Brand Extension 5j1b48

Cadbury’s Brand extension

Table of Contents

Brief Thought on Brand Extension…………………………………………………………………06 Successful brand extension……………………………………………………………………………07 Unsuccessful brand extension……………………………………………………………………….07 Advantages of Brand Extension…………………………………………………………………….07 Disadvantages of Brand Extension………………………………………………………………..08 Present portfolio of Cadbury…………………………………………………………………………08 Cadbury brand Prism…………………………………………………………………………………….09 Cadbury Potential brand extension Categories………………………………………………11 •

Product Extension I – “Cadbury Flavored Milk”………………………………..12

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Product Extension II – “Choco Cafe”……………………………………………........15

Conclusion……………………………………………………………………………………… ……………..17

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References…………………………………………………………………………………… ………………..18

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A Brief Thought on Brand Extension: A brand is a complex set of beliefs and meaning held by s and purchasers. A brand can be expressed in of name, sign, symbol, design music or a combination of all these, which is use to identify a seller’s goods and services from that of the competitors. A brand is a source of promise to its customers. It promises differentiated benefits to the customer from that of the competitors. Through branding the marketer not only places itself in customer’s consideration set and also makes an effort to be chosen from that consideration set.

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Brand Extension is the use of an established brand name in new product categories. This new category to which the brand is extended can be related or unrelated to the existing product categories. A renowned / successful brand helps an organization to launch products in new categories more easily. For instance, Nike’s brand core product is shoes. But it is now extended to sunglasses, soccer balls, basketballs, and golf equipment. An existing brand that gives rise to a brand extension is referred to as parent brand. If the customers of the new business have values and aspirations synchronizing/matching those of the core business, and if these values and aspirations are embodied in the brand, it is likely to be accepted by customers in the new business. Extending a brand outside its core product category can be beneficial in a sense that it helps evaluating product category opportunities, identifies resource requirements, lowers risk, and measures brand’s relevance and appeal. The Brand extensions, throughout the history have seen mixed success. From very successful extensions to utter failures, brand extensions have had a chequered history. The success of the parent brand does not offer any assurance towards success of the extension also and hence due diligence on target market, new product development and positioning is required. Instances where brand extension has been a success arei. ii.

Wipro which was originally into computers has extended into shampoo, powder, and soap and was successful in leveraging the brand to entirely unrelated products. Mars which was once a famous bar has now extended into ice-cream, chocolate drink and a slab of chocolate which is brand extension in the related product line.

Instances where brand extension has been a failure arei.

Cosmopolitan Yoghurt: The largest selling women’s magazine in the world is Cosmopolitan. It’s not being contended with the magazine business tried to enter the food market with its Yogurt. When Cosmopolitan Yogurt was released, it was a big failure since so many Cosmopolitan readers did not see why a magazine should be selling the Yogurt or why should they eats the product of the company which is not known in food business. Page | 7

ii.

iii.

Coca Cola while introducing new Coke, has forgotten what the parent brand was meant to the customers. Considering taste the only factor that consumer cared about, it inadvertently extended the brand to new Coke which resulted in complete failure and the result was that the image parent brand also got hurt. The time and money spent on research on new Coca Cola could not evaluate the deep emotional attachment to the original Coca- Cola. Rasna Ltd. is among the one of the well-known soft drink companies in India. It experimented by launching with fizzy fruit drink “Oranjolt”, the brand fizzed even before it could take off. Oranjolt was a fruit drink in which carbonates were used as preservative. It didn’t work out because it was not the type the retail used to treat the original Rasna. Oranjolt was required to be refrigerated and it also faced quality problems. It has a shelf life of three-four weeks, while other soft drinks could go on for six months.

Advantages of Brand Extension Brand Extension has following advantages: 1. It is a cheaper option as compared to introduction of new brand in the market and the risk

perceived by the customers reduces, as compared to a totally new product, thus making the acceptance of new product easy. 2. The likelihood of gaining distribution and trial increases. An established brand name increases consumer interest and willingness to try new product having the established brand name. 3. Advertising, selling and promotional costs are reduced. There are economies of scale as advertising for core brand and its extension reinforces each other. 4. Cost of developing new brand is saved and the expense of introductory and follow up marketing programs is reduced. Disadvantages of Brand Extension 1. Brand extension in unrelated markets may lead to loss of reliability if a brand name is

extended too much in unrelated category. An organization must research the product categories in which the established brand name will work. 2. There is a risk that the new product if not successful may generate complications for established parent brand and that may damage the image of the core brand. 3. The brand extension may also result in cannibalization of sales of existing brand to that of the extended brand. If the brand extensions have no advantage over competitive brands in the new category, then it will fail.

Present Product Portfolio of Cadbury Presently Cadbury has a product portfolio comprising of

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1. Chocolate bars 2. Cakes and Biscuits 3. Box, Bags and Tins: Containing various products like éclairs, caramel nibbles , clusters etc. 4. Drinks like Bournvita, drinking chocolate, hot chocolate etc. 5. Ice Creams

All the above products clearly have their base as chocolate, hence it can be safely concluded that Cadbury is operating under Range Brand Strategy where in Brand Strategy has been restricted by Brand Concept which here is chocolate products. Although Cadbury has expanded its product portfolio to Cakes and Biscuits i.e. Bakery and ice-creams but the same is still ed by chocolate concept. Cadbury Brand Prism Cadbury brand identity has transformed and strengthened over the years and with strong repositioning the brand has become a mass appeal. The external and internal indicators of Brand Identity have been modified many times. Its logo, packaging etc have undergone changes over time but the distinct identity of Cadbury has been maintained. Cadbury’s brand identity using Brand Prism is as follows

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Physical Quality: Physical qualities of the brand resemble to small handy rectangular, rich purple coloured person who is sweet in nature . Personality: Cadbury as brand has a personality of being sophisticated, polite, candid, confident and social. It has a feminine persona who is humble in nature and close to heart of the masses. Culture: The elegance in the product depicts its British culture but differs from not being haughty or arrogant. Values that the product delivers is again reflect the culture it belongs to.

Relationship: Cadbury as such has not been maintaining an explicit relationship with the customers, but the same was more of implicit. The customer felt associated with the brand as the brand image portrayed by the company was of happiness and love. Reflection: Target customer thinks of the product as exchange of happiness. It gives a feel of belongingness and self-indulgence. The product is a reflection of liberation and expression of the small tacit desires which an individual generally avoids to make public. It also became synonymous to celebration of those small desires or occasions. Self-Image: The brand exuberate self-indulgence and inner confidence, without much caring about the outside world. The self-image projected by the brand is that of candid, social and one which understands the feeling of others. Cadbury’s prime source of Brand Identity remains its British in nature. Purple colour with glass and half of milk helps everyone to recall the brand as chocolate with goodness of milk. The brand has always looked for common man as its target audience. A common man who has small desires, Page | 10

small dreams and who wants to enjoy a small moment of happiness is shown associated with the Brand (campaign like “pappu ho gaya”). Brand Ambassador Amitabh Bachhan an iconic personality in Indian film industry has added to association of the brand with honesty, fervor and authenticity.

In its initial years Cadbury’s chocolates were meant basically for the kids and the ads also revolved around that concept only in which parents were seen trying to reward their children with Cadbury’s dairy milk chocolates for getting them to do the things that they wanted them to do. But as sales in this segment were not growing rapidly so Cadbury’s shifted the focus from kids to the adults. Several campaigns like “Kuch Khaas Hai Zindagi mein”, “Khaane Waalon Ko Khaane Ka Bahana Chahiye”, “Kuch Meetha Ho Jaye” are celebrating their success in repositioning the Brand as a substitute of sweets in the market of grown ups. Sharing of sweets during festive season or during any auspicious occasion is part of Indian culture and Cadbury through these ments has definitely stolen some share of Rs 15000 crore unorganized market of Sweets, thus bringing the brand closer to its customers. Hence the essence of Cadbury brand is primarily spontaneous, happiness, liberation selfindulgence and joyful feelings.

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http://strategyonline.ca/2011/10/05/cadburys-success-is-no-secret/ In view of the present strategy being followed by Cadbury, it is suggested that the company should follow the same product category or closed product category brand extensions. Distinct product category brand extension may result in brand dilution. Hence company can go in for (a) Cadbury Delite - Flavored Milk (b) Choc Café – Choco latew themed café.

Product Extension Flavored Milk”

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“Cadbury

It is proposed to extend the Cadbury brand into the flavored milk segment. Cadbury’s proposed foray into beverages segment is justified on of the strong brand association it has with Chocolates. Another advantage shall be of Cadbury being able to leverage on this association to open up a different market segment and hence create opportunities for itself for further growth. Presently, there are few established players in the flavored milk segment such as Amul at the national level. Its highly successful “Amul Kool” brand has a 60% market share in this segment. Other nationally known brands are Nestle and Britannia but they do not have a very strong presence in the segment. At the regional level, we have Saras (in Rajasthan), Verka (Punjab) and Nandini (Karnataka). Rest of the market is with the local cooperatives. Opportunity for Cadbury: (Why Cadbury Delite is a perfect product extension) In India, milk continues to be a favorite food item across all ages and other customer segments. It’s highly associated with the public imagination of a natural healthy drink. However, at the same time, considering that the taste of milk itself is not liked by a large segment of the population, the introduction of flavored milk has presented an alternative way for the consumers to have milk. The acceptance of this alternative

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has been successful across all segments, be it the harried mother trying to force her kids to drink milk to the elderly people who would like to have milk for their own good health but cannot bring themselves to accept the taste of raw milk. The huge success of Amul in the segment leads to the inference that there already exists a huge market for flavored milk as a product. Cadbury’s foray into this segment (with a suggested name of “Cadbury Delite” is ed by the associations that have developed around Cadbury brand in the minds of the Indian customers. The following associations are considered to be relevant in this case: i.

Cadbury is strongly associated with Chocolates. The byline for its flagship product, Cadbury Dairy Milk itself emphasizes on the “Goodness of Milk”. Hence, the mixed association of milk and chocolate lays its claim strongly on the two base feature of flavored milk i.e the flavor and milk. Popular acceptance of “Cadbury flavored milk” is hence instantly assured.

ii.

The brand Cadbury also has a strong association with quality product. The assurance of strong quality is very essential for a health drink like flavored milk which is meant to be consumed with the sole purpose of health benefits. The fact that the product comes from a MNC house with renowned track record of quality will certainly help in positioning the product in of quality.

iii.

Another great association of Cadbury brand is with taste. That any Cadbury product is certain to appeal to the taste buds of the customer is a given. Connect this with the requirement of flavored milk to be tasty enough so that the customer is able to tide over her natural resistance towards the taste of milk. And we have a product which has all the customer is looking for in of taste. Cadbury can easily extend the tastes of its various chocolate brands as milk flavours. This should appeal to the consumers who would be assured of indulging in a product with a known taste.

iv.

Another important association of Cadbury brand is with the feeling of self- indulgence and self-liberation. A chocolate not only satisfies the consumers taste yearnings but also makes her content with the knowledge that the consumption was a manifestation of indulgence in her and the sense of breaking free. This association shall be important for Cadbury to position this product not only amongst the youth but also with all segments of customer who would simply like to break free from the daily chores and indulge in one’s own sensual yearnings.

v.

On a smaller scale the fact that such flavored milk will be a handy tool for the mothers to feed their kids with something as healthy as milk and Page | 13

without causing much distress for the kids, the association of gifting and care fits perfectly well with the consumer behavior and goes along its byline for another product “a gift for someone you love”.

Proposed Marketing Mix and Strategy:

The reason for Cadbury foray into flavored milk product becomes clearer with the following proposed marketing mix: Product: As mentioned earlier the product has an existing yet fast growing market. The flavored milk is initially proposed to be launched in just three flavours and later (perhaps shortly enough) with other popular as well as exotic flavours. The initial three flavours are proposed to be limited to Chocolate, Strawberry and Vanilla. This is with an objective to focus on the Cadbury’s strength in Chocolates as well as to create parity with the strongest competitor (by making available the same flavours as the competitors but having a distinct advantage on the Chocolate flavor). The flavored milk is also proposed to be distributed in small bottles (just like Amul Kool) so as to create a strong parity and association with the goodness offered by the competitor (in of physical visage). With this strategy, it is expected that the consumers will immediately recognize and perceive Cadbury flavored milk” as a strong substitute for “Amul Kool”. Alternately, Cadbury may also launch the product in highly innovative and snazzy getup to emphasize its strength as an innovative marketer with an international pedigree. This is expected to appeal to all segments but will also make a considerable impact on the youth segment. Page | 14

It can also have a large size package for “at home” consumption segment besides the smaller bottles for “out of home” consumption. Price: The price is suggested at a small to “Amul Kool” so as to emphasize on a quality offering from an internationally renowned company. Place: Again, in order to reinforce the perception of good quality, the initial availability is proposed to be restricted to renowned malls, at CCD outlets (Cadbury already has a tie up) and a few upscale retail shops. Later, as part of the strategy, having built up on the image of a quality and healthy product, the same can be made available through smaller kirana shops. Promotion:The promotion of the product shall be critical especially in view of presence of a very strong competitor with an extremely dominant market share and the need to strongly establish the association of Cadbury brand with the product on offer. The product positioning shall incorporate two objectives: -

The product be perceived high on quality, taste and in level of sophistication especially since it’s an offering from a firm with international standing (Point of Distinction).

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The product should also be perceived as a considered substitute for “Amul Kool” and any other flavored milk beverage (Point of Parity)

Product Extension II – “Choco Cafe” Cadbury can also extend its brand into the highly visible and popular format of coffee houses which not only offers an excellent outlet of its products but also helps in reinforcing its brand by way of high visibility and even higher customer involvement. That such cafes are capable of charging higher on the products and services would help Cadbury in shoring up its bottom line too.

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Though, this does not fall into a “product” extension in a strict sense, it is felt that the Cadbury will be able to leverage on its brand in this segment in a considerable manner. Besides, the success of such a foray will again hugely add to Cadbury brand value besides opening up a new world of business opportunity. Outlets like Café Coffee Day and Barista have already shown the successful model of doing business in this segment. Cadbury can strategize to enter with certain differentiating features while still riding on the Cadbury brand and its popular associations.

Hence, the chocolate themed café will primarily offer chocolate based products (chocolates, cakes, muffins, pastries, rolls and such other items along with beverages like coffee. Music, wi-fi, tv and perhaps live bands shall also be on offer. The t shall be a perfect place for consumers to spend time alone or in company for pleasure as well as business. The outlets can be operated as COCOs (preferable) or on franchise model. Opportunity for Cadbury: (Or why Choc café should also be a perfect product extension) As has been mentioned earlier, the following associations are relevant for this business: 1. Association with Chocolates: The chocolate themed café would not only help in creating related association with chocolate but it will also help in creating a differentiating factor. A chocolate theme is indeed novel and Cadbury looks like the best candidate to lay claim on it. Besides, the usual fare (ambience, facilities like wi-fi, music, tv etc) shall help in associating with the concept of a café where people can sit in leisure and sample the fares on offer. We already have such “themed” ts in the form of Café Coffee Day/ Barista (Coffee), Dunkin Donuts (Donuts), Amul Parlour (Ice cream) and many others.

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2. Association with Youth: Cadbury and its chocolates have been associated with the young and happening crowd. Its various promotions have been focused on this consumer segment. Hence, its foray into Choc Café is expected to garner a lot of from the youth who would favour Choc Café due to its association with Cadbury.

3. Freedom and Self Indulgence: Cadbury’s connect with freedom and self-indulgence (reflection on part of the customer) shall help gaining favor amongst such segment as youth, women as well as across all segments. Besides the above, other associations (with quality, taste and caring) will also play a role in Cadbury’s foray into this product.

Conclusion: Any brand extension into new product category is fraught with risks as detailed elsewhere in this report. While this remains an opportunity for the firm to capitalize on its existing brand strength, it also gives an opportunity to the firm to extend its footprints in hitherto uncharted markets and hence open up avenues of further growth. However, the challenge lies not only to the extent that the brand and its associations should be leveraged upon but also to the extent that the brand dilution be allowed with the proposed brand extension. Though, with the age of time and success of the extension, the brand should regain its strength in spite of the early dilution but should also now have a broader set of associations and acquire an even more generic existence based on values rather than product specific characteristics and functions.

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References: •

http://www.rediff.com/money/report/danone-india-sees-wealth-inhealth/20100422.htm

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http://en.wikipedia.org/wiki/Brand_extension

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