Introduction
Organizations engage in brand extension as a way to differentiate their brands and gain a competitive edge over their competitors. Many organizations that have been successful in brand extension have managed to become market leaders, thus beating the competition; a good example is Coca Cola Company.
However, brand extension is not a decision to be made in a rush. It requires careful planning and an understanding of how it will affect the existing products. For successful brands extension, an in-depth of concepts necessary for brand building is necessary and some of them are discussed below.
Definition of Key Terms
According to Dechematoy and McDonald as cited in (Jones, Kenkins and Karen 239), a brand refers to commodity, person or place designed in such a way that the buyers or target customers can find unique value adding features that meet their needs in a satisfying way and being able to sustain the added values.
This definition does not actually state the exact designs to be used. According to Kotler as cited in (Schultz & Schultz 301), a brand is a name, design, symbol, term or a mix of all the attributes that makes or differentiates the goods or services of a firm from those of competitors. The definition by Kotler concerns itself only with the attributes and fails to account for associations and identifiers.
On the Contrary, Murphy cited in (Schultz & Schultz 301) defines brand as a trademark that has both tangible and intangible attributes that get to be embraced in the minds of consumers after aggressive and skillful promotion, proper management and wide use by the customers. Definition by Murphy is inadequate since it does not actually capture the idea of identifiers in a comprehensive way. A brand has three major components, which include attributes, associations, and identifiers.
Brand identifiers determine the position of a company’s brand in the minds of the customers and therefore need to be clearly visible. Identifiers would include the brand logo, color, taste, name, or shape among other aspects. Attributes incorporates the product or service, the benefits, and needs derived from the brand. A brand should focus on meeting emotional benefits and market needs instead of the product itself. Since such are difficult to be imitated by the competitor.
Associations are the links that enable a customer to shift from brand identifier to attributes. Building associations requires time and hence need for consistency in brand building (Sexton 2010). From the definitions above, a brand can be defined as a product, service or place that has strong identifiers with desired attributes and able to make consistent and long lasting associations that motivate the customers to move from identifiers to attributes and this definition will be used in the research.
Marconi (215) defined Brand equity as the value in and of the brand this definition is limiting in that it does not recognize the importance of brand strength and its staying power. Another definition of a brand is that it refers to the monetary value of a brand that comes as a result of loyalty and goodwill created in customers this definition is limiting in that id does not not incorporate aspects of how to measure and report on the brand value.
Brand equity can also be defined as the benchmark of the relationship between the seller and the buyer that shows whether the buyer will continue to buy (strouse 160). The weakness in this definition is evident in that a relationship between the seller and buyer may not be adequate to help in making financial decisions on allocation of resources.
From the definations above, brand equity should incorporate or show aspects such as brand strength, its power to stay in the market, its potential and clearly show what adds or reduces value to both the customer and the seller in a brand in such a way that the information can be used to make financial and marketing decisions.
For purposes of this research, a definition by Aaker and Biel (51) will be used: “A set of brand Assets and Liabilities linked to a brand, its name or symbol that that increase or reduce value derived from a product or service either by the firm or the firm’s customers”.
Brand image can be defined as the association network that determines how the consumer perceives a particular brand (Mooij 275). Definition by Mooij does not explain the behavior after perception. Keller as cited in (Woodside 42) defines brand image as:” perceptions about a brand as reflected by the brand associations held in a consumer memory. It is important to note that brand image influences or affects customer purchase decision-making process.
If the customer negative towards a certain brand, it is likely that the customer will not be motivated to purchase. Therefore, in definition of brand image, it is vital to incorporate an aspect of how it influences the purchase decision. For purposes of this research, brand image will be defined as a collection of all the ideas, perception, and views held in customers mind about a product and the way such a collection influences their purchase behavior.
According to Srivastava and Shockers as cited in (Soto 18), brand strength refers to associations that are conceived in a consumers mind when they see a brand. Kriegbaum as cited in (Soto 18), defined brand strength as: “psychic constructs in the mind of consumers that are linked to the brand and influence their buying decisions.” The challenge in this definition lies in seeking to explain which psychic constructs are responsible for driving brand strength.
In the two definitions, driving forces have not been accounted for. Hence, for purposes of this research, brand definition by Feuerhahn who introduced the concept of driving forces and defined brand strength as “current and future increase in value of benefits to both the firm and the consumers as a result of branding” (Soto 18)
Brand extension refers to a situation where a firm comes up with a new product or service in a new category or decides to use the existing brand name.
Brand extension should be used if there is idle manufacturing capacity because it helps in the utilization of the idle capacity and generates economies of scale. Brand extension can also be used when new customer needs have been identified in order to serve the customers in an efficient and satisfactorily manner.
If a competitor has a new offer in the market, brand extension can be utilized to match such an offer and remain competitive. Brand extension has various benefits some of which include; it makes it possible for companies to get into new product categories since it leads to instant recognition of the products. It also reduces the marketing and advertising costs since less of such campaigns is required to create awareness.
However, brand extension has its challenges too in that it may lead to a negative image about the company especially if the new extension is weak as compared to other products. It could also confuse the circumstances on what to buy and especially if the existing brands are too strong in the market (Monye 97). There are two types of brand extensions namely vertical or line extensions and horizontal or product extension.
Vertical extension refers to a situation where a new product is launched in the existing product category and another name is added to the original brand name to show that they are linked to each other. Horizontal extension means that an existing brand is used to target a new market segment with identical product line; the implication is that an existing brand name is used when introducing new products in similar or new product class (panda 6).
Successful brand extension requires that a firm address two key areas: opportunities and threats as well as branding issues. Under opportunities and threats, the firm needs to assess whether there is potential demand, strength of competition, market accessibility using existing delivery channels, firm’s ability to meet the demand and availability of the necessary skills and equipments to launch the product.
Branding issue implies an assessment of how the customer will associate the current product with the new ones. This is important because a negative perception by the customers will lead to a downfall and vice versa is true. Therefore, there should be strong brand associations and the relationship between the two should congruous.
Family branding refers to assigning the same brand name to all individual products produced by the same company to enhance recognition. Brand personality is defined by Allen and Olson cited in (Stone& Desmond 210) as; “set of meanings constructed by an observer to explain the inner traits of someone else.” Brand loyalty means that a customer will buy a firms product all the time he or she makes a purchase without shifting to other similar or related brands.
History of Virgin Brand
The “virgin’ brand started was originally started by Richard Branson and it started with music, then extended to entertainment megastores, airline , publishing business and then to a radio station and many more the latest being Virgin Galactic as the entry to space level. It has over fifteen extensions.. Virgin brand used brand extension correctly since the customers accepted all the extension and the firm seems to be adding important properties every time it launches an extension.
The firm has been able to offer quality, excitement, and value for money and innovation, and it is no longer a market specific brand but rather a people’s brand. The extensions succeeded because new extensions entered the market using the original brand name that already had a good reputation thus giving other extensions an immediate recognition and acceptance in the market (Fhima 156).
Importance of Building Brands
Brands give an identity to the company; most consumers and customers recognize a firm by its brand. If a company’s brand is positive and liked by the customers, even in the event that new brands are introduced, the new brands will find their into the market with a lot of ease being the opposite of what would happen if the brands were negative. Brand building also creates a differential advantage. This is especially so in the case of services.
It may be difficult to differentiate the features of one service provider from those of another. A firm with a well-built brand will therefore have an advantage over the competitors since a good brand serves as the differentiating factor. Brand building also assists in earning customer loyalty. This is because, if customers’ needs are met and satisfied by a memorable brand, it is probable that they will want to purchase that brand repeatedly rather than purchase competing brands and this eventually leads to customer loyalty.
Brand building brings in familiarity and research conducted by psychologists has shown that familiarity is a pre-requisite to liking. This can be strength since even non-customers can give referrals of brands they are familiar with.
Proper branding allows for premium price and image in that customers are willing to pay more than the standard price for the products and services. It is also possible to create new extensions that will be easily recognized and accepted in the market if associated with well-branded products thus lowering costs and increasing profitability.
Branding brings in greater equity to the organization in terms of goodwill incase the firm is sold or merged to or with another firm. It also lowers customer risks in that customers will generally go for branded rather than unbranded products when they are not sure of what to purchase (Yudkin, 2005)
How Brands Affect Consumer Behavior
Popularly and positively known brands can have a positive impact on consumer buying behavior. This is because consumers are willing to pay premium price for popular and positively known brands. The customers will favour a brand that has high cultural capital. That means, culturally accepted brands will be preferred by customers to those that are neither culturally accepted nor recognized.
Brands may also affect consumer behavior with regard to social factors. Some brands may be associated with a certain social class that the customer wants to fit in. Customers buying decisions are also influenced by others such as opinion leaders and opinion formers (Hoyer &Macinnis 400). Customers will therefore tend to purchase brands suggested by those who influence their decision making process.
Some brands are associated with customers’ personality, lifestyle, and self-concept. Brands will therefore influence consumer behavior because consumers will want to purchase those products that reflect their personality and lifestyle. Consumers seek to satisfy their psychological needs too and this means that they will favor those brands that will be inline with their beliefs, values, and attitudes (Hoyer &Macinnis 400).
Brands in the Middle East
Top ten brands in the Middle East
By 2009, oil and gas from Saudi Arabian Oil Co. ranked top. The second brand being investment services by Kingdom Holding Company. The third brand is chemical manufacturing by Saudi Basic Industries Corporation.
Brand number four being automotive by Koc Holding A.S followed by diversified Finance from Sabanci Holding, Telecommunications by Saudi Arabia Telecom Company, commercial banking by Ziraat Bank, electric utilities by Perusahaan Listik Negaan, PT, airline by the Emirates Group and finally mining and construction by Eurasia Group (Middle East Directory N.d).
Building Brands in the Middle East
In building brands, the firm must first ensure that it has mass product implying that the products or services on offer must be able to meet consumer demand satisfactorily. This assures the consumers that thy will get the product any time they are in need of it. Another key aspect in brand building is the price (Upshaw 12).
Price should be affordable and match or exceed the benefits enjoyed by the customer. The customer should feel that the price is what he or she is getting in return. The firms should therefore be able to minimize cost and set a price that will focus on profit maximization without altering the quality and customer exploitation.
A strong sales force and advertising is also essential (building brand, Para 6). Brand building necessitates that the marketing department has qualified personnel to market the brand i.e. be able to pass the message to the customers on the benefits and existence of the product, be professional when closing a sale and also intensify on media support to create mass awareness about the brand.
The distribution channels used to deliver the product are also an important factor in brand building. Successful brands are those that accessible to the customers when needed in the right and correct timing. This means that not only do the brands need to be accessible but also available at the right time and place. This delivery channels should be convenient and up to date depending ion the target customers and the nature of product or service.
Building brands requires the firm to assess the need to build brand personality. Some brands are socially conspicuous and more often than not, the users are self-conscious.
Such brands require building of brand personality and the firms must know the exact brand personality they want associated with their brand. In building brands, firms in the Middle East need to understand the intensity of competition. An analysis of who the competitors are, what are their strengths and weaknesses and reacting on the same by turning competitors weaknesses to strength for their own advantage.
An analysis of how differentiated competitors product are and coming up with mechanisms to differentiate their products from those competitors in a competitive way. Organizations should also ensure that their product or services adequately meets customer needs and this will help in winning customer loyalty and reputation, which in return will strengthen the brand.
How Strong Brands Can Maintain Their Strength
Strong brands can maintain their strength by increasing the awareness level. This means that a firm continues to create awareness about its existence and the range of brands it offers. Customers tend to favor those products and services that they have heard about to those they have never heard about. Strong brands can also maintain their strength if good reputation is maintained about the brand.
Good reputation will lead to increased profitability without extra investment in promotion. Good reputation also allows the firm to earn extra premium and have an edge over their competitors. Brands that want to remain strong in the market place should maintain high quality and always look for ways to maintain and improve their quality. The brands should also serve the customers in an effective and efficient way in order to maintain customer loyalty and attract new customers.
Though the brands may not have been in the market for a long period, they should give the customers a feeling or at least an assurance that they will continue being in the market for the longest duration of time i.e. infinitive existence. In addition, brands that wish to maintain their strength must focus on continued renewal. The renewal approach taken should be relevant to the customers in question at that time (Aaker & Biel 16).
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