Brand funda : Elasticity of Brand

Article Review : What Makes Brands Elastic? The Influence of Brand Concept and Styles of Thinking on Brand Extension Evaluation Journal of Marketing Vol. 74 (May 2010), 80–92 ( Link)

 In this very deeply research article the authors examine why some brands are more elastic than others. Here the authors describe elasticity as the ability of the brand to extend to other categories

• Research suggest that brand extension success depend very much on the extension fit.That is whether the extensions fit the perception of consumers about the parent brand.
• The more elastic the brand is when the brand is able to extend itself to distant categories.
• Early research suggest that the brand's elasticity is dependent on the parent brand's characteristics.If the brand is positioned on prestige, then it is more elastic and can be extended to multiple categories.
• Functionally positioned brands are less elastic 

This article tries to expand the existing research by saying that while brand's characteristics are important in determining its elasticity, the consumer's style of thinking is also very important determinant in the brand's elasticity. Consumer's thinking styles are classified into Holistic thinking style and Analytical thinking style.

Analytical thinkers focus more on attributes and categories to draw inferences and judgements while holistic thinkers focus on broader connections ( contexts, relationships) between objects. According to the study, brands which have a positioning based on prestige usually have a abstract message which can be transported to multiple categories. Functional brands are at a disadvantage since the functional attributes cannot be moved effectively to distant categories.

The response by the analytical and holistic thinkers to the extension are also significant. Holistic thinkers are able to connect between parent brand and extensions while analytical thinkers will find it difficult to relate parent brand and extensions if they are functionally different.

The study finds that the brand's elasticity is jointly determined by the parent brand's positioning ( prestige vs funtional )  and consumer's style of thinking ( holistic vs analytical)

For prestige brands, analytical and holistic thinkers has similar  response to brand extensions while for functional brands, holistic thinkers had a favorable response towards extensions. The probable reasons can be that when evaluating extensions of functional brands, analytical thinkers focused on functional attributed and their similarities and often found dissimilarities.Another important finding is that prestige brands encouraged holistic thinking in both type of consumers. 

The study also suggest that brand can encourage holistic thinking in consumers through brand architecture. Sub-brands can be used to increase elasticity of functional brands for analytical thinkers.Brands can also bridge the gap for analytical thinkers by elaborate communication about the extension. Marketers has to match the message to the consumer's style of thinking which can make distant extensions receive favorable responses from analytical thinkers.

The article has lot of significance to marketing practice. While conventional marketing wisdom suggest the brands should not extend too far from parent brand, in practice, this may not be possible.The article gives direction for marketers endeavoring such extensions.It is important that marketers understand the consumer characteristics and its impact on the responses to extensions. Prestige brands are difficult to create but it has its advantages when it comes to brand extensions.

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Brand Update : Fastrack launches helmets

One of the most successful homegrown youth brand Fastrack announced its entry into Rs 400 crore organized helmet market recently. Fastrack has grown from a watch brand to an umbrella brand endorsing products from watches, eyewear, bags and accessories. 

image source : gaadi.in

Although I am not a big fan of brand extensions, I have to admit that Fastrack has been able to spot opportunities ( gaps) in the market where it can fit in without diluting its core positioning.

Helmet market is highly cluttered with lot of local brands and minimal differentiation. Although there are established players like Studds, the organized market constitutes only 20-25% of the total market. Since the designs and styles of helmets can be easily copied, differentiation becomes very difficult in this market. 

Many motorists also feel that helmet is a grudge purchase since they wear it out of compulsion . Hence focus of many commuters will be to spent less, get a helmet and carry on.
Fastrack has priced its range between Rs 1495 - Rs 3495 charging a premium. The pricing , in my opinion, is steep and make the product out of reach for many consumers. 

It is in this context that Fastrack's foray into this market becomes interesting. Fastrack definitely will have a headstart because of the brand's equity. But how it fares will depend on the freshness it will bring into the design and style aspect of the product . Since competitors will waste no time in copying the design the challenge will be to keep one step ahead of the others.

Brand Update : Dettol is also a Dishwash ??

Economic Times reports that Reckitt Benckiser has decided to extend the popular Dettol brand to Dishwash category. This will be one of the bizarre brand extensions I have seen in the last few years. Now we can see supermarkets having Dettol bathing Soap and also Dettol Dishwash  placed near to each other.  ( ET Report)

The reason behind the extension is simple. According to ET, the dishwash category is worth Rs 2000 crore and the category is dominated by HUL with its Vim brand. Reckitt is now pitching Dettol against the Vim brand. 

While Dettol is a brand which was able to leverage the brand's germ killing proposition to various categories like soap, handwash etc, it has not moved into toilets or kitchen. Now we are going to see this brand extending its reach to kitchen. According to the report, Dettol's entry into the dishwash will be using the sub-branding strategy - Dettol Kitchen . Dettol Kitchen will share the same positioning of germ killing and will be competing with Vim and Exo. The first product will be a Dishwashing Gel ( multi-purpose cleaner).

Can a soap brand share its name with a dishwash ?? Dettol seems to think that since the positioning is the same, it may not be a concern to the consumers. My take is that Dettol's entry into Kitchen will affect the premium image of Dettol.  I don't think that a brand which has dishwash gel or a toilet cleaner can retain its premiumness for its bathing soap brand-extension. Since Dettol has a very strong equity, erosion will be felt slowly. Secondly the message for a dishwash product would also talk about strong cleaning ability . So if Dettol is going to claim that it will remove the toughest of the dirt/stains, how would a consumer of Dettol soap perceive that message ? 

If Dettol can extend to Dishwash, can Vim extend to bathing soap ?? 

How about Pril Bodywash ??? 

Harpic Beauty Soap ??

I hope HUL will not react by launching Lifebuoy Dishwash gel. 

Brand Update : Santoor Extends to Baby Soaps ?

I stumbled upon a commercial for Santoor Baby soap in Facebook, thanks to the tip from Bhatnaturally. I was surprised to see this move from one of India's biggest soap brands - Santoor.
Watch the ad here : Santoor Baby 
A search in Google yielded no results. I assume that the ad is real and Santoor is now test marketing this brand extension in select markets. Since the ad features the South Indian actress Jyothika, Santoor is serious about the new launch.

Indian baby care market is huge with a size of  Rs 3000 crore expected to grow at a rate of 20% according to ASSOCHAM.The baby skin care market is valued at Rs 400 crore and toiletries valued at Rs 380 crore.
Johnson and Johnson has a huge stronghold in this market with a share of over 70% . Many brands like Sparsh from Marico and Babysoft from Wipro tried unsuccessfully to dethrone J&J . It is in this context that Santoor's move becomes relevant and interesting.
Santoor has been very consistent in its positioning. Santoor's core brand's positioning is " for a younger looking skin". The brand through all its campaign effectively reinforced this positioning and became India's second biggest soap brand.
Santoor Baby soap will be trying to leverage this equity . The problem is that Santoor is perceived to be a soap for adults. So when such a brand launches a baby soap, inevitably doubts arises with regard to the mildness of the soap. Wipro earlier tried the Baby Soft brand but couldn't succeed so it is now trying to extend its best brand's equity. The ad shows not an infant but a 2-4 year old kid. So the brand will be trying to target the segment which is slowly growing out of the Johnson and Johnson's baby soap. More over since the child is growing , mothers will not be much bothered about trying out a baby soap from Santoor's portfolio.

Brand Update : Axe Extends to Soaps

Axe deo , the market leader in the Rs 1000 crore Indian deo market has extended itself to soaps. In the typical Unilever style of experimenting with successful brands the current guinea pig brand is Axe. The rationale is very simple  a) The soap market is witnessing a growth while deo market is now full of competition

b) With Cinthol brand becoming unisex, there is a vacuum for a men's soap brand and Axe is the best fit for filling the gap.

c) The lure for incremental profits from an established brand.

Indian soap market is around Rs 6500 crore and the men's grooming market is around Rs 1500 crore ( Economic Times). The brand may be looking to become an umbrella brand endorsing multiple products across the men's grooming category. The big question is whether these extensions will make the original deo brand vulnerable ? 

I think so.

I wonder why Axe is being extended when there is so much competition in the deo market. Axe is now attacked both on positioning front as well as on product attributes front. The Axe positioning is aped by most of the deo brands to the point that everything is so predictable and boring. Now HUL is further diluting the brand by its extension into a different category. 

The new extension carries the same positioning as the Original Axe brand . Axe bathing bar has the tagline " Engineered for Guys ". The ad campaign follows the same theme as the Axe Deo brand.

Watch the ad here : Axe Deo

Priced at a premium of Rs 35, Axe expects the brand loyalists to be the early adopters for this brand. HUL will be leveraging on its huge distribution strength and its reach to make sure that Axe Bathing Bar is available across the markets. To be fair to this experiment, Axe globally also is extended to various categories like Body Wash, Talcum powder etc but none of the extensions has been as successful as the original product. The same will be the case in the case of Axe Soap also. 

Brand Update : Lux Extends to Deo

Lux, India's most famous personal care brand has extended itself to deo. The campaigns are on air featuring the extensions. The deo market in India is witnessing huge amount of brand activity with new brands being launched almost every month. According to Economic Times, the deo market is estimated to be around Rs 1300 crore and growing at 40%. 

The question as always is what can be logic behind HUL extending its iconic brand to deo. It is not that Lux is not extended before. The brand has soaps, shampoos, bodywash in the product-line. Globally this is the first time that the brand is extending to deodorants. 

HUL has been a pioneer in creating the deo category in India. The company holds its leadership position in the market with its iconic brand Axe. HUL also has its anti perspiration deo Sure and also Dove. So rather than investing on these brands why would HUL try to extend Lux into this category ? 

One of the reason can be to pre-empt competition by flooding the market with its own brands. Lux has a huge equity which will translate to trials and incremental sales. Further, the company is also wary about the launch of competing brands like Santoor, Nivea etc into this category. 

However, HUL is taking the risk of spreading the budgets too far on these extensions. After Axe, the company was not able to come out with another blockbuster deo brand. It pulled out Rexona and Sure was not able to replicate the success of Rexona ( during the initial years). Dove is also another brand which is extended to almost all imaginable personal care categories.

Lux as a brand will get more diluted  if HUL tries to milk its equity too much. None of its earlier extensions could replicate the success of the core brand. Rather than diluting, HUL could have launched new focused deo brands.

Brand Extension, Line Extension, Product Extension

The Differences between Brand, Line, Product Extensions:

Brand extension or brand stretching is a marketing strategy in which a firm marketing a product with a well-developed image uses the same brand name in a different product category. Organisations use this strategy to increase and leverage brand equity (definition: the net worth and long-term sustainability just from the renowned name).

When done successfully, brand extension can have several advantages:

• Distributors may perceive there is less risk with a new product if it carries a familiar brand name. If a new food product carries the Heinz brand, it is likely that customers will buy it

• Customers will associate the quality of the established brand name with the new product. They will be more likely to trust the new product.

• The new product will attract quicker customer awareness and willingness to trial or sample the product

• Promotional launch costs (particularly advertising) are likely to be substantially lower.

While there can be significant benefits in brand extension strategies, there can also be significant risks, resulting in a diluted or severely damaged brand image. Poor choices for brand extension may dilute and deteriorate the core brand and damage the brand equity.

Product extensions 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 in same product category of soft drinks. This tactic is undertaken due to the brand loyalty and brand awareness they enjoy consumers are more likely to buy a new product that has a tried and trusted brand name on it.

Line extensions examples are different variant of 7Up, Coke, Nachos, Dove soap etc.
Indian example is HUL's Wheel Vs RIN both which offer the same core benefit which is a washing detergent, but targeted at different segments.

This is where the confusion between line and product extensions occur, because under which area would you put a Good Night mosquito mat and a Good Night mosquito Liquid. They fall under the same core benefit, which is eradicating mosquitoes, but are different categories.

Yamaha music instruments and Yamaha bikes can be termed as Product extensions, since here each category, i.e. music does not leverage upon their presence in bikes and vice versa.

But if this is true, then Good Night would fall under Line extension.

Let the arguments continue..Do throw any more clarity on these three topics if available.