.

3.      The Spin off, These are the extensions that take some small elements of the original and try to make a full blown brand out of it.

4.      The partnership, Co-branded extensions can confuse and confound customers

5.      The Anti- Brand, this is not really an extension, these are brands that leverage the brand awareness of another product to their benefit by claiming to Not be them.

6.      The non-sequitur, these are brand extensions that generate a “HUH?” reaction out of consumers.

Source: www.brandxpress.net

However on the other hand, Ernst and Young’ study shows that 84% of brand extensions are failures. Some of the brand extension failures are Amul’s entry into Pizzas, Kellogg biscuits, Tropicana ice creams.  

 

Four factors influence the successful brand extensions i.e. Relevance, Recognition, Transfer and credibility.

Relevance means the new product belongs to same category of that parent product in a broader sense. Airtel introducing mobile devices is an example of relevance.

Recognition means associating the characteristics of new product or brand with that of the parent. PEPSI introducing juices is an apt example of recognition.

Credibility is about the trust people have in the parent company. The core values of TATA group helped the company when t launched TATA services in software.

Transfer means ability to transfer the skills and characteristics into new product.

So in short, it means that what is perceived by the marketing managers does not sell, it is what is perceived by the customers is ought to sell. So brand extensions is not a sure short victory for established brands.

 

 

20-20 Marketing

IPL(Indian Premier League) Season-2 is again back and running successfully in SA. Marketers wait for this season to make their brands more visible.

Every other brand whether LG, the electronics Goods brand, which is using this time to showcase number of products.

Even Radio FMs are using this time to grab in lot of attention by offering tickets to South Africa or by holding an official interviews with players.

Some where Cola Brands are using celebrities to make their brands more visible.

These are all usual stuff and even more than expected.

Something unusual happened in one of the stores of Big Bazar in Surat, where 20-20 offer was running for few hours. Offer was like that with every 20 items, a customer buys, she gets free 20 items from selected list of items. Though the list of items are not so expensive. Things like Sugar, Match Box, Towels etc.
Well With such small gifts or freebies, hardly there was any increase in the sales. More over It again goes with the perception of the Big Bazar, that it offers low quality products. Even to counter this they are offering various communications on TV and FM i.e. they buy stuffs like mixer grinder, trousers in quantities that is why they sell it at cheaper rates. In fact a good way to improve their brand equity.

Coming back to the topic of 20-20, in one of the restaurants of South-Delhi, Menu of the day included 20-20 paneer in which there were 20 pieces of paneer garnished with gravy. So it is just not usual advertising spenders who are exploiting the opportunity of IPL but also small hospitality players like Hotels etc.

Lets see what comes next from marketing world for the next thrilling days of IPL.

Disruptive Innovation

Reliance Communciations has changed the rules of the game when it entered inro the CDMA mobile technology. It started offering the service to its customers at such a low price that the market leader in the mobile sector got shattered. This marketing strategy is known as Distruptive innovation. Distruptive innovation is a process by which company introduces a new product or service typically by being lower priced.

Disruptive innovations can be broadly classified into low-end and new-market disruptive innovations. A new-market disruptive innovation is often aimed at non-consumption (i.e., consumers who would not have used the products already on the market), whereas a lower-end disruptive innovation is aimed at mainstream customers for whom price is more important than quality.

Distruptive innovation is mostly threatening to the market leaders as it was in the case of Reliance. Big players like Airtel, Vodafone (then Hutch) also lowered their prices and started giving lot of value added services at low prices, which on the other hand is good for customers.

According to Clayton Christenson, Harvard Business Professor and author of The Innovator’s Dilemma and The Innovator’s Solution, a disruptive innovation is a technology, process, or business model that brings to a market a much more affordable product or service that is much simpler to use. It enables more consumers in that market to afford and/or have the skill to use the product or service. The change caused by such an innovation is so big that it eventually replaces, or disrupts, the established approach to providing that product or service.

Disruptive technology does not always mean low prices. On the other hand when Computers and laptops were introduced into the market, it was like a disruptive innovation to replace Big Main frames and similar machines.

It is to believe that Tata Nano, the cheapest car in the world would be termed as one of the examples of disruptive innovations. As only middle class and upper class people were able to access the modes of transport as luxurious as car, but now mobility in a four-wheeler would not be a dream for a population of India. This is an apt example of disruptive innovation and now all the competitive companies like Bajaj, Mahindra etc. planning to foray into this market. While contrary it was a daring task to make a safe car for common man at an affordable price of $2500.

Disruptive innovation is one of the most popular strategy of the modern times and this is the strategy companies normally follow to enter in to highly competitive market.

Marketing Myopia

Marketing myopia is a term used in marketing as well as the title of an important marketing paper written by Theodore Levitt.

Marketing Myopia is a term that refers to the short sightedness of a marketer. It is basically a strategy where in the marketer wants to sell the product and services, without much focussing on the customer demans.

Once executive of Pepsi was asked regarding the major competitors and the reply was that the water is their major competitors and that is what is known as the market focus. Itw ould have been callled Marketing Myopia if the answer would be that Coca cola is the majo competitor.

Marketers who value the long term objective of the organization and some time sacrificing the short term objectives can rise above the myopia. People who focus on the future predictions, trend analysis and customer life time value will be able to successfully erase the marketing myopia.

Let us take an example of Frankfinn, India’s No.1 Air hostess training institute. Now with a recession going and the airline industry hit very hard. They are changing their focus and trying to portray themselves as the India’s renowned Hospitality trainer. Had they considered themselves the part of the bigger picture, they would have not fallen into the trap of this business cycle.

On the similar lines, Harrison Locks, the market leader in the India is spending huge amount of money in communicating to the customers that they have entered into new domain and that is the door locks. The communication that is being aired on radio and television goes something like this where in an executive tries to convince an apartment owner to buy Harrison door locks. Owner asks that Harrison sells only Locks so the reply is that now company has introduced new range of products. In fact they are doing same mistake once again. This process would be repeated as in when they enter in to new domain. This is a perfect example of Marketing myopia. If they call themselves as India’s best Security solutions provider, the domain in which the company could play would be very wider be it locks, security doors, handles, doors, security alarms, digital alarms, and even to large extent security guards service.

Well new modern companies have risen above this myopia and trying to capture the whole industry like Educomp, India’s largest education company. Similarly there are many examples where in companies facing with marketing myopia and others rising above it.

Iodex

Iodex is one of the examples of failed brands. Iodex once topped the market with as high as 70% market share in the pain killing balm sector. But it didn’t change with the changing market sentiments. It also over looked the emergence of the competitor brands like Paras’s Moov. Today Moov has replaced the Iodex from its leadership position. Now Iodex falls into the category of follower.

It is a very sad story of the fall of a leader which is once a trusted band. Iodex is a trusted brand in India since 1919 and no doubt it has some loyal customers too. But MOOV changed the rules of game by launching its ointment in tubes as compared to Jars in transparent color. On the other hand Iodex was sold in black color.

Iodex was re-launched in 2004 to over come the shortcomings like un attractive packaging, greasy look and bad smell. It tried to revamp its positioning by launching itself in a green colored bottle. But the damage was already done. By now even the local competitors were challenging the position of Iodex in the market. Iodex faces challenges from local brands like Amrutanjan, Tiger Balm (locally manufactured by Elder Pharma), Zandu Balm and Sensur of Glenmark

Iodex extended its brand by launching a variant for multi purpose use with the name Iodex Double Power, which has double the pain fighting ingredients that give quick relief from back pain, wrist pain, joint pain, muscle strains and sprains.

Now again it faced the stiff competition from Moov. As Moov has positioned it self the quickest pain reliever from backache. So now Iodex again re-launched itself in 2006 with the help of its new advertising agency JWT. Iodex launched a new campaign A 'back-up' plan to steal five hundred bucks, where a middle-age man, while walking in the garden notices a five hundred note on the ground. He was tempted to pick it up but as soon as he bends to grab it, he feels great pain in back. Then the advertising shows that if the opportunity is to be grabbed, apply Iodex..

Now Iodex is trying its best to regain its market leader position but it seems quite difficult for them to regain the position.

Honda City

Honda Siel Cars India Ltd., (HSCI) was incorporated in December 1995 as a joint venture between Honda Motor Co. Ltd., Japan and Siel Limited, a Siddharth Shriram Group company, with a commitment to providing Honda’s latest passenger car models and technologies, to the Indian customers.

The Honda City was launched in the Indian Market in year 1997 and since then it is being one of the remarkable brands. Honda City is one of the best performing cars in the mid luxury segment.  It is the luxury at an affordable price was the point of difference for Honda City. Honda City is known for its regular innovation be it placement of fuel tank under the front seat rather than the norms of placing it under the rear seats.

According to the J.D. Power Asia Pacific Reports, HONDA CITY ranks first in its segment for the customer satisfaction. Honda has segmented the market for Honda city on the basis of demography. When Honda city was launched in the Indian market, it was targeted at youth who were stylish and admire technical stylish features like stylish interiors, dashboard, mobile chargers etc.

Honda city has strong brand equity as in the luxury segment car. Honda city has a strong customer base. In fact this is one of the opportunities for Honda city is to start targeting now small towns and cities as most of its communication is for urban population of metros and Tier-A cities.

Honda has tried all sorts of sales promotion to boost the sales of Honda city like offering free gifts like stereos with every car, organizing road shows and offering free test drives. Honda believes in strengthening the customer relationship and good service quality is one of its strong POD (Point of Difference) to maximize the Customer Lifetime Value(CLV).

Honda adopted Flank Attack Strategy by launching HONDA CIVIC to compete with the competitive models like Toyota Camry and Hyundai sonata.

Honda revitalized its brand by innovating every other time. It launched an improved version of Honda city in 2002 which was more fuel-efficient along with new stylish looks. This measure was taken keeping the fuel prices in mind. Brand extension was also done by introducing the diesel and CNG variants.

It would not be surprising if Honda city launches its products in all segments so as to offer strong competition to its competitors.

 

Koutons

Koutons a leading manufacture of ready made and stylish wear is a discount retail store. Merchandise available at the store are always on discount. In 1999, Koutons was born with the forward visionary thought of providing affordable men wear for masses. Today, known as Koutons Retail India Ltd., it has two brands Koutons & Charlie Outlaw. Company moved up the value chain from a garment manufacturer to a retailer by launching its first stores in 2002

Started under the brand name Charlie outlaw in 1991, as garment manufacturing and export house, today koutons is know for large format family store selling men’s , ladies and children wear also. Koutons focus on value for money, as mantra for them also. Company has created the conducive environment for a family shopping by making fashion available at affordable prices.

According to one study, Indian consumer tends to buy more during sale period, thereby Koutons’ strategy of offering discount throughout the year attracts customers to their stores, which increase their sales too. If a customers goes to buy one shirt he ends up buying 2-3 more by seeing such lucrative discount offers run at the Koutons store. Today Koutons garments are a name to reckon with in both large and small cities with wile presence in the malls and at high streets.

Koutons is able to sell merchandise at a affordable price to consumer by selecting fabric and getting stitched merchandise at their own unit thereby reducing any middle men cost. Koutons has its retail logistics in place appropriately to suit the market needs and track the key areas which are future business opportunities.

Koutons is slated as the Most Admired Fashion Group for the year 2008 by Image Fashion Awards. Koutons Retail India Ltd has won the prestigious “Chain Store of the Year” Award at the National Awards for the excellence in Apparel business organized by CMAI.

Though it is rightly said that coin has two faces. The story of Koutons has also two faces. Koutons’ has diluted the brand name of itself by offering 50-99% discounts through out the year. This strategy has generated the perception among the consumers that Koutons’ is a low price brand. But C.K Prahlad’s bottom of pyramid along with middle of pyramid theory is working for Koutons. It does not matter whether they cater to the demand of upper class, fashionable customers. For them the most rewarding strategy is to target middle class who buys on discounts.

Fanta Apple

After the success of Fanta orange in Indian market, Coca-Cola has launched Fanta apple nationally in February 2009. Few months back it was launched only in south India. And after witnessing positive response from south market now Coca-Cola has launched it nationwide. According to studies after orange, apple is the most preferred fruit in India. So company came up with refreshing apple flavored drink.

Brand Fanta is already present is most of the countries of the world , it was launched in India in 1994. Fanta orange enjoys majority share in the Indian market in orange drink and now launch of Fanta Apple in India is aimed at extending company’s leadership in the fast growing segment.

The main target group of Fanta apple is youth. The communication of Brand Apple is very apt as the tagline for the same is “Go bite”. Brand Fanta is endorsed by Bollywood actress Genelia D'Souza

It is more like a carbonated Appy. It is priced comparatively lower. Fanta is available in more than 70 flavors in some countries despite of the fact it has become synonymous with orange flavored drink.

The strategy of the company is to capture growing market by adding new flavors to their basket. By doing this, the company wants to give competition to mirinda and other fruit drinks available in the market.

Retail branding

Retailing is a process that includes business activities that are involved in selling goods and services to the customers. It is the last step in the process of distribution. On the other hand, Branding is used to differentiate between the products, services, manufacturers etc. Now a days new term has been emerged to define new way of retailing because retailing today is not only about selling but also about surveying the market , offering choice and experience to consumers, competitive prices and retaining consumers as well.  Since retail is highly competitive business, therefore branding can be especially important in the retailing industry to influence customer perceptions and drive store choice and loyalty.

So the concept of Retail Branding is not of retailers selling brands but branding the retail business itself, like the grocery supermarket chain or the fashion store. Chroma, a TATA enterprise is a way to differentiate itself from other players in both un-organized and organized players. It is India’s first national level retail chain for consumer durables.

A hypermarket or department store, may offer several well-known brands, but in today’s competitive world cannot afford to rest on its strategic product assortment and pricing initiatives to bring in the customers. The retailer must attempt to brand himself differently, especially when today’s product brands are being launched through their product brand’s own shops.  In the same way Big Bazar differentiates itself from other stores and its philosophy is based on the strategy of Walmart i.e. EDLP (Every Day Low Prices). Retail pricing format is one of the way of retail branding.

Store Atmosphere is another method of retail branding. Spencers in India is providing typical Indian market atmosphere to consumers where stacks of cartons are piled up across the items. Vegetables and other fruit items are kept on wooden trolley as sold in streets and markets.

Another specific strategy followed by retailers is about Brand assortment. In last decade retailers have moved from using the brand image of manufacturers to building the brand image of their own. One such method is Cross-category assortment i.e. availability of every type of goods and services with in the retail store. Crosswords offer every type of books and of almost every author and every subject and that is the way it is the most respectable brand in the country.

Another way of retail branding is the use of Private labels. Most of the big players like fashion bazaar, More, Spencers etc. use private labels to increase their margins. But the method of private labels is very risky proposition as over all image of retail store comes in the way of success or failure of a product.

There are three dimensions of retail branding

First, Brand Value – develop, embody and transmit clear and consistent value to the customer.Second, Brand Strategy - develop retail brand or corporate brand; one product/one brand. Third, Brand Structure – marketing, human resources, distribution, logistics, administration and sales have to work a common brand value. Coffee retailing in India is one of the successful examples of Brand value to the customers as offered by CCD.

This area is still to be developed and studied further. Retail branding in India is still in nascent stage and it will grow in years to come as in when the products and services will be similar to each other.