END-OF-CHAPTER SUPPORT
MARKETING DEBATE—Are Brand Extensions Good or Bad?
Some critics vigorously denounce the practice of brand extensions, as they feel that too often
companies lose focus and consumers become confused. Other experts maintain that brand
extensions are a critical growth strategy and source of revenue for the firm.
Take a position: Brand extensions can endanger brands versus brand extensions are an important
brand growth strategy.
Pro: In today’s crowded world of products and services, the choices available to consumers can
sometimes be overwhelming. Marketers with strong brand identities and positions can help
consumers narrow their choices by the use of brand extensions. Brand extensions help marketers
quickly gain retailer acceptance of their new products and provide the consumer with the
“confidence and familiarity” of the parent brand. From the production, distribution,
manufacturing, and marketing communications side of the equations, brand extensions allow the
marketer to maximize economies of scale in these areas. Additionally, brand extensions can
benefit the parent brand by catering to new markets, new users, or previous users that had
“dropped” using the product for various reasons—creating incremental sales to the parent brand.
Finally, the cost of developing a new brand from scratch, in terms of dollars and time, has
become so high that it is virtually impossible for many firms to consider such an option.
Con: The proliferation of brand extensions can cause the parent brand to lose its identity and
individuality with the consumer thus eroding brand equity for the parent brand over the long
haul. When brand extensions fail, the failures of the extensions could impact the parent brand
simply by association. Cannibalization of the parent brand for the extension if not pre-emptive
could erode profits as consumers switch to a less profitable line extension. Finally, a marketer
loses the opportunity to build a new brand with a new image and equity by the use of brand
extensions. The time and money needed to develop a new brand, if done correctly, can pay off in
the end for both the consumer and the firm.
MARKETING DISCUSSION
How can you relate the different models of brand equity in this chapter to each other?
How are they similar? How are they different? Can you construct a brand-equity model that
incorporates the best aspects of each model?
Suggested Response:
Brand equity depends on three main factors: the initial choice for the brand elements or identities
making up the brand, the way the brand is integrated into the supporting marketing programs; the
associations indirectly transferred to the brand by linking the brand to some other entity. Brand
equity needs to be measured and managed well. Branding strategy identifies which brand
elements a firm chooses to apply across the various products it sells. Brands play a number of
roles within a brand portfolio: expand coverage, provide protection, extend an image, or fulfill a
variety of other roles as dictated by the firm’s strategy.
Their similarity rests in their execution and the overall strategic direction of the firm. Their
differences lie in the “role” designated for each brand. As long as the firm identifies and
maintains a consistent “role” for each of its brands, the brand portfolio will and can maximize
coverage and minimize brand interactions and overlaps. If the firm does not maintain a
consistent “role” for each brand it runs the risk of destroying brand integrity.
A brand equity model that incorporates the best aspects of each model becomes the challenge
and the “art” of marketing. In such a model, each brand contains its own identity, has an
integrated marketing program designed around such identity, and has the associations consistent
with its identity. Additionally, the brand has a strategy that defines its positioning within the
market and the firm, has a strategy that has defined its “role” within the corporate structure with
a well-defined positioning statement, and maximizes coverage with minimal brand interference
and cannibalization of other corporate brands.
Marketing Excellence: Procter & Gamble
1. P&G’s impressive portfolio includes some of the strongest brand names in the world. What
are some of the challenges associated with being the market leader in so many different
categories?
Suggested Answer: Student answers will vary, but good students will note that as a brand leader
in 15 categories, P&G continuously fights off challenges from smaller niche firms, its own
internal branding metrics.
Additionally, P&G must study its consumers, use long-term perspectives, employ product
innovation and quality strategies to remain ahead of their competitors.
1. With social media becoming increasingly important and fewer people watching traditional
commercials on television, what does P&G need to do to maintain its strong brand images?
2. What risks will Procter & Gamble face going forward?
Marketing Excellence: McDonald’s
1. What are McDonald’s core brand values? Have these changed over the years?
2. How has McDonald’s grown its brand equity over the years? Has McDonald’s changed in
different economic times or in different parts of the world? Explain.
3. What risks do you feel McDonald’s will face going forward?