POSITIONING â€“ THE BASE OF EXTENSION:Extending your target market, Consistency with brand vision

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Brand Management (MKT624)

Lesson 24

POSITIONING THE BASE OF EXTENSION

Introduction

After having learnt what extensions are, the difference between line extension and brand

extension, and the positive and negative sides of extensions, we now move on to the

fundamentals of positioning that should be the bases of undertaking extensions. This discusses

the "how" part of extensions. The lecture then emphasizes the strategic deliberations that we

must have before extensions and relates those with a couple of examples for clarity.

Positioning as the key for extension

Positioning being central to brand strategy is at the core of extensions. The three components

of positioning in the form of the definition of business, the target market, and the point of

difference are the guidelines for positioning1. Whatever extensions that we may be considering

have to stem either from one or a combination of these three fundamental components of

positioning. Let's discuss them one by one.

Extending your target market

This extension is all about defining new segments that are going to be served by a product

with features differentiated from the basic product. A bicycle manufacturer getting into

manufacture of mountain bikes is extending the target market. A jeans manufacturer getting

into comfortable and fashionable dress pants is again extending its target market of jeans.

We may have been considering such examples before, but they were restricted only to the

understanding of what extensions are. Here, the emphasis is on understanding the rationale

for such extensions.

Extending the definition of business

Extension of segments or target market automatically leads you to extend your business

definition. Obviously, you now want to operate in more than one segment, which requires

that you extend definition of your business. Getting into more segments, in other words,

means redefining the scope of the market within which the company plans to operate in a

bid to satisfy more than one need with more than one offering.

Extending the target market cannot be viewed in isolation of extending the overall business.

Going back to the examples of bicycles and jeans, their manufacturers have to redefine the

overall businesses with emphasis on a larger scope.

Extending your point of difference

In order to make extensions meaningful, improved features with convincing benefits have

to be offered to customers. Small improvements are taken for granted by customers, who

expect you to keep making those for the sake of contemporariness.

Meaningful improvement with an attempt to address a different need, however, justifies an

extension of the existing product. Every time you come up with a new formula of packaged

yogurt (fat-free, high-calcium, or fruit formula) you are improving the point of difference

and hence deserve to extend the brand. The improvement can also be in package size to suit

customer needs at different occasions. A pack of yogurt to be served with in-flight meals

has to be smaller and ergonomically designed keeping in view the occasion. This refers to

"brand for when" and "brand for whom".

Each time a chip maker comes out with a faster chip, it extends the benefit and hence the

point of difference. The point of difference, in other words, relates extra benefits that you

offer your customers.

Brand Management (MKT624)

It is obvious that extending the brand on the basis of extension of the target market, overall

business, and the point of difference relates to line extension. When we consider extending

(diversifying/stretching) the brand into new areas, we extend the entire positioning. It is new

position. The concept is graphically illustrated for clarity.

Figure 30

Extending the entire

Brand Positioning key to Brand Extension

positioning

The examples of oil

filters

manufacturer

getting

into

rice

husking, or a company

of shoes getting into the

area of foods explain

Extend Target Market

Extend Overall Positioning

this concept. It is risky,

(Line extension)

(Brand extension)

but if done with the

right

strategic

deliberations, it can

make a company follow

the

true

portfolio

Extend

approach to managing

its brands. What bears

importance here is the

need to add to image

capital and not diminish

Extend

Extend Point of Difference

Definition of Business

it. Diversification must

(Line extension)

give the brand strength

and supplement the

overall brand picture.

The next step is to learn

"when" part of the extension exercise. This relates to "when" part of extensions.

When should you extend your brand?

Brand extension is a very sensitive area that takes on highly strategic proportions. An

extension should come by only with a strategic rationale supporting it. It must be

undertaken to add strength and value to the brand and not diminish those. Therefore, before

undertaking an extension, we must make some strategic deliberations relating the following

factors. We must make sure that the extension

1. Is consistent with the brand vision.

2. Upholds the overall brand picture.

3. Is consistent with overall positioning

1. Consistency with brand vision

Vision tells you where you are and where you want to reach. You are clear about the

financial gap that you have to fill. New introductions have to be undertaken in that

light keeping in view the bases of positioning. It was during development of the

company vision and in turn the brand vision that you determined any related (line

extension) or unrelated (brand extension) areas that you planned to enter. You did

that in the light of existing brand strengths and weaknesses. That vision must lay the

foundation for decisions relating extensions.

Brand Management (MKT624)

Fast food Brand XYZ example

If the vision is all about restricting ourselves to the lunch market, then we may

get into a few more entries in segments right and left of the one we chose to

stage our debut. Refer to figures 10-12, lecture 7.

If the vision calls for getting into the fast food by targeting the lunch market as

just the starting point, then extensions could take on different forms.

You may like to get into related lines like fried chicken, when you put up

restaurants that will gradually redefine your target market and overall business.

Razor blades and shave market example

A company in the market of shaving blades may define its business as the blades

market. The moment it envisions getting into shave creams, balms and other

related products, it must translate that vision into creating brand extensions that

are consistent with the vision.

The company is redefining its business as the one from blades to the one in

personal care items. The redefinition is through extension by target market, but

essentially necessitates changing the entire positioning for different products it

plans to introduce.

2. Extension must uphold and strengthen brand picture

We know the image of our brand and the contract it fulfills and also the fact where

our brand stands against competition. Knowing this picture, we should not go wrong

in extending our brand. In other words, if we have created the right brand picture it

almost guarantees right kind of extendibility.

3. Consistency with overall positioning

The price, the target audience, the distribution, and the quality factors must form a

position that offers extendibility possibilities. Any abuse of one or more of the

factors amounts to deviating from the original position of the brand. To make sure

that there are consistencies between overall positioning and brand extensions, we

have to make sure that the extensions do not

· detract customers from what the parent brand stands for

· confuse the customers in making their choice (meaningful differences)

· cannibalize your current brand

A few more deliberations: Basically, these refer to things that should be avoided.

1. Not to have a narrow vision

Some companies keep the brand locked up in a way that they define its scope in too

narrow-minded a way. They forget that brands are broad-minded creatures that have

a caring character in that they like to respond to changing needs and in the process

add value to themselves and the companies2. The result is that the brand's real

potential never blooms and it either becomes static not adding to the companies

strategic goals or declines and goes into the records of history as the one that was

killed for not getting an extension. The following example illustrates this thinking to

the benefit of all of us.

Managers responsible for "Maggi" at Nestle, Switzerland thought that the image of

their brand was old and they needed to launch further introductions with little

connection to Maggi. They locked the brand and its potential in the sense that

Maggi could not cover latest and modern products3. This is what they thought and

Brand Management (MKT624)

not the market. They had forgotten that brands stay alive by continuously

responding to the changing expectations of their customers.

By disassociating new introductions with Maggi, they only reinforced Maggi's old

image. They had forgotten that a brand proves its modernity by creating and

offering new and modern products from time to time. They got caught into the

product life cycle and failed to realize that brand building is a long gradual process.

The vision for the brand should not be narrow to the point that the future becomes

hostage to too much focus on the past, as the case has been with Maggi. The present

must be given importance to determine brand's potential to stay up-to-date. Failing

this, it cannot enter the future with energy and zeal.

A manufacturer of spark plugs staying too much focused on the existing line of

business cannot grow beyond a certain point by not going into other accessories.

The vision should also not be broad to the point that a company stretches it in all

directions. A brand cannot be everything to everybody. The same manufacturer of

spark plugs should avoid, by all logic, getting into foods.

2. Awareness and reputation of the parent

These two always provide an advantage and have to be present at the same time.

Absence of one may harm the brand. Levi's experience demonstrates that despite

having high awareness, its reputation for blue jeans did not transfer into formal

clothing4. The lesson is to be sensitively careful to extendibility if one of the factors

does not seem to be working in favor of the brand. Do not do it if you are not 100%

confident.

3. Brand essence should be applicable

Extension of overall business in certain situations stems from a common

denominator. Bic's brand essence is all about small disposable items like ball point

pens, disposable lighters, and disposable razors. The denominator in this case is

disposability that gives Bic a position of similarity across the categories of writing

instruments, lights, and shaving. When Bic got into perfumes, it failed. The

character of perfumes did not have the element of disposability. The lesson here is

not to go against the essence of your brand, especially if the essence is very strong5.

Bibliography:

1. Scot M. Davis: "Brand asset Management Driving Profitable Growth through

Your Brands"; Jossey-Bass, a Wiley imprint (129)

2. Jean-Noel Kapferer: "Strategic Brand Management Creating and Sustaining

Brand Equity Long Term"; Kogan Page (263-264)

3. Jean-Noel Kapferer: "Strategic Brand Management Creating and Sustaining

Brand Equity Long Term"; Kogan Page (264)

4. Geoffrey Randall: "Branding A Practical Guide to Planning Your Strategy";

Kogan Page (60)

5. Geoffrey Randall: "Branding A Practical Guide to Planning Your Strategy";

Kogan Page (60)

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