Brand strategy: brand extensions in the Indian context

Abstract

Brands are a firms most important strategic assists as they serve as a source for sustainable competitive advantage and growth. The tool used to tap a brand for growth is an extension of its name to another product class, i.e. a brand extension , This mode of entering new markets has become increasingly popular with Brand Managers in in India as is evidenced by the small yet growing number of examples of this phenomenon. Extensions are risky decisions as a poorly made extension can decisions as a poorly made extension can destroy the original brand and thereby drastically effect a firms competitive portfolio. It must therefore be made with out most care after examining various factors related to the new product market and the brand itself . Sadly few brand managers in India had a comprehensive idea regarding what to examine. Towards removing this lacuna the author set out to develop a framework that could be applied to a decision making situation. The factors that were indentified fell into three distinct categories Brand/ Company related new market related Extension related. Brand/ Company related factors were the perceived difficulty in manufacturing the new product cless the strength of the brand and the appropriateness of the name product class . New Market related factors were whether the product class was a search or an experience good the amount of knowledge that consumers had about the new product and the amount of competition in that class. Extension related factors were fit along three dimensions namely complementariess substitutability and Transferability of values and the consistency of the concept between the two classes. The authors then attempted to study the effect of these on some brand extensions . They studied 5 examples from the Indian marketplace and obtained information on the aforementioned factors from a consumer survey . A distrimination analysis was then applied to examine the importance of those facrors on discriminating between a successful and failed extension. It was found that complementariness and transferability of values explained 90% of the difference between success . Factors like amount of knowledge , perceived difficulty etc. had little impact . These findings were however restricted by the limited number of examples available for consideration.