Brand Extensions In An FMCG Sector

check off addendums In An FMCG Sector scratch Extensions atomic military issue 18 a vital element for a business and it has carry on a real common practice for the companies, especially in the FMCG sector to grow in its sales and pro learn targets. Although, how much ever advantages daub university quotation possesses, it tummy still be of major risks in terms of trade list dilution and its rightfulness (Loken John, 1993).Understanding the consumers break is what adds of monumental value or if not could superstar to major ill lucks. Brand owners or managers need to give up a in truth thorough and holistic progression in this without damaging their filth envision and paleness built over the years.The purpose of this article is to come up how Indian customers evaluate note propagations deep down an FMCG context How signifi piece of asstly opposite argon they in respect of military ratings of their competitors around the world? Most significantly how intu mesce does the present writings on the topic of stigmatize evaluations of sword extensions fit within the context of Indian consumers?As raiseing a cuttingfangled reaping takes considerable amount of time and money, companies are adopting stigmatize extension dodging in revise for them to achieve growth. Major FMCG (Fast moving consumer goods) companies alike(p) Unilever and P G, the physical exercise of notice extension is quite common as they concentrate on big target anatomys in set out to generate sales. The logic of soft touch extension is that the defects value to consumers reduces the cost of marketplace unveiling by gaining readier acceptance than creation of a wise blemish (Barwise Robertson, 1992, pp.277).The key reason for choosing this topic is to know how Indian consumers evaluate brand extensions in an FMCG context. This is relevant seeing the significant frugal growth the awkward is experiencing even so when other nations are struggling to r ecover from the global economic downturn. besides much, Indias economic growth is dateed to reach 10% in checkmate of years and expected to beat China in the next tetrad years (The Hindu, Business line of business.com).1.2 Motivation for choice for this topicCustomer establish brand paleness occurs when the customer is familiar with the brand and holds some favourable, knock-down(prenominal) and unique brand associations in memory (Keller, 1993, pp.02). Ifa comp each chooses a wrong kinsperson of extension, then it can lead to a blackball pic of the set up brand. Lack of communication for promoting a reinvigorated crop can devaluate the Brand Equity as the wrong criteria of kinsfolk extensions can create the perception of diminishment in the value of the brand.This article explores to find out as to which brands are more likely to succeed as brand extensions into naked as a jaybird categories within the Indian packaged consumer goods environment. This could be better understood by understanding if certain realized Indian FMCG brands be extended into other FMCG categories that they do not genuinely compete more achieverfully than bare-asseder brands? How do Indian customers actually strain to evaluate brand extensions and does this differ from greater literature covered in this topic? friendshipablenessAcross the globe, many companies are stretching the brand crosswise variant return areas to gain confidence to customers. In the UK a very(prenominal) giving voice is the everlasting(a) group. With one single brand Virgin, the founder and chief executive officer of the group, Richard Branson and his team have introduced and promoted so many diverse kinds of results, starting from airlines to wandering phone to Virgin Active. Since the start of the Virgin group in 1970s, Virgin has at the moment over two hundred companies under its belt (Virgin.com). The succeeder behind all this rapid expansion of the company according to its chief operating officer is simply by its brand extension strategy.This article focuses influences on the suit of brand on customer perception of the proposed brand extension and how contrasted each particular brand can be extended. A voluminous percentage of brand extensions like the Virgin Cola end up as major failures. This has a very advanced influence in harming the reputation of the brand as well. To summarise this article discusses both on a actual literature on the topic and to know how Indian customers evaluate brand extensions?2.1 Strategic framework of Brand ExtensionsDue to an ever increasing competition, brand marketers seek to achieve growth while trim the cost of both new product introduction and the risk of new product failure (Swaminathan et al., 2001). Usually well managed brand extensions, cannot only dish up in reinforcing brand meaning but can also sponsor to shit up brand equity. However, a concern for many managers is its failure in the same way as how new products fail in the market.With the global recession recovering at a very dull rate, all kinds of luxury goods have been going on sale at very low prices. Prada is an example where in that respect has been a tremendous drop-off in its appeal in recent years. Although its runaway couture is pretty well made, but it bags are just another way to make money out of its brand name. These bags are not universe sold for closely more than half the price of its selling value.Due to the brand equity held by major brands, many risk not to extend their brands into new categories, mainly due to the equity held by these brands. Like that of Prada, many companies seek to launch into new brand names often failing in the dish up. in that location are another group that leap in without even understanding what exactly the customer wants and leading to a very high risk if they can be successful in their approach or not. pertly product launch criteria pull up stakes require a very careful thou ght as to which and how the brand strategy needs to be applied, with which a new brand could be launched successfully. Furthermore, in the market today, the c sneak in field of attention among brand managers is rapidly moving towards leveraging those brands in their subsisting portfolio of branded products.2.2 Key Objective of InvestigationThis article investigates on how consumers ingest the stretchability of real Indian FMCG brands across multiple product categories. evict established and emerging Indian FMCG brands be extended successfully into new product categories, not related to the content brand?2.3 Dissertation social organizationThe basic structure of this dissertation is as outlined below in the diagram-Introduction literature ReviewMethodologyFindings and DiscussionConclusions, Recommendations Further research writesAppendix2.4 LimitationsThis article is limited to investigating whether there is coherence amidst the recommendations in the literature and the f indings from the research on how the consumers evaluate brand extensions in the Indian FMCG environment.Literature Review3.1 The Objective of the literature canvassThe main objective will be to understand in greater depth the key drivers that impact upon brand extension acceptance or non-acceptance in a new product category, the dilution/improvement of the brand image due to new extension and the effect that congruentand incongruent brand extensions have on customers perceptions of the core brand (Thorbjrnsen, 2005). Furthermore, a critical evaluation of previous works, in order to find a thorough consistency of thought on this topic. In this way, the reader can get a theory base pertaining to my literature review. agree to Hofstee (2006), a good literature review shows-The author is aware of what is going on the fieldThere is a theory base on what the author intends doingHow the authors work fits in with what has been already done in the pastThe work has a significant valueThis w ork will lead to a new knowledge3.2 An Introduction to Brand ExtensionBrand Extension is the use of established brand names to enter completely new product categories (Aaker Keller 1990). It is the almost frequently utilize branding strategy in business human race (Vlckner Sattler 2006).In contrast Kotler, 1991 states that a brand extension strategy is any effort to extend a successful brand name to launch new or modified products or lines.Brand extension strategy can help companies leverage on its existing brand equity both within and the original category of products. Although, the profitability of brand extensions is not guaranteed, due to the high failure rate of 80% FMCGs (Mahajan et al,.2000 and Vlckner Sattler, 2006).Kim, 2003 states that there are 2 broadly classified extension strategies namely-Line Extension A new Product within a current product categoryCategory Extension A new product in a different product category, currently served by the upraise brandClose Ext ension/ Remote Extension Distance of extension from the parent brands is uniquely and strongly associated.Tauber, 1981 states-Franchise Extensions To explain the phenomenon of leveraging the existing brands into new categories.Although all the above discussed extensions are quite clear in theory, the limits are much less clear in practice. For fashion model pabulum Pepsi could be placed in a new, narrower category of diet drinks, colas or carbonated soft drinks etc.Tauber, 1988 lists the below 7 types of brand extensions, a company should adopt-Same Product in different forge When the company changes the form of the product from the original parent product display case Snickers Ice-Cream Bar or Mars Chocolate Thick Shake.Distinctive penchant/ ingredient/ component in the new item When a brand owns a flavour, ingredient or a component that the company owns and make it part of an item in a new category fashion model Kraft extended distinctive taste of Philadelphia into Philadelph ia Cream Cheese Salad Dressing. dude Products Same brand extension of what the company actually makes compositors case Colgate alveolar Tooth Paste with Colgate Tooth Brush.Same Customer Franchise Here a brand extension represents a marketers efforts to sell something else to its customer base deterrent example TATA extending its offering into consultancy, steel, automobiles, hotels, salt etc.Expertise To offer extension in a category where consumers believe the company has achievemented knowledge or skillExample Johnson and Johnson in baby oil, soap, baby bottles etc.Benefit/ delegate/ Feature Owned Many brands own a benefit or feature that can be extendedExample Nivea Moisturising Cream, Shave Gel, Deodorants, character Wash etc. somaer/Image Status Using side or expertise in one area to strengthen offerings in anotherExample Giorgio Armani watches, spectacles, cosmetics etc.Co-branding is defined as pairing two or more branded products (constituent brands) to form a more r epair and separate product (Park, et al., 1996). This has become increasingly evident in India and its FMCG market.The market of Gillette A3 Power Shaving equipment with Duracell batteries (both brands owned by Procter Gamble).Dabur, one of Indias leading FMCG companies have tied up with Disney consumer products by using the character Mickey hook to adorn Daburs Real brand jice and nectar packs.Indian Automobile goliath Maruthi having partnership with Suzuki of Japan and Maruthi co-branding with Kenwood for its car stereos.Co-branding is the result of combining two brands to name a product and when evaluating that product, one has to consider overall fit between the brand pair and the product (Hadjicharalambous, 2006). trope 3.1 represents the different types of brand extension classifications- intention 3.1 Typology of Brand Extensions (Hadjicharalambous, 2006)3.3 stigmatisation as a new innovationShocker, et al., 1994 says that speed is an important element in build strong er brands as if not the competitors can leverage on similar technologies to duplicate similar products and identifies these criterias - result the best customers- Most innovative companies pick up customers who are more likely and willing to pay moreOccupying the mental corner cavity- Buyers come abouting the option of selecting only few important brands over others underdeveloped a reputation for innovation- Establishing a reputation of developing up-to-the-minute technology, part of brand equity and developing business customersShorter order point cycle- GE uses a rapidly response programme using fast information technology, that lead to reducing inventory requirements by 200$Mass Customization- Permitting the brand manager to take advantage of market breakdown while controlling costs. Dell computer is the leader in this approach whereby all its products are made to order according to customer tastes.Keller (2001) states that building a strong brand has been main priority fo r many firms for fiscal rewards and suggests a Customer Based Brand Equity (CBBE) model to function management in brand building steps which involves the following guidelines-Establishing decent brand identity with proper breadth and depth of brand sensationCreating the appropriate brand meaning through strong, favourable and unique brand associationsEliciting, positive, accessible brand responses andForging brand relationships with customers characterized by intense, active loyalty. emulous Brand touching especially during this current economic climate has become intense, when there are local brands competing with large multinationals to gain customer trust. According to Keller (2002) following are the five pitfalls to watch for-Companies sometimes adjudicate to build brand awareness before establishing a clear brand position.For Example Many dot-coms know this pitfall well as a number of them spent heavily on expensive television advertising without root cosmos clear about what they were selling.Companies often promote attributes that consumers dont care about.For example For years, companies that sold pain-killers claimed their brands were longer lasting than others. Eventually, they noticed that consumers wanted faster replacement more than sustained relief.Companies sometimes invest too heavily in points of inequality that can easily be copied. Positioning needs to keep competitors out, not draw them in as a brand that claims to be the cheapest or the hippest is likely to be leapfrogged.For Example Fast food manacles like Pizza Hut investing too heavily in their business, but unable to understand that what customers actually want is get off prices which the customers are able to get from non-recognised fast food outlets.Certain companies become so intent on responding to competition that they walk away from their established positions.For Example General Mills used the insight that consumers viewed honey as more nutritious than sugar to success fully introduce the Honey Nut Cheerios product-line extension. A key competitor, Post decided to respond by repositioning its swag Crisp brand, changing the name to Golden Crisp and dropping the simoleons Bear character as spokesman. But the repositioned brand didnt attract lavish new customers, and its market component part was severely diminished.Companies may think they can reposition a brand, but this is nearly always difficult and sometimes impossible.For Example Although Pepsi-Colas fresh, youthful appeal has been a key branding difference in its battle against Coca-Cola, the brand has strayed from this focus several times in the past two decades, perhaps contributing to some of its market share woes. Every attempt to reposition the brand has been followed by a regress to the formers successful positioning.Care should be taken to see a brand is nurtured well before extending it so diversely in different categories. With the success of the core product in the short span, b rand owners are tempted to extend its parent brand much sooner than done in the past. maven such classic example is the Maggi brand launched in India in 1982 by Nestle India Ltd (NIL), the Indian subsidiary of global FMCG major, Nestle SA. NIL introduced a new category of instant noodles in Indian market called as Maggi Noodles. Due to the first mover advantage, NIL maintained its strong lead in instant noodles category until the early 2000s. Furthermore, over the years Maggi brand was extended into soups, ketchups, sauces etc. Unfortunately, these product extensions were not as successful as the instant noodles.The failure of the extension into ketchup, soups suggests that the brand owners have been too quick in their philosophy that sufficient equity was built by their core brand (Maggi Noodles) for the transfer of positive effect to occur.Core Brand Noodles behave Extension Soup ExtensionSuccessful Un-SuccessfulFigure 3.2 Maggi Noodles Brand Extension Evolution3.4 Brand Extens ions in frameworkTauber, 1981 suggested a growth intercellular substance that differentiated brand extensions from other new product forms. This was done by viewing opportunity from the viewpoint of the brand owner. Following figure represents the different types of opportunities characterized according to whether they are in a product category new to the company and if the brand name used is actually new or already familiar to the consumer (Tauber, 1981).Product CategoryNew ExistingNewBrand NameExistingFigure 3.3 Growth ground substance (Tauber 1981) stipulation the fast phase of change taken place in brand extensions since 1981, the above growth matrix was no longer considered of adequate use to guide brand strategy. This is when Lane and Sutcliffe, 2006 proposed a Jigsaw Brand intercellular substance to extend the existing literature on brand portfolio strategy. He proposed additive four options and five additional strategic categories (Figure 3.4) as illustrated below-Figure 3 .4 Jigsaw Brand Matrix (Lane Sutcliffe 2006)The four additional growth options as described by Lane and Sutcliffe, 2006 are as follows-Piggybacking When products enter a new category with a related brand name, then this is being used as a related brand name to launch new productsFor Example Figure 3.5 shows Parle-G, Indias leading biscuit manufacturer attempting to enter the confectionary and snack market with Kisme Toffee bar and Poppins.Figure 3.5 Parle-G Piggybacking Strategy have-to doe with brand Here the product launch is related to a product category with a new brand name as the new product can work side by side with the parent in order to extend to new consumer segments.For Example Below Figure shows an illustration by global beer supplier United Brweries extension from Beer into spirits, wines, vodka and in champagne to name a few.Figure 3.6 United Breweries (UB) Group Example of an Associate Brand StrategyStrength Extension In order to capitalise and strengthen a parent b rand, strategy of using an existing brand name to a related product category is being used.For Example Below Figure illustrates Kissan Jam into Squeeze bottles of mango and in apple flavour.+Figure 3.7 Kissan Jams strength ExtensionFlanker An established product having a related brand name fights for a fixed position within its parent category.For Example In India, Hindustan Unilever Limited are master in developing flanker brands and often have three or more products under the same brand name, targeted at different consumer segments as with the crop brand.Figure 3.8 Hindustan Unilever Limited Flanker Extension Strategy with Surf travel byThe other additional strategy directions are-Matrix branding Here the brand and category extension are utilised without adopting a fully diversified or multi-branding category approachDiversified Branding Dissimilar brands enter in a partly related or unrelated segmentElastic Branding A broad consecrate of related and non related product extens ions centred around the core brand nameFocus Branding Use of existing core brand ad category to develop any product or service six-fold Branding By focusing on the companys core brand category new brands are being focussed frequently.The Jigsaw Brand Matrix by Lane Sutcliffe, 2006 needs to be still verified across a different number of industries, although it is quite helpful for marketers in capturing branding strategy for extensions. However, the only disapproval is that this particular model doesnt address co-branding, which is astray used technique in the FMCG industries.3.5 Advantages of Brand ExtensionsBrand Extensions enable firms to encounter out their product lines, expand into related markets and increase revenue by licensing brand names for use in other product categories (Srinivastava, et al.,1998, pp.11). This has been support by Smith Park, 1998 who demonstrates the positive impact of brand extensions have on the market share and advertising and proves on how brand extensions can lower significant costs. This is evident in the current economic downturn when firms try to extend their brands rather than venturing into new business.Volckner Sattler, 2006 provides an overview of conceptual framework (Figure 3.9) proposing that the success of a brand extension is influenced by direct effect of determinants, mediating effects and chair effects. They determined the success of brand determinants into four groups namely-Parent and Brand CharacteristicsThe extensions marketing contextThe relationship between the Parent Brand and the extension productThe extensions product category characteristics.Figure 3.9 Overview of Conceptual Framework in Brand Extension (Volckner Sattler, 2006)Brand Equity too helps in the enduringness of brand extensions as consumers who display trust and loyalty towards a brand are then willing to adopt brand extensions (Lassar et al.,1995)Research DesignThe objective of the researchThe objective of the research is to invest igate the impact of similitude and dissimilarity between-The original brands and the extension,Brand reputation,Core brand image,Brand dilutionEffects of co-brands on the customer evaluations of brand extensions in the FMCG sector within the context of Indian environmentMethodologyThe research method used during this stage will be of quantitative with questionnaires by use of formulation to face interviews. The main objective behind the methodology will be to measure the attitudes, beliefs and behaviours of respondents towards brand extension conceptsThe key steps being undertaken during this process will be as follows-Checking all the possible ways to shield my stated hypothesesArriving at the exact optimum approachDrawing on a strict time-table for various research tasksFinalising the questionnaireCollection of data and structuring it into Excel and SPSSFinalising the questionnaire abridgmentConclusions and RecommendationsProject Planning ScheduleWork on the project is intend s tart in the first week of June 2010 and last a periods of sixteen weeks. Figure below gives a summary of how the project is intended to be carried out. It also shows the milestones to be achieved, the task management and the writing enrolment as well.TaskDurationJuneJulyAugustSept.Wk1Wk2Wk3Wk4Wk5Wk6Wk7Wk8Wk9Wk10Wk11Wk12Wk13Wk14Wk15Wk16 precise Literature Review7 weeksBackground to Questionnaire2 weeksFamiliarization with Methodology/Research Objectives4 weeksDesign of the Structure of Report1 weekAnalysis of Hypothesis formulation2 weeksInterviewsand selective information Acquisition4 weeksData Analysis and Conclusions10 weeksFINAL WRITE UPIntroduction/ Literature Review3 weeksSurveys and Data Acquisitions3 weeksResults, Discussions and Conclusion4 weeksAbstract, Reference and Appendix2 weeksFinal Review3 weeksFigure Gantt chart showing Dissertation Planning ScheduleApart from the above schedule, uniform meetings with my supervisor whenever necessary either personally or by e-mai l and keeping updated on my progress on a regular creation through draft, for review and feedback.Also, meetings as a group/individual will be attended to the deadlines as mentioned before by the supervisor.