Product extensions, on the other hand, are versions of the same parent product that serve a segment of the target market and increase the variety of an offering. An example of a product extension is Coke vs. Diet Coke

A successful brand helps a company enter new product categories more easily.

Brand extension benefits:

• Brand extensions let a marketer take a brand with well-known quality perceptions and associations and put it on a brand in a new category. Not only can marketers capitalize on brand awareness, they can also leverage off of the associations consumers know about the parent brand.
• Second, consumers who favorably evaluate a parent brand are more willing to try and adopt the brand extension than an unfamiliar brand in the same category. They trust a known brand name.
• Brand extensions can also help a firm’s stock prices. Some academic research has found that Wall Street attend to brand extension announcements and that whether they like them or not depends on how much they like the parent band.
• Brand extensions can also help consumers understand the core meaning of the brand name.

One of the principal dangers of brand extension is that the parent brand equity may be diluted. If there is a misunderstanding of consumers’ perception of the brand, it could be moved into a sector that consumers view as “inappropriate.” Quite often the parent brand will have been available for some time, enabling it to build a level of equity and trust with consumers. It will have strong credentials. Over time, its marketing has sought to build and secure these credentials within its target market. An irrelevant positioning has the ability to undermine the parent’s credentials.

TippingSprung’s second annual survey of brand extensions, produced in collaboration with marketing newsweekly Brandweek, revealed which extensions are most effective, which have potential to dilute the brand, and what makes some brands more extendible than others. Major trends in brand extensions were also uncovered.

The Top Brand Extensions.

• best overall brand extension – Iams pet insurance
• best liquor brand extension – Starbucks coffee liqueur
• best co-branding/ingredient branding – The Motorola ROKR phone with iTunes
• best extension of a magazine onto new platform – hardcover books from O, the Oprah magazine
• most overdue brand extendion – The Tide to Go stain removal pen
• best furniture brand extension – Antiques Roadshow
• best extension of a not-for-profit – National Geographic

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Seek out insights:

Outstanding brands identify customer insights. When these insights are shared across cultures they assist in a brand’s adoption globally.

Integrate local intelligence:

Brand guidelines are tremendous tools for ensuring consistency. However, they have been known to impede innovation and diminish relevance. Brands are dynamic, never static, so the management of them must integrate new thought. In the case of global brands, to assume that one message can appeal uniformly to all audiences with equal relevance is unrealistic. Well-managed global brands cull local markets for intelligence related to the ‘next big thing’ to ensure local relevance and to counter competitor’s moves.

The Team:

Global brands demand a global brand management team. This regional and international organisation is in place to maintain brand leadership. Companies with large brand portfolios tend to have separate managers for each brand. Regardless, global brand managers have the authority and resources necessary to implement key decisions based on performance measurement. Global brand management teams implement processes to create, review, and improve brand performance.

Investment:

Intangible assets, including brand, now comprise the majority of the value of a company. These assets require capital investment like any other. Progressive companies and enlightened management recognise the need for appropriate communications spending.

Measurement systems:

In order to sustain a global brand’s long-term position, there must be consistent and widespread brand equity measurement. This will not only help brand development by highlighting and demonstrating best practices, but it will also provide the brand management team with a means of monitoring global consistency.

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[There are] two other sources of brand equity: a consumer’s perception that a brand is better than it really is (“attribute-based” equity), and nonattribute-based equity, for instance, a consumer’s preference for a brand based on the cachet of owning it. If you’re successful in these three aspects, an added benefit is that stores will feel a customer pull to carry your product, and so your availability and hence sales will increase.

Simple awareness ”getting the brand’s name to pop up in consumers’ minds”generates the largest return, followed by consumers’ responding to the cachet of owning the brand (nonattribute-based equity). Attribute-based equity trails in third place. This means that a brand’s image provides a stronger incentive for buying even than the perception that it is a better product. But greater awareness of your brand is the major component driving brand equity.

These are some extracts out of an interesting study with the title Calculating the Dollar Value of Brand Equity made by V.Seenu Srinivasan Professor of Management at Stanford Graduate School of Business along with Chan Su Park of Korea University Business School and Dae Ryun Chang Yonsei Business School. Read more about the study here.

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But all this is about to change. Next month global agency group WPP will launch an alternative brand valuation league table that will directly challenge Interbrand’s calculations. The system has been masterminded by chief research officer Andy Farr and his marketing quant jocks at Millward Brown Optimor (MBO).

Here are some insights into this soon to be revealed WPP study:

• WPP’s annual Brandz survey questions more than 650,000 consumers and professionals in 31 countries.
• The results are analysed to create a combined diagnostic and predictive tool that evaluates the strength and growth potential of brands.
• Respondents are asked to compare more than 21,000 brands in 300 categories from sectors including long purchase-cycle brands, FMCG, retail and e-commerce and services.
• Each respondent is asked to evaluate brands in a competitive context from a category they shop in.
• Their responses generate scores for levels of bonding with a brand, its advantage over rival brands, brand performance and relevance to consumer needs.
• Consumer loyalty and claimed purchasing data are used to generate a ‘brand voltage’ score, indicating the brand’s potential.

More here

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On the other side corporate branding refers to the practice of using a company’s name as a product brand name. It is an attempt to leverage corporate brand equity to create product brand recognition. It is a type of family branding or umbrella brand.

Martin Roll, author of Asian Brand Strategy : How Asia Builds Strong Brands has an interesting view on corporate branding:

Corporate branding employs the same methodology and toolbox used in product branding, but it also elevates the approach a step further into the board room, where additional issues around stakeholder relations (shareholders, media, competitors, governments and many others) can help the corporation benefit from a strong and well-managed corporate branding strategy. Not surprisingly, a strong and comprehensive corporate branding strategy requires a high level of personal attention and commitment from the CEO and the senior management to become fully effective and meet the objectives.

Among the advantages of a corporate branding strategy we can count:

1. the corporate brand is the face of the business strategy, portraying what the corporation aims at doing and what it wants to be known for in the market place, is the overall umbrella for the corporations’ activities and encapsulates its vision, values, personality, positioning and image among many other dimensions.
2. corporate branding strategy creates simplicity; it stands on top of the brand portfolio as the ultimate identifier of the corporation.
3. a coporate branding strategy can drive some cost efficiencies that can often be achieved as opposed to a large multi-brand architecture where the corporate brand plays a smaller or insignificant role.

On the other side among main disadvantages of this strategy is that products may not be treated individually, which reduces the focus on the products’ unique characteristics or that the corporate name can become synonymous with a product category

Three different strategies can be approached for corporate branding:

Branded identity is when a company uses different brands for their products that function independent from each other and the company’s brand. The strength of this strategy is the flexibility. The company can build different brands in different marked segments and for different products. If a brand is involved in a scandal it will only damage that brand, and will not hurt the other brands of the company.

Endorsed brand identity is when an organisation has a group of products or companies that it endorses with a group name and a common identity. The strength of this approach lies in the relationship of the products/companies, they can benefit from the goodwill given to others with the same common identity.

Monolithic brand identity is when a company uses only one name and one visual style for all it products. The strength is the simplicity and the potential for growth. The weakness is that one happening; one scandal can cause severe damage even to big strong brands.

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A study by global communications company Burson Marsteller showed that the CEO’s reputation is responsible for approximately 50 per cent of a company’s reputation, which translates into achieving key business objectives and increasing sales.Like it or not, CEOs are part of a company’s brand equity. In other words, the leaders inevitably reflect on the company.

Today, consumers expect a consistency between a company’s brand message and the behaviour and image of its key executives. Brand validity can only be fully achieved if the CEO embodies the brand and its values to meet the new challenges of an increasingly critical and demanding marketplace.

The CEO is often said to be the brand leader or guardian of the company’s brand. Consequently, all CEOs need to clearly understand the value and importance of the powerful, clearly defined corporate and personal brands. They need to ensure that there should be a clear brand strategy in place and that all stakeholders in the organisation understand and embrace it to deliver the brand promise.

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1. Brands are built mainly through advertising.

In today’s increasingly service-oriented economy,something has replaced advertising as the key to brand building: the customer experience. This represents the sum of a customer’s numerous interactions with a company, each of which is a moment of truth that can, to varying degrees, enhance or erode the brand. And a positive customer experience, so crucial to the health of brands in service industries, also plays an increasingly important role in product businesses. The purchase of a product, which used to be the final interaction between company and customer, now is often only the beginning of an ongoing relationship that includes after-market service or the creation of customer “solutions” that incorporate but overshadow the physical product.

2. Brands are used primarily to influence customers.

Although most brand strategies are developed, quite naturally, with the customer front and center, they will fail to generate sustained growth in profitability and shareholder value unless they target not only customers but also investors and current and prospective employees.

Besides the three primary stakeholders—customers,investors,and talent – there is a fourth constituency that,although it plays no direct role in driving profitability or value growth, is crucial to a company’s health. This is the group of regulators, media, and public interest organizations that can affect a company’s real or de facto license to operate.A company that ignores this audience in positioning its brand risks a hostile response when it seeks their support.

3. The key to successful brand management involves understanding the effectiveness of the brand in today’s marketplace

While achieving such an understanding is a worthwhile aim, on its own it risks creating a dangerously complacent view of a brand’s health. More important is being able to anticipate a brand’s relevance to the most valuable customers of tomorrow. One way to look over the horizon and glimpse future brand pitfalls and opportunities is through the discipline of pattern recognition. Analyzing a library of brand patterns that have played out in the past can suggest how and when a brand should evolve.

4. Brands are symbolic and emotive and therefore are managed primarily through creativity rather than analysis.

While brands appeal to the heart as well as to the head, they can be quantified and analyzed with much the same economic rigor as other business assets. One means of doing this involves a detailed assessment of something we call brand equity.

5. Brands are the responsibility of the marketing department

Because brands derive their power from the value that they symbolically represent, there must be real value in the branded products or services.Otherwise,a brand will simply create false promises — a surefire way to erode its strength. It has long been true that a product must deliver on the brand promise. But in an increasingly service-intensive economy, employees, not just the product, determine a company’s success in delivering on the brand promise. Giving employees the tools and leeway to satisfy the customer across the entire customer experience can tremendously protect or enhance a brand’s strength. Delivering on the brand’s promises requires the involvement of virtually every employee in all areas of the organization, even those who have no direct customer

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