Successful brand extensions in the FMCG industry

Successful grease reference works in the FMCG industryINTRODUCTIONBrand computer address or shuffle stretching is a tradeing dodging in which a firm tradeplaceing a fruit with a well-developed image uses the same scratch name in a assorted carrefour category. The sore product is c aloneed a spin-off. Organizations use this system to increase and leverage speck equity (definition the net worth and long-term sustainability just from the renowned name). An usage of a carry extension is Jello-gelatin creating Jello pudding pops. It increases aw areness of the disfigurement name and increases profitability from offerings in more than than nonpareil product category.A crisscrosss ext demolitionibility depends on how strong consumers associations are to the targets values and goals. While on that point can be significant benefits in target extension strategies, there can also be significant risks, resulting in a come downd or severely damaged scar image. Poor choic es for fall guy extension may dilute and deteriorate the core brand and damage the brand equity. around of the literary works focuses on the consumer evaluation and positive meeting on parent brand. In practical cases, the failures of brand extension are at higher rate than the successes. Some studies show that negative impact may dilute brand image and equity. In spite of the positive impact of brand extension, negative association and awry(p) communication strategy do harm to the parent brand even brand family.Organizations frequently trace brand extension strategies. This paper investigates the impact of category similarity, brand personality, perceived risk, and consumer innovativeness on the success of brand extensions in FMCG, long-lived goods, and operate arenas. A set of hypotheses were developed and tested in a schooling amongst 153 consumers. The findings show that extensions into categories more similar to the original brand tend to be more readily accepted. L ikewise, the reputation of the original brand is an important factor influencing the success of the extension. These findings are consistent crosswise FMCG, durable goods, and services brands. However, perceived risk about the extension category was only found to fire acceptability of extensions for durable goods and services brands. Innovative consumers are more positively disposed towards service brand extensions than FMCG and durable goods brand extensions.REVIEW OF LITERATUREIn his paper, Hem Leif E a set of hypotheses were developed and tested in a orbit amongst 701 consumers. The findings show that extensions into categories more similar to the original brand tend to be more readily accepted. Likewise, the reputation of the original brand is an important factor influencing the success of the extension. These findings are consistent across FMCG, durable goods and services brands. However, perceived risk about the extension category was only found to enhance acceptability of e xtensions for durable goods and services brands. Innovative consumers are more positively disposed towards service brand extensions than FMCG and durable goods brand extensions.(Factors Influencing Successful Brand Extensions By Hem, Leif E. de Chernatony, Leslie Iversen, Nina M.. diary of Marketing Management, Sep2003, Vol. 19 offspring 7/8)In his paper, Thamaraiselvan, Raja, projects the intense competitive environment where companies launch new products to satisfy constantly changing consumers preferences. The new products are prone to failures due to many factors. Companies regard efforts to reduce new product failure rank to maximize their returns for their s go throughholders. A brand extension, leveraging existing brand names to new product categories is one such strategy to reduce the risk of new product failures. This study primarily focuses on how consumers appreciate brand extensions for FMCG (Fast Moving Consumer Goods) and service product categories in Indian mart conditions. It explores how exactly the consumers evaluate different product categories based on factors like, similarity fit, perceived quality, brand reputation and perceived risk. It brings out the impact of brand reputation of the core brand and perceived service quality on the brand extensions evaluations. It highlights the bureau of perceived risk involved in the wide product category in brand extensions evaluations. Most importantly, this study establishes the relationships among similarity fit, brand reputation, perceived service quality and perceived risk in extended product categories through appropriate multivariate analysis.(How do Consumers Evaluate Brand Extensions- Research findings from India. By Thamaraiselvan, N. Raja, J.. Journal of Services Research, Apr2008, Vol. 8 Issue 1 )In his article, Park, examines two factors that differentiate between fortunate and unrewarded brand extensions product have similarity and brand concept consent. The results reveal that , in identifying brand extensions, consumers take into account not only information about the product-level feature similarity between the new product and the products already associated with the brand, scarcely also the concept consistency between the brand concept and the extension. For both function-oriented and prestige-oriented brand names, the most favorable reactions occur when brand extensions are made with high brand concept consistency and high product feature similarity. In addition, the relative impact of these two factors differs to some extent, depending on the nature of the brand-name concept. When a brands concept is consistent with those of its extension products, the prestige brand seems to have greater extendibility to products with low feature similarity than the functional brand does.(Evaluation of Brand Extensions The Role of Product Feature Similarity and Brand ideal Consistency. By Park, C. Whan Milberg, Sandra Lawson, Robert. Journal of Consumer Research, Sep91, Vol. 18 Issue 2 )In his research paper, Hem Leif, projects that the most successful brand extensions are considered to be those having high perceived similarity between the parent brand and the extensions, and universe well known in the marketplace. However, previous research has mainly examined the effects of all everywhereall measures of perceived similarity between a parent brand and an extension. Correspondingly, little is known about the effects of different areas of consumer cognition. This study investigates the effects of three types of perceived similarity (usage, associations, competence) and three areas of consumer knowledge (original brand, original category, extension category) on evaluations of brand extensions. The results indicate that some types of perceived similarity and knowledge are more important than others. These findings imply that brand managers need to identify and measure the relevant types of perceived similarity and knowledge that will affect evaluations of brand extensions in order to design effective communication strategies for extensions.(Effects of different types of perceived similarity and subjective knowledge in evaluations of brand extensions. By Hem, Leif E. Iversen, Nina M.. International Journal of Market Research, 2009, Vol. 51 Issue 6 )In his article, Swaminathan, focuses on the impact of a new brand extension introduction on choice in a behavioral context using national household scanner data involving multiple brand extensions. Particularly, the authors investigate the reciprocal impact of trial of successful and unsuccessful brand extensions on parent brand choice. In addition, the authors examine the effects of picture with the parent brand on consumers trial and repeat of a brand extension using household scanner data on six brand extensions from a national panel. In the case of successful brand extensions, the results show positive reciprocal effects of extension trial on parent brand choice, partic ularly among prior non-users of the parent brand, and consequently on market share. The authors find evidence for potential negative reciprocal effects of unsuccessful extensions. In addition, the study shows that experience with the parent brand has a significant impact on extension trial, but not on extension repeat.(The Impact of Brand Extension Introduction on Choice. By Swaminathan, Vanitha Fox, Richard J. Reddy, Srinivas K.. Journal of Marketing, Oct2001, Vol. 65 Issue 4 )INDIAN FMCG INDUSTRYThe Indian FMCG sector is the quartern largest sector in the economy with a tally market size in excess of $13.1 meg. It has a strong MNC presence and is characterized by a well established distribution network, intense competition between the organised and unorganised segments and low operational cost. Availability of key raw materials, cheaper labour costs and presence across the entire value range gives India a competitive advantage. The FMCG market is set to treble from $11.6 trill ion in 2003 to $33.4 billion in 2015. brainwave level as well as per capita consumption in most product categories like jams, toothpaste, unclothe care, pilus process etc in India is low indicating the untapped market potential. Burgeoning Indian population, particularly the middle mob and the rural segments, presents an opportunity to makers of brand products to convert consumers to branded products. Growth is also likely to come from consumer upgrading in the matured product categories. With 200 million people expected to shift to processed and packaged viands by 2010, India needs around $28 billion of investment in the food-processing industry.The Indian FMCG sector is the fourth largest sector in the economy and creates employment for three million people in downstream activities. inside the FMCG sector, the Indian food processing industry represented 6.3 per penny of GDP and accounted for 13 percent of the countrys exports in 2003-04. A distinct feature of the FMCG indust ry is the presence of most global players through their subsidiaries (HLL, PG, Nestle), which ensures new product launches in the Indian market from the parents portfolio. Demand for FMCG products is set to boom by almost 60 per cent by 2007 and more than 100 per cent by 2015. This will be driven by the grind away in share of middle class from 67 per cent in 2003 to 88 per cent in 2015. The boom in various consumer categories, further, indicates a latent invite for various product segments. For example, the upper end of very rich and a part of the consuming class indicate a small but rapidly development segment for branded products. The middle segment, on the other hand, indicates a large market for the mass end products.The BRICs report indicates that Indias per capita disposable income, currently at $556 per annum, will rise to $1150 by 2015 other FMCG demand driver. Spurt in the industrial and services sector growth is also likely to foster the urban consumption demand.HOUSE HOLD CAREThe size of the textile wash market is estimated to be $1 billion, household cleaners to be $239 million and the production of synthetic detergents at 2.6 million tonnes. The demand for detergents has been growing at an annual growth rate of 10 to 11 per cent during the past five yrs. The urban market prefers washing powder and detergents to bars. The regional and small un-organised players account for a major share of the total volume of the detergent market.PERSONAL CAREThe size of the personal wash products is estimated at $989 million hair care products at $831 million and oral care products at $537 million. While the overall personal wash market is growing at one per cent, the premium and middle-end soaps are growing at 10 per cent. The jumper cable players in this market are HUL, Nirma, Godrej Soaps and Reckitt Colman. The oral care market, especially toothpastes, remains under penetrated in India (with penetration level below 45 per cent). The industry is very co mpetitive both for organised and smaller regional players. The Indian skin care and cosmetics market is treasured at $274 million and dominated by HUL, Colgate Palmolive, Gillette India and Godrej Soaps. The coco oil market accounts for 72 per cent share in the hair oil market. In the branded coconut hair oil market, Marico (with Parachute) and Dabur are the leading players. The market for branded coconut oil is valued at approximately $174 million.FOOD AND BEVERAGESThe size of the Indian food processing industry is around $ 65.6 billion, including $20.6 billion of value added products. Of this, the health beverage industry is valued at $230 million bread and biscuits at $1.7 billion chocolates at $73 million and ice creams at $188 million. The size of the semi-processed/ready-to-eat food segment is over $1.1 billion. Large biscuits confectionery units, soya processing units and starch/glucose/sorbitol producing units have also come up, catering to national and international mark ets. The three largest consumed categories of packaged foods are packed tea, biscuits and soft drinks. The Indian beverage industry faces over supply in segments like coffee and tea. However, more than half of this is available in unpacked or scant(p) form. Indian hot beverage market is a tea dominant market. Consumers in different separate of the country have heterogeneous tastes. Dust tea is popular in southern India, while tease tea in preferred in western India. The urban-rural split of the tea market was 5149 in 2000. Coffee is consumed largely in the southern states. The size of the total packaged coffee market is 19,600 tonnes or $87 million. The total soft drink (carbonated beverages and juices) market is estimated at 284 million crates a year or $1 billion. The market is highly seasonal in nature with consumption varying from 25 million crates per month during peak season to 15 million during offseason. The market is predominantly urban with 25 per cent contribution from rural areas. Coca cola and Pepsi dominate the Indian soft drinks market. Mineral piddle market in India is a 65 million crates ($50 million) industry. On an average, the monthly consumption is estimated at 4.9 million crates, which increases to 5.2 million during peak season.With the presence of 12.2% of the world population in the villages of India, the Indian rural FMCG market is something no one can overlook. Increased focus on farm sector will kick upstairs rural incomes, hence providing better growth prospects to the FMCG companies. Better infrastructure facilities will improve their supply chain. FMCG sector is also likely to benefit from growing demand in the market. Because of the low per capita consumption for almost all the products in the country, FMCG companies have immense possibilities for growth. And if the companies are able to change the mindset of the consumers, i.e. if they are able to take the consumers to branded products and offer new generation products, the y would be able to generate higher growth in the near future. It is expected that the rural income will rise in 2007, boosting purchasing power in the countryside. However, the demand in urban areas would be the key growth driver over the long term. Also, increase in the urban population, along with increase in income levels and the availability of new categories, would help the urban areas maintain their sit in terms of consumption. At present, urban India accounts for 66% of total FMCG consumption, with rural India accounting for the remaining 34%. However, rural India accounts for more than 40% consumption in major FMCG categories such as personal care, fabric care, and hot beverages. In urban areas, home and personal care category, including skin care, household care and female hygiene, will keep growing at relatively attractive rates. Within the foods segment, it is estimated that processed foods, bakery, and dairy are long-term growth categories in both rural and urban areas .