Brand Management (MKT624)
VU
lighters, the manufacturer is venturing into an industry that is totally different from match making. What is common is the target market that cuts across two industries (match lights and lighter lights) and hence leads to creating two segments of the same market of “lights�. In actuality, it is a function of so many diverse efforts like making investment into the new plant and creating an appeal for a sub-segment of smokers from within the overall segment of users of lights. While it is extension of an existing brand into a new industry, it also is an effort to define new segments within a market. The need to do so may arise due to one of the factors discussed under the preceding point, that is, stiff competition or shrinking category of match lights. Brand extension, therefore, also has the ability to draw fine lines within the segments and define those by taking the lead. 6. Brand extension gives access to an accumulated image capital Part of the high prices negotiated during takeovers of companies with established brands is the intention of the acquirer to extend the brand immediately after the take over, extend it and reap the profits from the image capital of the brand. That is why many companies internationally are known as good acquisition targets because they have established brands. Some brands have such a high awareness that those are perceived by customers to be in categories where they are not present. As an example, a famous maker of jams may be perceived to be in the market of chutneys and pickles. Realizing such a perception on part of the consumers, companies feel obliged to get into those categories. Situations that drive brand extension make it mandatory for the management to capitalize on those. Such situations reinforce the accumulated brand image. It is an interesting phenomenon; on the one hand it motivates managers to acquire from the image capital of the acquired brand and on the other it lets extensions add to the cumulative image. The graphics further illustrate the concept. Accumulated Image Capital
Brand Extension
Brand extension having access to image capital
Figure 29
Accumulated Image Capital
Brand Extension
Reinforced Image Capital
Existing Image Capital
Brand Extension
7. Essential for brand survival It is absolutely essential to break away from the mono product in order to survive. All products have a lifecycle and are bound to decline one day. Before a product is subjected to the implications of the law of obsolescence, we must introduce another as a strategic move into a diversified area. The product gains from the brand name and yet it is independent having its own meaning.
Brand reinforcing the accumulated image capital
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