 As-Salaam-Alaikum-Khawwateena-Hazzat. I welcome you to the virtual University of Pakistan. With the discussion on the Brand Extension, that's been taking place for the previous two or three lectures, we are now getting into lecture number 24, still discussing the same concept for our understanding. What we discussed in the previous lecture was that there are certain positive sides of the Brand Extension, like Brand Extension provides the brands with an opportunity to stay up-to-date and modern. Brand Extension offers the chances of success, meaning higher chances of success. Brand Extension offers opportunities to ailing brands of survival. Brand Extension defines new segments and new boundaries. It provides the brand with an opportunity to have access to image capital, which has been building over the last so many years or decades, and it is good for the survival of brands. Now, this is what we discussed about the Brand Extension, and before we culminated this discussion in the previous lecture on the positive side of Brand Extension, we were discussing things which are good for stretching the line, meaning line extension. Now, after having talked about all the positive sides of Line Extension and Brand Extension, the conclusion should not be drawn that it is always essential or it is always good to get into Line Extensions or Brand Extensions whenever we are to introduce new brands. This does not and should not preclude the possibility of getting into new brands, meaning standalone brands. Standalone brands offers us the opportunity of a better market coverage, or I would say they offer us with an opportunity to maximize the market coverage and therefore we should not forget the usefulness of getting into new brands. Line Extension or Brand Extension, whenever they have a fit with the overall strategic situation of the company, it is always good to get into Extensions, but it is not the rule that we must always get into Line or Brand Extensions. While new brands come into being given a certain rationale, the existing ones that must not be stretched or extended unnecessarily, there have to be certain strategic considerations before we get into Extensions. Let us now move to the word actual extension, that we have had quite a bit of understanding by now what a Line Extension is and what a Brand Extension is. We haven't yet talked about how to actually extend the brand. To extend of a brand, we have to go back to the concept of the positioning that we learned a couple of lectures ago. If you recall that concept, you know that the positioning statement has basically three components. One relates the target market, the other relates the overall business within which the brand operates, and the third one talks about the point of difference. Whatever extension that we may be considering has to stem from either one of the components or a combination of the three components of the positioning statement, which means that we can extend the brand to buy the target market or we can extend the brand to buy defining the overall business within which the brand is operating or we can extend the brand to buy defining the point of difference. So this in a way provides us with a summary of all the factors that we have been discussing so far in terms of going for real extension. We have been talking, I will repeat, we have been talking about all the positive sides. We also had a chance to talk about a few negative sides of Line Extension, but basically we have been trying to understand the difference between Line Extension and the Brand Extension and the factors which really help in the favor of extensions. The meaning, what is it that really makes extendability a promising opportunity with a full of potential. That's what we have been talking about. And now we are talking as to how to go for that extendability in real terms. So the first one is extending your target market. Here the extension is all about defining your new segment in which you are going to offer your differentiated features of the same basic product. But then you are going to have a different product altogether, well I shouldn't say altogether, a different product with added features. Now this can be explained with the help of an example of a bicycle manufacturer who is planning to get into manufacturing mountain bikes. It is a very different segment that we are talking about. We may have overlaps of customers, like a customer who is using an ordinary bike for the purpose of transportation, may like to get into that segment also, but basically it is going to be a different segment and this is what Line Extension is doing. It is pushing the boundaries, it is taking the company into a new segment which addresses the very different needs and those needs relate to fun and hobby and all that. That is not the need of basic transportation which somebody else fulfills while going to one's office or commuting. It is a very different need. Another example could be from the area of clothing. This is like a manufacturer of blue jeans getting into comfortable clothing, meaning comfortable formal clothing. Now whether the company succeeds or not is a separate issue but the market or the target market is being extended by defining a new segment which is an extension of where the company has been operating before. This is what is meant by extending the market or extending the brand in terms of extending the target market. The other component that we talked about is extending the brand in terms of defining your overall business. Now this is the different from defining your segment because segment A is dealing with a regular basic bicycle. Segment B is basically dealing with a mountain bike which is all about exercise, fun and hobing and all that. We are talking about two different segments but nevertheless when we take a look at those two segments at the same time we realize that the overall business has different boundaries and the overall business has now got to be defined. The definition of the overall business when it comes to strategic planning or strategic management process that it takes on very different dimensions because you are talking about a very different bag of variables not only in terms of the marketing mix but also the other management areas including the financial one. Defining the overall business is the different from defining the segment but having an understanding of how could we cross the one segment and get into the other does explain to a large extent or rather to a great extent the definition of the overall business which has now taken a different and a new shape altogether. So in other words we just cannot talk about extension of a brand in relation to defining the overall market without having to take into account the target market meaning the segment. We have to take into account one segment, the other segment and yet another if we are moving to that as well. So this is what is meant by extending the by definition of the market meaning extension by redefining the overall business we can say in those terms. The next one is extending by the point of reference. Just look at yogurt. The manufacturers could keep defining the points of difference with gradual passage of time we have a regular package of yogurt and then we have a package of yogurt which has a different flavor it may be fruit yogurt and then we have something else which is enriched with some kind of vitamin good for certain parts of the body. We have brands that are talking about calcium enriched and so on and so forth. So these are the points of difference which manufacturers take into account while they consider extendability. So naturally when you are extending your brand in terms of the flavor or in terms of a different taste or in terms of a different package, different size you are extending the brand and the improvement that has taken place takes you into the area of brand extension. The point of difference naturally relates the benefits that you have added to the product meaning the point of difference which you are offering to your customers that becomes the basis of your extension. Just to give you another example of this kind of a scenario look at the manufacturer of the computer chip every time the manufacturer adds certain more benefits the manufacturer defines the point of difference and starts selling the newer generation of chips by that definition. So that is what is meant by extending the brand by the point of difference. So in other words we can very comfortably conclude that positioning lays the foundation for brand extension. And let me also get the point at this very moment before I go further that the extensions that I have been talking about so far, the meaning in this lecture extending your brand by taking into account three different components of the positioning concept or the positioning statement relate to line extensions because we are talking about those differences which are taking place with the same base product may that be yogurt, may that be a computer chip or may that be the bicycle so we are addressing the area of what you may call line extension. How do we get into extensions when it comes to extending the brand? Well, this is a subtle differentiation here in terms of the concept that I would like to with a pin point in very explicit terms that you get into the brand extension by changing the overall positioning. The reason is very obvious that we are getting into a new market a new field, a new area altogether which means that we have to go by that positioning map and we have to define the overall business in which we are planning to move into and we have to talk about all the dynamics of the competition of that particular area and therefore we say that we extend the brand by changing the overall position. I think it goes without saying that when a manufacturer of dairy products and other food items gets into something relating automotive parts for example, he or she is getting into a different market altogether. However, there are certain bases and there are certain strategic considerations which are to be studied very carefully before we get into areas or territories unknown to us. Venturing into those territories requires a lot more study and analysis of the situation which is going to take us from here to there and if we are clear about the brand vision if we are clear about how to fill the overall gap meaning to what extent we are going to strengthen the existing offerings and to what extent we are going to venture into new areas by defining the new categories and by defining the dynamics of those of the new territories we are taking a step in the right direction and there are many examples in the marketplace meaning our own market in which people have moved from one area to another which doesn't really have any relationship in terms of the production synergies or even marketing synergies meaning that you need to have a very different production setup for that category in which you are venturing into you need to have a different marketing team and you need to have a different sales team you may not have a completely different marketing team but one or two of the brand managers could here and there but certainly a new sales team because you are dealing with a new market altogether it is risky it is costly and it requires a lot more effort and energy but if the companies could have done their homework very carefully then the chances are they are stepping into the right direction and then it is a matter of deploying the amount of resources which must be deployed in order to make that venture successful the important point that we have to keep in mind here is when we are getting into a new market altogether we add to the image capital meaning we are getting in there because we have access to the image capital which we have built over a long period of time but then at the same time with the new entry meaning with the new area of operations we must see to it that we add value to the brand and we add value to the company and not diminish that if getting into the new area is going to mean compromising your existing image capital translating into lower financial values all the way down to the bottom line and then the share value and so on and so forth then we are not moving into the right direction and if that happens you have to go for a quick fix which could take so many different forms and shapes it is not the topic of discussion at the moment but the objective is that you see to it I mean the company sees to it that it is moving in a direction which is going to take the company to the envisioned objective and on the way the brand accumulates more value and higher image so brand extension or diversification to so to say must give the brand strength and enhance the overall picture which people or customers in the marketplace have about your brand this concept that we have talked about meaning how to get into real extension in relation to line extension and in relation to brand extension I would like to summarize that with the help of a graphic illustration which makes the understanding very clear I am using similar kind of grid which I used for explaining the positioning concept and as you can see from the four quadrants three are in red color and the fourth one is in blue the reason three are in red color because these three belong to the three components of the positioning statement extending the market by which basically falls into the realm of line extension we are talking about extending the target market we are talking about extending definition of business and we are talking about extending the point of difference so in other words if you move from left downwards and then toward your right you see all these red quadrants explaining the extension with the by way of the three components of the positioning statement if you go upwards on the right hand side you see the blue quadrant which is talking about extending the overall positioning and this relates to the brand extension whenever we talk about extensions we may talk a little loosely just in order to enhance your understanding of the concepts so that there are no mistakes when you enter the practical field I am trying to explain all these in a very detailed manner but the fact is that an extension is an extension and whatever shape it is going to take it is going to take that shape in relation to going for a new offering going for a new introduction and you are dealing with the segment you are dealing with the market and once you have all these concepts clear in your mind you are going to be very accurate in deciding which situation fits with what kind of a concept or what sub concept of an overall concept so to say having said that I would assume that your understanding about how we extend the brand is complete whether in terms of line or brand whatever it is your understanding should be complete by now let us now take a look at when should we extend the brand how we extend the brand we are clear about that when the timing and when is the situation right that we start considering line extensions or brand extensions I would like to talk about one fact which is that the brand extension in particular is something very sensitive and very strategic not to say that line extensions are less strategic or less sensitive but moving into a different area altogether that takes on some added proportions so you have got to be very very careful when to go for extendibility so in other words not to have a complete and a very solid rationale for getting into extensions whether those are line extensions or brand extensions the extension must be undertaken to add strength and value to the brand and not diminish the value like I said earlier strategic deliberations relating extensions should be undertaken and there are different factors which we must consider before we go for these extensions and these are the factors called for the consistencies one is in the area of brand vision the other is in the area of brand picture and the third one relates overall positioning so whether it is line extension or brand extension these deliberations have to be undertaken very assiduously and very diligently because one mistake is going to cost you a lot of money and time and let us make sure that we are extremely clear before we put our steps into the water let us now talk about what consistency with the brand vision is going back to the brand vision and before that the confirmation we are very clear that company vision translates into brand vision and the brand vision translates into all the strategies and objectives while we created that vision we knew what are the related and unrelated areas that the brand may like to get into related areas are those which are very closely related to the existing brand which in a way means that we have to go for line extensions and unrelated areas are the ones which are going to take care of new businesses and that also is something which we were clear about while we were creating the overall business vision and that led to the brand vision so in other words we are clear about whether we are going to get into related areas or we are going to get into unrelated areas the meaning line extensions are brand extensions and there is nothing that is going to come as a surprise or as a shock all those things are the ones that we did consider and took into the consideration for the while we were talking about the vision so consistency with is one of the fundamentals that we have to consider so in other words in light of the overall business vision and the brand vision we know whether we are going to get into the related areas or unrelated areas meaning whether we are going to get into line extensions or brand extensions and then deliberate dynamics relating to different situations the point which I really want to make here is that it is very hard to go wrong if you had the right vision because the right vision led you to the right brand vision and the right brand vision led you to creating the right picture and the contract and then the product, the promises and so on and so forth so it will take you a lot of effort to go wrong here if you know what I am saying the chances are you will go right and your vision is going to be consistent with the extension that you create here at this juncture to give you one example how the vision can be related to your actions when it comes to extending the brand let's go back to the example of the brand XYZ of the fast foods now if the brand vision restricts the brand to the lunch market only then the extension is going to take place in a very minor way but of course in a meaningful way into the segments which are the right and left of the target segment number four where we started doing business if the vision of the business is to make the brand XYZ a huge brand and turn it into the circle of the winners then we have got to do something more than just restricting it to the lunch market then I think we have got to do something in order to be in the market of all the times meaning dinner, lunch in between and maybe also breakfast at one time somewhere down the line now if that is the vision now the lunch market is just about the point of departure because you are taking a start from there and you have in a couple of or a few entries catering to the needs in one particular segment but when you get into restaurants for example because you are extending the target segment you are extending the overall business and you are defining those two things by the fundamental components of the positioning statement then your extension is going to take a different shape and form and I think it goes without saying it becomes very obvious at the kind of extensions that you should go for at that time maybe you would like to go for fried chicken the kind of items which you are not selling at the time of introducing the brand you would like to make a base then consolidate that and then get into strengthening the brand by way of extending the definition of the target market by way of extending the definition of business and by way of extending the point of difference and I think the example should suffice what I am trying to put across to you people the second example to illustrate this consistency with the brand version would be in the area of razor blades because they look at a company which is defining its business in terms of razor blades with a meaning just about shaving and that's all and they have one particular brand they may have a few variations in terms of different qualities of the blades but look at the vision of the brand if it says that we have to reach a destination which is going to be a function of so many different factors strengthening the brand being one introducing something new which is meant for the same customer but which is away from the blades then that amounts to being another the manufacturer of razor blades who defined his market or her market by way of the blades is now defining his market by getting into an area in which he made term as personal care in the category in which he would like to introduce alongside blades like a shaving cream soothing balm and so on and so forth and this example once again explains in depth the concept of extendability what kind of extendability you should go for meaning at what time because we are talking about when we should get into extendability this is an appropriate time when the company is all set to get into areas which are going to bring the company added business with the help of a renewed definition of segments and also overall business having said that let us now try to keep the one factor in mind that it is the level of growth that we have envisaged it is the increment of growth that we envisage that must come our way if we want growth to take place in small increments then you may go for line extensions if you are looking for something dramatic and the growth gap is huge which you nevertheless think an invasion that you can fail then you go for the brand extensions and you go into areas which are maybe far apart from what you are doing right now so this summarizes the once again the concept and clarity when we should get into extensions of two different kinds line extension and brand extension the second deliberation that we may talk about maintaining the second deliberation necessitates that we maintain a consistency with the brand picture meaning we uphold the brand picture how do we do that it again is very obvious that we have the right picture in place because while we created the picture we were very mindful of the image of the brand carries and we also were very mindful of the promises which the brand fulfills and the contract it has in place in order to satisfy its customers so all the factors which form the overall brand picture we created that with the help of those factors and if we have the right brand picture in place the chances are the extendability is going to be full of sense it again will take you a lot of effort to go wrong for the meaning it is very difficult to go wrong if you have the brand picture but the point here is that we must uphold that picture so that we can position the brand the new extension meaning the line or brand whatever it is is fully according to the picture that we created and the picture gets upheld another deliberation is that extension has to be very consistent with the overall position the price the target market the distribution factor and the quality factor but all must form a position which offers the brand possibilities of extension so in other words if we have created a position which is just about the right position it is going to provide us with opportunities and possibilities to go for extensions you will recall that we talked about the position being such that it offers the opportunity of shifting it if you already have to we can go for another positioning because the one positioning just cannot satisfy all the needs and also recalling that the brand offers so many different benefits from so many different angles we can talk about one positioning in relation to the one brand and we can talk about another positioning in relation to another brand and that is the beauty of the limitation of the positioning concept in a way that it keeps you focused on one particular position and in order to create another position which is closely related or it is which is related may not be very closely related you go for another brand and that offers you the possibility of extendability that is when you extend your brand any abuse of the one factor or a combination of the ones that I talked about in relation to positioning meaning quality the price, distribution in the target market is going to hamper your progress or they may be going to make totally impossible the task of extension you have to have all those factors in place and that is what an accurate position is all about to make sure that the consistency between overall positioning and the brand extensions are very much in place we can look at a couple of factors and those are whether our core customers are detracted from the parent brand if we feel that the core customers the prospects are going to be they're detracted from the parent brand then there is something wrong with the new positioning meaning there is something wrong with the extension which we are contemplating so in other words this question has got to be answered in affirmative that is there is no possibility of the prospects or existing customers getting detracted with the extension in place after having talked about these strategic deliberations now I'd like to talk about a few more factors which you must have a very good understanding of relating to the brand extensions one is that the managers at times tend to have a very narrow vision of the brand so this is something that has to be looked into in very qualitative and real hard business terms and I'm going to explain this with the help of an example which I will be talking later but the fact is that the managers keep the potential of their brand locked up why they do that because they think that the brand has become too old and it doesn't really have any further potential to grow and therefore any new introductions by way of extensions have to come all the way by the way of introducing new brands meaning standalone brands meaning by creating a portfolio of different brands that is something I'm going to talk about later but for the time being about the locking up of the potential only thinking that the brand is aging and therefore it may not have any appeal for the market is something that only the managers may think there is a strong possibility that the market is not thinking that way the one factor of which we must keep in our minds is and I keep repeating that again and again brands go by the process of evolution because they want to satisfy evolving needs and while they do that they take on a very caring character if we believe in this thing the brands do take on a caring character then I think that we should let the brands do the job which they are doing of caring about the customers and about being very friendly and about being very responsive so in other words what I'm saying is if we do not allow our brands to stay responsive and to stay friendly and caring the brands definitely are going to go down the history of marketing as the ones which were killed only because the managers thought that they were not worth their existence still in other words what I'm saying is that the potential of the brands has got the hard nest it's got to be further nurtured by way of introducing new extensions and those extensions are the ones which are going to satisfy the needs which still are unmet in the marketplace and when we do that we are making our brands modern we are making our brands up to date because they are responding to needs and when they respond to needs they have to be contemporary and up to date to give you an example which I indicated earlier at a huge multinational in the western markets in one of the western markets the managers at the headquarters thought that one of the brands which is in the soups and those kind of related items had grown very old and the new introductions which they were contemplating but had to be very different and they had to be launched in a way that customers could not think of the old brand because that might cost some negative images over the new offerings so in other words they tried to maintain such a tremendous gulf between the brand which they thought was old and the new offerings which they wanted to bring into the market buy new names that the old brand really got in a way killed and when they launched the new entries they realized that they were not in a position to be as successful as they really wanted to be and probably market research or their analysis of the situation proved later on that had they continued with the brand which they had thought had grown old they would have been better off so in other words they did not give the brand an opportunity to unlock its potential and to bloom in response to the changing needs of the market and hence it was deprived of the possibility of extensions meaning the brand just could not subdivide itself into further subspecies in relation to those offerings which the managers were considering at that particular point in time so this is what is meant by not having a narrow vision of the brand because brands are the very broad-minded creatures and that broad-mindedness is fairly manifested by way of their responding to our changing needs still in other words managers must not be too much focused on the past I mean there is no question about one fact that it is the past practices and the history which guides us into the future because we know what is happening at the present but here is a situation in which the managers might get too much focused on to the past in too narrow a way that they lose perspective of the present and therefore may lose direction for where they really want to reach meaning the destination so managers have got to have a broader motivation of the brand because the brands themselves are very broad-minded creatures in other words the present must be given importance to determine brands potential to stay up to date it is only because of that importance that brands enter the future with a lot of energy and zeal one example which I may give you at this very juncture could be that of a manufacturer who is making spark plugs for your motorbikes and for your cars and for generators now this manufacturer may like to get into other accessories of the cars and motorbikes like rearview mirrors like filters like wipers and so on different kinds of accessories if he does so he is going to take his brand into new areas with full energy and zeal and this is what I meant by keeping the brand up to date and by having a broad vision or not having a narrow vision to the point that we cannot take up a brand into the future with a lot of energy at the same time the brands should not be broad-minded enough to venture into those areas miles and miles apart and again to give you the example of the manufacturer of spark plugs just think of this manufacturer getting into foods now there are examples of the distance between the two markets of one particular business house but then you've got to undertake a very careful study of the new market where you are venturing into you cannot be too narrow-minded and you should not be too broad-minded you must try to maintain a balance in order to provide your brand full opportunity to extend themselves in areas where they really belong another factor of which you must consider in addition to the deliberations that I was talking about is awareness and the reputation of the company or the business if you are a business house about which awareness is at a very high level of good reputation then extending your brand into areas which may be new to you may not be a bad idea but then again you've got to be very careful about defining your overall business and then looking at the dynamics of the situation in its competitive posture if competitors are too strong and are too well entrenched into the category you may not like to get into that category but then basically it is a question of awareness and reputation of your business about what I'm talking about and if you have those two factors through your favor you are logically all set to go for brand extensions there are examples which might talk of situations otherwise like one of the largest the blue jeans the making companies that are getting into the area of comfortable formal clothing and failing there so this can be argued by the marketing people and by those who are not even related to marketing what happened with that company because they got into something which was very closely related and they had a very very high level of awareness and reputation the greatest in the world then what went wrong this could be a very interesting case study which is not the topic of discussion at this moment but generally speaking awareness and reputation do come to your favor but when it is a question of considering whether or not we should go for brand extensions another factor that must keep in mind is the essence and what that means is that essence of your business should be very much applicable to the extensions that you are trying to create. Line extensions are the brand extensions example one of the largest companies that is into the manufacture of different kinds of disposable items like ballpoint pens and disposable lighters and a few other items of that kind decided to get into perfumes and the company failed here you can say that the company ventured into an area where people never thought or perceived the company could get into and the company was getting too far away from the essence that offered business or businesses it is into disposable lighters it is into disposable this and that and all of a sudden getting into a market which is kind of a upscale market and deals with things which stir your emotional values and emotional relationships with those products how could a manufacturer of disposable items get into that category notwithstanding the fact that the company had a lot of resources to itself only because the company was too far away from the essence customers or the prospects did not accept that and that is why we keep talking about all these marketing concepts with it being customer driven whatever the concept whether we are talking about line extension or positioning developing a brand based customer model and all the the concepts we talk about in every lecture relate to customers and the market and they have got to be centered on customers because whatever we do is for customers and anything which is away from the perceptions that the customers may have is not going to be successful in the marketplace that is one of the fundamental rules of marketing having talked about all that I now would like to bring this lecture to a close and to give you a recap of what we have learned today there are factors which we did consider as the positive side of brand extension then we went on to learning what is it that really makes it possible for us to extend the brand and we looked into the components of positioning and we also talked about changing the overall positioning while we are dealing with brand extension per se not loosely and then we talked about certain strategic deliberations which we must undertake before deciding when to go for brand extensions and in relation to that I also started talking about a few factors which we must consider before getting into extensions the last one being the essence of the business there are a few more factors which I am going to discuss in the next lecture and for the time being I am going to bring this to a finish because of the shortage of time so I will look forward to talking with you in the next lecture Allah Hafiz until that time