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Written: 1996

Intel's Dilemma

Ever since it embarked on the x86 journey, Intel has led the innovation curve in microprocessors. this has, among other things, forced Intel to kill its own profitable products, to protect its territory. The 486 was introduced in 1992. Now in 1996, we are on 3 generations of chips ahead and Intel has stopped making 486 chips, an era ago. This gives very little time to Intel to recover the product development costs before it has to commit infanticide on its successful products. There are 3 things that Intel has done worldwide to solve this problem. The first, is the Intel Inside campaign - which must rank as one of the greatest advertising innovations - which has drawn attention to the Intel brand name. The second, is to ensure rapid global rollouts of all its products. The third, is to build a brand stronger than the "X86" nomenclature - by opting for the name Pentium instead of the dry 586 - the natural successor.

Pentium was launched with fanfare, and a hiccup not withstanding, succeeded as expected. The added bonus was the brand name which brought the product out of numerical nomenclature and made it a high-recall brand. It was, however, the success of Pentium that put Intel in a quandary. When the 5th generation processors time came to yield place to the new, 6th generation chip, Intel was loathe to see all the money poured into Pentium become history with the brand. It was this thinking that led to the 6th generation chip being named P6 instead of 686 or whatever it may have been. Intel, opted for a brand extension. Today, Intel must wonder what it wants to name the 7th gen chip. To continue with another Pentium extension would make economic sense, but the users of the brand may feel that any extension of pentium is ultimately a 5th gen chip, may perceive more value in any competitors product that is positioned cleverly as a 6th or 7th gen chip.

Intel's dilemma points us to the moot question that surrounds any extension of brands or products. The values of the original brand get transferred onto the new product, but not all these values may be positive or desirable in the new context. Any brand at a given point of time occupy a finite number of categories (and segments within them), from highly focused brand like Ceasefire to a brand like Godrej that spans over 20 product categories. However, it may feel the need to extend to new segments and categories or offer new variants with different attributes/benefits to the same segment for a number of reasons. Some of the reasons for extending brands are:
a) the Brand is strong and the company can leverage this strength into other areas;
b) the existing category / segment is limited or diminishing; the brand needs to be excited/ rejuvenayed;
c) the company needs to defend certain categories from flanking attacks by competitors;
d) the company finds an attractive market and decides to brand extend rather than build a new brand etc.

Whatever the reason, brand extensions are likely to become more the norm than the exception as the brand building costs spiral upwards.

The questions that must precede an extension decision in the mind of the brand manager, however, are:
a) What does the brand do?
b) What do consumers see it as capable of doing?
c) What is the value that the brand adds to the consumers life?
d) And how relevant and applicable is this to the desirable values, attributes and benefits in the new segment or category ?

Managing Customer Value While Extending a Brand

There are some clear value-additions that a brand extension can make over and above the actual use experience of the product or a new brand launch. First, the customers decision making time is cut down, her choice is made easier and the level of post purchase dissonance is lowered. The person seeking an anti dandruff shampoo would buy a Clinic All Clear shampoo because the brand and its performance would be known to her.
Second, the cost of building brands will almost always be lower for an extension. This lower cost could translate to a lower price, or the extra margin could be directed into R&D for improved product performance.
Third, keeping a brand young and exciting - regular activity on the brand keeps the spotlight on the brand. It increases recall and keeps the brand young and exciting.
Finally, extensions allow a brand to be more meaningful to specific segments, increasing loyalty and building stronger bonds with the consumer.

However, to maximise such value, the marketer must understand what are the values being extended, the extent of difference in the products and the possible dissonances created.

UNDERSTANDING BRAND VALUES IN THE CONTEXT OF EXTENSIONS
The value proposition of the brand is a key construct in planning and evaluating extensions. The word value is ambiguous in meaning and in the context of brands also, has 2 meanings. One refers to the value to the customer - implying the goodness and / or wealth that it adds to the customer's life. The other refers to a psychological construct which social scientists have described as an enduring belief that a specific mode of conduct or end state of existance is socially acceptable to an opposite or converse mode of conduct or end state. The reader should at all times be cognizant of which meaning of value is relevant to a particular discussion. When we talk of brand values, we refer to the latter, usually implying the set of beliefs and modes of behaviour that the brand represents. On the other hand, when we speak of value delivery, or customer value, we mean the benefits that the brand offers the consumer.

At Hindustan Levers, the core values define the brand and set the boundaries for extensions. M S Banga, 42, Director, HLL, explains: " I believe that each extension must strengthen the core and the core must remain unchanged. Thats the definition of a core. Else one wonders what is core. In fact thats a trap that many marketers fall into, and perhaps with 20-20 hindsight, thats the simplistic trap that we fell into with ponds - by the extension into toothpaste, because the equity of ponds is in the area of skincare and fresh ness, while from a toothpaste you want hygiene. When the core of the equity is in one direction and the product extension is in another and you graft the two, you are unlikely to succeed. The the set of peripheral or extended values can be changed over time. Reckit & Coleman India use the idea of a brand footprint, which is a product of the personality and the values. Ashok Bhasin of RCI feels that Extensions can be used to move the brand footprint in some dimensions, for dettol, extension is a tool for cueing convenience and modernity - from packaging change to product change." He feels that as in the case of Dettol liquid handwash, if you lead innovation curve, then value will be added back to the mother brand.

THE TYPES OF EXTENSIONS
The term brand extensions defines an entire spectrum of extension possibilities. There is ample scope for semantic arguments on the difference between brand extensions, product extensions, line extensions etc. In this story, we will steer clear of such discussions and concentrate on the rationale for and evaluation criteria of all kinds of extension decisions, in the process determining how to build customer value.

At one end of the spectrum of extension opportunities is extension of a product line, popularly called line extensions. These are typically carried out to cater to the convenience of different sets of buyers, to tie in to their purchase and usage patterns. This can take new packaging forms - like dispensers, easy to use packs or variants . DHL's successful brand Jumbo - which is an Air Freight Made Easy branded service - was extended from the original 25kg size to a 10kg size despite the runaway success of the jumbo brand.

At the next level, the brand extends within a category, but to new segments, determined by the relevant segmentation parameters. This could be along price, benefits, demographics etc. Examples of Price based extension are Titan into Timex, Aqura and Tanishq. Clinic extensions into special, all clear, active etc. are along benefits. Colgate toothbrush stretches across demographic segments with its "Junior" sub brand, as does Bata's "For Her". Segments are not water-tight, sometimes people switch segments - for variety. The smart marketer will capture these consumers by providing variety within the brand. Banga adds "When we extend Close Up - into 3 flavours, the idea is to provide choices along relevant dimensions. For tooth paste the relevant dimension is flavour but people do not all like one flavour. So we categorise according to taste profiles. We use different colours to back it up and also to create excitement. So variants are about relevance to different types of consumers. " As is clear by now, stretching a brand this way is often done through descrptive subbrands, like Classic Milds, or by building a different personality like Jumbo Junior for DHL and the Baby Puf for Godrej.

We come now to extensions that cross the boundaries of product categories. Here again we will consider a range of extension categories. Kapferer, in his book grades extensions according to the level of dissimilarity with original product against a hierarchy of the values being transferred.
(Diagram of Kapferer)

The first level of extensions is at the product level. Take Britannia which is a house name. Despite its vast product portfolio, is only in bakery products - biscuits, bread and cakes. Kaushik maintains "There is no need to stretch beyond this. Core equity of name should not be diluted." But he admits that other areas within foods are being considered. This kind of extension is what we have covered in the earlier discussion.

The next level of extensions is termed by Kapferer as the Formula - extension. Newport Jeans has succeeded with its value for money formula, and is now extending to extending to gaberdeens, socks, t-shirts, and underwear - which is in fact being sold as "underjeans" Mirchandani asserts that the value for money formula is driving these extensions, and the baseline of the brand has been modified from "Good jeans for less" to "Your budget, our values"

Know-how extension comes next - where Philips and 3M are able to span categories because the consumer believes in the know-how of the company - consumer electronics and electricals for Philips and adhesive and film based technologies for 3M. Philips' knowhow spans the entire range of consumer elecrical and electronic products.

Interest expansion allows a brand to go into dissimilar things where the knowhow may not extend, but the usage is similar. Nestle's Maggi is an example of this, with products ranging from Sauces soups and additives to Noodles. Gillete is another such brand with Shaving Foam, Razors, brushes, After shave lotion etc. Consider the range of Dettol's consumer products (there are other hospital products as well). It has been around for over 50 years in India as an antiseptic liquid. This was followed by a mouthwash (Dettol Lyn), a soap (1980), medicated plasters (1992) and liquid soaps (1994). Dettol Shaving Cream in Pakistan and Shower Gel in East Asia, outline some more extension possibilities. Admits Bhasin "...the rigorous thinking has come into brand management at RCI only in recent years", which accounts for Dettol's blundering into the beauty soap segment before scrambling back to the 100% bath soap which was able to capitalise on Dettol's values of protection, caring and trust. The customer clearly believes in Dettol's ability in fighting germs, and is willing to accept any product with the Dettol brand name which delivers this benefit and where such a benefit is relevant.

The Tata Brand sells, among other things, watches, steel, cars, telephones, salt and till recently, soap. The Godrej brand similarly endorses locks, forklift trucks, refrigerators, office furniture,soap, cupboards, fresh chicken, real estate, cooking oil and many other unrelated categories. Is this foolhardy - a flagrant disregard for the caonons of brand extensions ? Perhaps not. When a brand is able to represent a philosophy - as the tata brand represents quality and excellence of Indian products, or as the Godrej brand stands for care and concern for the customer - the brand becomes almost omnipotent and is able to leap across great chasms separating dissimilar categories. Wipro is another diversified company which has products ranging from Soaps to Laptop Computers. Sudip Banerjee, Vice President Software Products Division & Chairman, Sales & Marketing Council, Wipro Infotech Group, explains "Wipro's core values of Integrity, quality and commitment to honour its product and service promises have helped in acceptance of all new products among our consumers". Adds SR Gopalan, President, Wipro Finance "The Wipro values of service, quality, integrity and security .... are especially desirable in the Financial services industry". Ravi Deol, National Sales Manager, Wipro Lighting makes the further point that the "Wipro Brand ....helped us to make an entry into the lighting business with credibility in an undifferentiated segment." The benefits aren't restricted to market entry - they can help in consolidation as well. As M S Rao, President Wipro Fluid Power points out " With concentration of customers....the supplier customer relationship has increasingly come under scrutiny.... the use of the Wipro brand gives us that extra edge and places us on a firm footing with OEMs"

THE HOUSE NAME & THE UMBRELLA BRAND
The combination of an Umbrella Brand and many sub-brands, is a technique used by many marketers. Take the case of Cadburys or britannia. In all products which have their individual brandnames like Five Star, Eclairs and Gems for Cadburies and Marie, 50-50 and Bourbon for Britannia, the umbrella brand - in both of these cases toe corporate brand or "House Name" - features as an endorser of the product. In a sense while a brand such as 50-50 may convey the excitement and humour of contrasts, the Britannia name lends the benefit of the quality and reliability to the product. Ofcourse, you can have an overkill of subbranding - some years back, Godrej GE ran a print advertisement that carried apart from Godrej, 3 sub-brand names for the same 300 L fridge - Sumo, Cold Gold, and Puf.
It may seem strange to some that Brooke Bond, Kissan or Lipton are present on all their products, not all HLL products carry the HLL brand name.The dilemma is explained by Banga " ...the category appropriateness needs to be explored. For foods where connotation of trust is important - you are very careful about what you put into your mouth - than what you put on your fingers. To that extent use of house name is relevant both in India and in other categories. For our product categories we would prefer to build individual personalities - remember that we are spanning a very wide range of segments - a price range from Lifebuoy to Dove..... target audience that could be male female or family, urban or rural etc. This is difficult with one house name but far facilitated if you can use individual brands - having said this we recognise that there is need for under pining this with the HLL name - which is why in all our advertisements at the bottom, there is a line that says "a quality product from Hindustan Lever", but thats just a reassurance."

THE RISK OF BRAND EXTENSIONS
Many corporations run the risk of over-stretching their brands. They rush into extensions that do not bear up to sound brand management principles. Not even the most admired marketing corporations can boast of a blemish free record. Ponds failed with Ponds toothpaste, Nestle had a rough time with Maggi pickle, HLL has replaced Surf Ultra within 3 years of its launch. RCI ran aground with Dettol beauty soap.
What marketers need to remember is that misadventurous brand extensions pose a hidden threat - that of damaging the original brand extension. As Bhasin points out " If you are not linking extensions to core values, then not only is less leverage possible and hence less gain for the new product but you may actually tear away equity of and damage old brand". Mreover the new product must accept the unfavourable associations along with the desirable ones from the mother brand. According to Banga, this happens because " ... the extension brings with it, many of the associations of the parentage - this should be an advantage, is in most cases, in some cases it can be a limiting factor, to guard against "
Extensions like Wipro's bring with them their own set of doubts and dissonances. S. R Rao expresses anxiety - "extensions might jeopardize core brand values if tthey are oo product specific." Gopalan adds a financial perspective to the limitations of branding -"... it creates inability to cash in on the brand by selling it off to somebody else." He also warns "Sometimes owing to dissonance the extension may actually cost more in brand building efforts." The technology end of the brand clearly feels that the consumer products are eroding the technological image of the brand - Ashish Basu : "lack of focus at the corporate level. Distribution orientation rather than a technology orientation. Perception of being conservative and slow. " while the consumer products fear that their consumers might get confused. Ravi Deol feels "whenever a corporate brand like Wipro is extended uniformly across wide product band it creates dissonance in the mind of the customer, since the market leader in the product band leads overall perception. Wipro - technology brand - makes softer products like soaps and bulbs difficult to accept under the Wipro brand umbrella."
So how do you guard against miscalculating while extending a brand ? Bhasin offers a 3 point checklist 1) Dont do just dipstick studies from time to time. Monitor the brand extension continuously. 2) Remember to view the logic of the extension not as your company sees it but as your consumer sees it. 3) Conduct Brand equity studies in the form of laboratory stretch tests. Bhasin, who is currently on the international team looking after the Dettol brand, feels that companies need to understand exactly what the brand stands for including rational, emotional benefits, personality, footprint, and work with consumer groups to achieve "natural extension." Warns Kaushik in the same vein, " Never stretch a brand beyond benefit area. "

REJUVENATING BRANDS VIA EXTENSIONS
Very often, extensions are seen as a way of rejuvenating brands. While the idea of adding excitement to the brand is good, if used at the right time, the idea of rejuvenating brands, to begin with, is not. The best marketing companies don't wait for their brands to get old before they start rejuvenating them. Take the case of HLL, which has marketed Lifebuoy over 4 or 5 generations in India, Vim for 100 years, Surf and Rin for over 30 years, Lux for 100 years and Pears for 80 yearrs and one never feel that these brands are "100 years old". "That, " says Banga, "is the real art of marketing - halting the aging process of the brand". The question arises, however, as a generation of users grows old, what happens to the brands image and apparent age ? Banga feels that the challenge is to ensure that the grand mother, the mother and the daughter use the same brand and still feel that it's aspirational."Most marketers fall into the trap of getting hooked onto the grandmother, the mother is already feeling that its dated and the daughter certainly so." This isn't only about advertising and intangibles though. It requires first tracking the consumer and staying abreast of all changes in the consumers needs, tastes and value equations. Secondly, it means staying abreast of, and absorbing into the brand, all technological developments in the product, or those that can better deliver the value that your brand is providing to the consumer. Having said that, its important to remember, that sometimes the process of staying relevant and incorporating technology themselves, may require a brand to extend. Lifebuoy and Dettol have both extended into liquid soaps, and this will surely impact the brands.

THE PRIVATE BANKS - COMPARING EXTENSIONS
Within an industry, there is a constant interplay between brands, some of which are stand-alone and some, extended brands. Even among the extensions, the levels of extensions may differ, the extension methods and strategies may differ. Some of the new private banks in the retail banking industry provide an interesting array of extension exercises. In any extension, three gaps can occur in the process of building brand equity, in the mind of the consumer - namely, competence gap, awareness gap and value gap. The first is the competence gap - does the consumer perceive this company and this brand have the necessary competence ? Times Bank, an extension from newspaper into banking, will face this problem. How is TimesBank tackling this problem ? Times Bank feels that the Times groups 135 year old reputation for Integrity will rub off on the bank and indeed, the bank is actively targeting readers of Times and regions where the news paper is stronger, but to bridge the competence gap, they are relying on a stream of innovative products, and letting performance speak for itself. The second gap is that of awareness gap - faced by any extension that targets an entirely new set of consumers. ICICI bank, despite their amassed financial acumen will face this problem in retail banking - as all their past customers have been corporates. Finally we come to the value gap, which is more subtle than the others. Does this bank have the right values - does it stand for all the things we look for in our banks ? Centurion Bank - an extension of a private financial company may experience this problem as they have been till date a profit driven organisation and a bank needs to stand for something beyond profits.
The one organisation that has the perfect credentials and pedigree for making a successful extension into retail banking - HDFC Bank - has, surprisingly, been slow to get off the block. HDFC Bank's studies have shown that HDFC is known in Mumbai as a provider of home loans, but in the East and North, it is better known as a place to make safe deposits. HDFC is also, according to perception tracked by the study an "ideal Public Sector organisation" and there are no negatives associated with the organisation that could rub off on the bank. HDFC bank, started building its retail banking business only in July 1996 and today are ranked second in terms of their turnover among the private banks. Infact, HDFC bank seems to be going about building its own brand equity with only an arms length relationship with HDFC. retailing HDFC products is one of the few areas where synergy is being sought. Samit Ghosh, Executive director, HDFC Bank, says " So far we have not worked together in attacking HDFC's existing market ...." Though he admits that till date, most of the customers are attracted by the HDFC name.

The scientific study of brand extensions, their success factors and effects is relatively new. N. Jayaraman, 43, VP Sales and Marketing, Colgate Palmolive, cites the example of Palmolive Shaving Cream for men, which stands for a close smooth shave, and Palmolive Soap, for women, which promises a softer smoother skin. He says "I agree its an extraneous linkage....but 20 to 30 years back, nobody applied the equity principles as such."
We will, no doubt, see more and more extensions in the future. Some will fail in trying to extend blindly, while some others may even result in self destruction of the brand. Those that will succeed, will be the ones that are able to capture and deliver value by providing meaningful benefits along relevant parameters, all the while enriching the core values of the brand.