Example of flanker brand strategy

Brand Growth Strategy Powerpoint

brand growth strategy

Victoria L. Crittenden

INTRODUCTION

The strategic opportunity matrix identifies four major strategic alternatives for company growth: market penetration, market develop- ment, product development, and diversification (Ansoff, 1957). Brands are fundamental compo- nents of each of these strategic growth options, and the company’s MARKETING STRATEGY depends strongly on decisions surrounding brand strategies (see BRAND STRATEGY) within the larger context of MARKETING PLANNING.

Evolving over time, brand strategies range from corporate brands to individual brands. This evolution is driven by competitor innova- tions, changes in customers’ wants and needs, and overall neglect that leads to atrophy of brand value (Capon et al., 2001). The potential harm to BRAND VALUE, brand equity (see PERCEP- TION OF BRAND EQUITY), and CUSTOMER EQUITY has long-term ramifications for shareholder value. Both business-to-consumer and business-to-business companies should plan strategically with respect to brand architecture. That is, all companies must understand the various strategies for brand growth so as to create brand value/equity and customer equity which lead to long-term shareholder value.

Brand growth strategies. The five major strate- gies for brand growth are line extension strategy, brand extension strategy, cobranding strategy, flanker strategy, and new brand strategy. There are no hard and fast rules as to when one brand growth strategy takes precedence over another. Brand growth requires a unique blend of art and science. Careful monitoring of the marketplace with respect to competition and customer desires is critical to brand growth strategy formulation.

Line extension strategy. The line exten- sion strategy, probably the most common brand growth strategy, is a powerful tool in a product manager’s toolbox. A line extension is when a parent brand is used to brand a new product that targets a new market segment within the product category served currently by the parent brand (Keller, 2007). A fairly common example

of the line extension strategy is Crest tooth- paste. A quick scan of the Procter and Gamble website highlights the depth of line exten- sions. For example, Crest toothpaste comes in a wide variety of product offerings: Pro Health, Weekly Clean, Whitening Expressions, Whitening, Cavity Protection, Tartar Protec- tion, Sensitive Teeth, Flavors, Baking Soda, Gels, Liquid Gels, Paste, Striped, and For Kids.

In the Crest example, the relationship between the core brand (Crest) and the line extensions is that Crest serves as the endorser of the exten- sions. A consumer may purchase whitening toothpaste for the benefits of whitening, but purchase Crest Whitening for the assurance of the Crest brand. Yet, Whitening would likely carry no weight as a stand-alone brand without the endorsement of Crest. In other instances of line extension, both the core brand and line extension exert influence on consumer decision making. The Toyota Avalon, Toyota Camry, and Toyota Corolla are examples of line exten- sions where the core brand (Toyota) and the extensions (Avalon, Camry, and Corolla) are important designators of brand building power.

Product managers must keep in mind the line logic when considering line extensions. Line LogicTM is a disciplined approach to creating and presenting a full complement of product line extensions (Reffue and Crittenden, 2006). The six interrelated elements in the Line LogicTM framework are segmentation, naming conventions, design elements, tiered feature sets, pricing, and packaging. In considering the logic behind line extensions, this framework is useful for building a strong portfolio of line extensions – all of which work to complement each other and increase the overall market share and profitability. Line extensions should be a source of new revenue for a company; yet, one of the biggest fears is that the line extension will fail and damage the core brand in its failure.

Brand extension strategy. While a line extension uses the core brand name in the same product category as the original core brand, a brand extension strategy uses the brand name asset to penetrate new product categories with a new product (Aaker, 1990). The brand extension strategy utilizes brand name recognition as a way to have immediate name recognition in

Wiley International Encyclopedia of Marketing, edited by Jagdish N. Sheth and Naresh K. Malhotra. Copyright © 2010 John Wiley & Sons Ltd

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a particular product category. Seven types of brand extensions have been suggested (Tauber, 1988). These seven types and examples of each are as follows:

1. Same product in a different form – this is one of the simplest forms of brand extension; an example of this form is when Ocean Spray created cranberry juice cocktail (a drink) by using its original food product (cranberries).

2. Distinctive taste/ingredient/component in new item – this is when a company takes a key ingredient or component of a branded product and uses that component in another product; an example is Arm & Hammer (original product was baking soda) with its Carpet Deodorizer.

3. Companion products – this is the extension of the brand into a product that can be used with the original branded product, such as Log Cabin syrup offering Log Cabin pancake mix.

4. Same customer franchise – an attempt to leverage a brand name by selling something additional to the current customer base; an example would be the American Express gift card, which is a typical gift card but leverages the American Express brand and reputation.

5. Expertise – this is when a brand extension is offered in a product category for which the customer expects the company to have expertise; for example, BIC was the leader in disposable plastic pens and transferred this disposability expertise to disposable lighters and razors.

6. Benefit/attribute/feature owned – this is when consumers tend to associate a partic- ular attribute with a brand; an example of this is when Ivory soap used its mildness attribute to extend into a mildness posi- tioning for shampoo for daily use.

7. Designer image status – this is when the status of the original brand extends its status to other product categories, such as the Porsche name appearing on sunglasses.

A brand extension strategy can help combat entry barriers put in place by prominent brand name domination of particular product cate- gories. Consistent with this, the primary benefits

to the brand extension strategy are capitalization on the company’s most valuable asset – its brand names, investment outlays typically necessary to establish a new brand are minimal, intro- duction of the new brand can increase sales for the parent brand, and reduced risk of failure (Tauber, 1988).

Yet, there can be a dark side to brand exten- sions. Failures are attributed to a variety of reasons (Aaker and Keller, 1990; Capon et al., 2001). For example, a lack of association between old and new products can lead to consumer confusion or even consumer disinterest. Often- times, the unique image of the original brand is not transferable to the brand extension. Even worse, the extension might be perceived to be of lower quality than the original product with the same brand name. Competitively, there might already be a dominant brand in the new product category, which could lead to unexpected and/or time-consuming competitive battles.

Cobranding strategy. The cobranding growth strategy is the formation of an alliance between popular brands. While not necessarily new to the marketplace, this cobranding growth strategy has become more prevalent given the popularity of alliances as a growth strategy in general. The synergy created by two well-matched brands can clearly enhance long-term value to the firm, with products signaling unobservable qualities by having a brand ally (Blackett and Boad, 1999; Rao, Qu, and Ruekert, 1999).

A physical cobranding growth strategy occurs when the two brands come together to form one product. Examples include a Dell PC with Intel inside and Diet Coke with NutraSweet. Ford Motor Company, however, has tried its hand at a different form of a cobranding growth strategy. In the mid-2000s, the company introduced the Ford F-150 Harley–Davidson. In the early 1990s, Ford cobranded with Eddie Bauer to offer Eddied Bauer branded Ford vehicles. Both of these Ford examples represent a cobranding that is more symbolic in nature in that neither Harley–Davidson nor Eddie Bauer provided component parts to the vehicles. Instead, the cobranding strategies at Ford were meant to relate Ford and Harley–Davidson/Eddie Bauer in the minds of the consumers and

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signal an unobservable aspect of the Ford vehicles.

Following a cobranding growth strategy has many benefits, not the least of which is bringing together the power of two strong brands to the marketplace thus enabling a new product to tap into the market following of both brands. On the flip side, however, companies must be careful when bringing together disparate brands that might cause confusion in the consumer’s mind. For example, some consumers might not opt for the Eddie Bauer version of the Ford if they are unsure as to the significance of an Eddie Bauer vehicle, instead attributing Eddie Bauer to a line of clothing or retail stores. Additionally, neither company has control over the actions of the cobranding partner. Thus, something that harms the reputation of one could spill over and have a negative impact on the cobranded product.

Flanker strategy. The flanking strategy has its roots in warfare. As related to marketing, the flanking growth strategy is one of the MARKETING WARFARE STRATEGIES. The general idea is that a company positions products in such a way as to have a presence in various market segments. In military jargon, the flanking growth strategy reduces the maneuverability of the enemy (competitor), with a defensive flanking strategy referred to as a flanking position and the offensive strategy referred to as a flanking attack. As a defensive move, a company following a flanking growth strategy will offer products in peripheral/secondary markets so as to prevent competitive attacks on a weak or no brand position. Offensively, the flanking growth strategy is engaged to avoid a head-on or direct confrontation with an established competitor.

The flanking brand growth strategy suggests that the brand is a fighting brand. A company following this strategy generally does not want to use its leading brand in battle, as the risks are too great. Thus, the company brings out the fighting brand to battle on possibly less strategic fronts and/or to prevent the competition from gaining market entry from a vulnerable position.

Cytosport, the parent company of Muscle Milk, understands the flanking brand growth strategy. With Muscle Milk as a market leader in a growing health and nutrition marketplace,

Cytosport recognized that other companies would want a piece of this rapidly expanding marketplace. Rather than only attempting to capture this growth via line or brand extensions, Cytosport focused on Cytomax as its flanking brand. Cytomax was intended to head off attacks in expanding market segments. The company’s strategy has been to offer a core brand and then have strategically derived flanking brands in market segments as necessary.

Pharmaceutical companies have also begun using flanking strategies by aligning with generic competitors in an effort to capture a share of the generic marketplace. Use of the flanking strategy in this context means that large pharmaceutical companies are not fighting head to head with the generic firms; rather the large pharmaceutical companies are using a form of cobranding as a flanking brand strategy.

A major risk in the flanker brand growth strategy is that the market segments may not be as clearly delineated as hoped. That is, consumers might trade down to the flanker brand. Thus, this is a particularly risky brand growth strategy in difficult economic times.

New brand strategy. The new brand growth strategy leverages the existing brand’s marketing clout in the introduction of a completely new brand. The company may be attempting to tap into new markets that might not fit the profile of the current customer base. Thus, there is a new brand offering in a product or market class that was not served previously by the company.

Toyota has followed the new brand growth strategy quite successfully with its Lexus and Scion product offerings. Toyota introduced the Lexus to compete in the very high end of the market – a consumer market that might have been turned off by a Toyota product which is considered more for the middle, mainstream marketplace. Similarly, in the mid-2000s, Toyota sought to capture the younger demographic with the Scion. While the Lexus consumer did not see the Toyota as an upscale automobile, the younger marketplace had a difficult time seeing Toyota as a trendy and fun car to drive. Thus, Toyota entered this market with the Scion. While both Lexus and Scion consumers know that Toyota is the

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parent company, neither group of consumers see themselves as driving a Toyota automobile. Yet, both groups know that their vehicles are backed by Toyota quality even without the Toyota brand name on the product.

In a similar move, Pepsi expanded into the non-cola market with a tea beverage named Tava. A fruit-flavored, caffeine-free drink, Tava allowed Pepsi to enter a new market with a new product. Branding the product as a Pepsi product would have enforced a strong association with a cola drink – something Tava is not. Addi- tionally, the entirely new brand allowed Pepsi to experiment with some non-traditional media alternatives without risking Pepsi’s traditional branded products.

The Toyota and Pepsi examples portray new brand strategies that work for companies. In both instances, the companies were extending into comparable product categories in seeking new consumers. An example of a new brand strategy that did not work well was the effort by Anheuser–Busch to break into the salty snack market with Eagle Snacks. While eating salty snacks might increase beer consumption, a beer

company offering a new brand of salty snacks did not resonate with consumers.

The new brand strategy enables a company to grow without compromising its reputation in already-strong markets. A company is able to exert influence in the marketplace with its marketing clout, but it is not putting its reputa- tion at risk. Yet, since there is no guarantee that consumers will naturally connect the goodness of the core brand with the new brand, the company is also foregoing any possible positive spillover effect.

Timing of brand growth strategies. Prominent in marketing strategy is the idea of the first mover advantage (see FIRST-MOVER (PIONEER) ADVANTAGE), yet brand growth strategies do not necessarily follow this early or first entry idea. For example, one study found that brand extensions entering early in the market lifecycle were more likely to fail (Sullivan, 1992). Entering late in the market lifecycle was suggested as the preferred strategy for a brand extension. Within the same study, it was found that the new brand growth strategy was likely more effective in the early stages of the market lifecycle, with early

Table 1 Summary of brand growth strategies.

Strategy Core Brand Growth

Line extension Crest (toothpaste) Pro health, weekly clean, whitening expressions, whitening, cavity protection, tartar protection, sensitive teeth, flavors, baking soda, gels, liquid gels, paste, striped, for kids

Toyoto (cars) Avalon, Camry, Corolla Brand extension Ocean spray Same product different form

Arm & Hammer Key component in new item Log Cabin Companion product American Express Same customer franchise BIC Expertise Ivory Benefit/attribute Porsche Designer image status

Cobranding Dell PC Intel Diet Coke NutraSweet Ford Motor Co. Harley–Davidson/Eddie Bauer

Flanker Muscle milk Cytomax Pharmaceutical Cos. Generic manufacturers

New brand Toyota Lexus &and Scion Pepsi Tava

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Table 2 Disadvantages of brand growth strategies.

Strategy Disadvantages

Line extension Damage to core brand; cannibalization; loss of product/brand focus; dilution of brand image; brand confusion; limited shelf space

Brand extension Consumer confusion; consumer disinterest; lack of transferability; unequal quality; competitive battles; potential damage to core; intrafirm competition; cannibalization

Cobranding Disparate, not complementary, brands; negative spill over effect reputation-wise; increased challenge of two brands; potential conflict between companies

Flanker Spillover between market segments; increased resources; increased competition; cannibalization

New brand Lack of brand connection; typical new product risks

entering new brand strategies outperforming late entering new brand strategies. Using the product lifecycle (see STAGES OF THE PRODUCT LIFE CYCLE) framework, companies tend to pursue brand growth strategies, particularly line exten- sions, in the growth stage of the product life- cycle.

CONCLUSION

Table 1 summarizes the five brand growth strategies with respect to core brands and implemented growth strategies. While the benefits of each brand growth strategy are evident in long-term value, Table 2 provides an overview of the possible disadvantages associated with each brand growth strategy. Unfortunately, there are no magic formulas for managing brand growth. Brand growth decisions are judgment calls utilizing both art and science. They are based on an analysis of market situations, company knowledge, and, of course, a hint of intuition. Not surprisingly, all five brand growth strategies are intertwined closely with the product and market lifecycles.

Bibliography

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Aaker, D.A. (2004) Brand Portfolio Strategy: Creating Relevance, Differentiation, Energy, Leverage, and Clarity, The Free Press, New York.

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Ansoff, H.I. (1957) Strategies for diversification. Harvard Business Review, 35, 113–124.

Blackett, T. and Boad, B. (1999) Co-Branding: The Science of Alliance, Macmillan Press, London.

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