Ever since it embarked on the x86 journey, Intel has led the innovation curve in microprocessors. this has, among other things, forced Intel to kill its own profitable products, to protect its territory. The 486 was introduced in 1992. Now in 1996, we are on 3 generations of chips ahead and Intel has stopped making 486 chips, an era ago. This gives very little time to Intel to recover the product development costs before it has to commit infanticide on its successful products. There are 3 things that Intel has done worldwide to solve this problem. The first, is the Intel Inside campaign - which must rank as one of the greatest advertising innovations - which has drawn ...view middle of the document...
Intel's dilemma points us to the moot question that surrounds any extension of brands or products. The values of the original brand get transferred onto the new product, but not all these values may be positive or desirable in the new context. Any brand at a given point of time occupy a finite number of categories (and segments within them), from highly focused brand like Ceasefire to a brand like Godrej that spans over 20 product categories. However, it may feel the need to extend to new segments and categories or offer new variants with different attributes/benefits to the same segment for a number of reasons. Some of the reasons for extending brands are:
a) the Brand is strong and the company can leverage this strength into other areas;
b) the existing category / segment is limited or diminishing; the brand needs to be excited/ rejuvenayed;
c) the company needs to defend certain categories from flanking attacks by competitors;
d) the company finds an attractive market and decides to brand extend rather than build a new brand etc.
Whatever the reason, brand extensions are likely to become more the norm than the exception as the brand building costs spiral upwards.
The questions that must precede an extension decision in the mind of the brand manager, however, are:
a) What does the brand do?
b) What do consumers see it as capable of doing?
c) What is the value that the brand adds to the consumers life?
d) And how relevant and applicable is this to the desirable values, attributes and benefits in the new segment or category ?
Managing Customer Value While Extending a Brand
There are some clear value-additions that a brand extension can make over and above the actual use experience of the product or a new brand launch. First, the customers decision making time is cut down, her choice is made easier and the level of post purchase dissonance is lowered. The person seeking an anti dandruff shampoo would buy a Clinic All Clear shampoo because the brand and its performance would be known to her.
Second, the cost of building brands will almost always be lower for an extension. This lower cost could translate to a lower price, or the extra margin could be directed into R&D for improved product performance.
Third, keeping a brand young and exciting - regular activity on the brand keeps the spotlight on the brand. It increases recall and keeps the brand young and exciting.
Finally, extensions allow a brand to be more meaningful to specific segments, increasing loyalty and building stronger bonds with the consumer.
However, to maximise such value, the marketer must understand what are the values being extended, the extent of difference in the products and the possible dissonances created.
UNDERSTANDING BRAND VALUES IN THE CONTEXT OF EXTENSIONS
The value proposition of the brand is a key construct in planning and evaluating extensions. The word value is ambiguous in meaning and in the context of brands also, has 2...