194 CHAPTER10 MANAGINGPRODUCTLINES ANDBRANDS
Brand-extension strategy offers many of the same advantages as line exten-
sions—but it also involves risks. One risk is that the new product might disappoint buy-
ers and damage their respect for the company’s other products. Another is that the
brand name may be inappropriate to the new product—consider Bic perfume, a clas-
sic failure because buyers did not associate the Bic brand with fragrance products. A
third risk is brand dilution,which occurs when consumers no longer associate a brand
with a specific product or highly similar products.MultibrandsA company will often introduce additional brands in the same product
category. Sometimes the firm is trying to establish different features or appeal to dif-
ferent buying motives. Multibranding also enables the company to lock up more dis-
tributor shelf space and to protect its major brand by setting up flanker brands.For
example, Seiko uses one brand for higher-priced watches (Seiko Lasalle) and
another for lower-priced watches (Pulsar) to protect its flanks. Ideally, a company’s
brands within a category should cannibalize the competitors’ brands and not each
other. At the very least, net profits from multibrands should be larger despite some
cannibalism.^17
New BrandsWhen a company launches products in a new category, it may find that
none of its current brand names are appropriate. If Timex decides to make tooth-
brushes, it is not likely to call them Timex toothbrushes. Yet establishing a new
brand name in the U.S. marketplace for a mass-consumer-packaged good can cost
anywhere from $50 million to $100 million, making this an extremely critical
decision.Co-brandsA rising phenomenon is the emergence of co-branding(also called dual
branding), in which two or more well-known brands are combined in an offer. Each
brand sponsor expects that the other brand name will strengthen preference or pur-
chase intention. In the case of co-packaged products, each brand hopes it might be
reaching a new audience by associating with the other brand.
Co-branding takes a variety of forms. One is ingredient co-branding,as when Volvo
advertises that it uses Michelin tires or Betty Crocker’s brownie mix includes Hershey’s
chocolate syrup. Another form is same-company co-branding,as when General Mills
advertises Trix and Yoplait yogurt. Still another form is joint venture co-branding,as in
the case of General Electric and Hitachi lightbulbs in Japan and the MSNBC Web site
from Microsoft and NBC. Finally, there is multiple-sponsor co-branding,as in the case of
Taligent, a technological alliance of Apple, IBM, and Motorola.^18
Many manufacturers make components—motors, computer chips, carpet
fibers—that enter into final branded products, and whose individual identity nor-
mally gets lost. These manufacturers hope their brand will be featured as part of
the final product. Intel’s consumer-directed brand campaign convinced many peo-
ple to buy only PCs with “Intel Inside.” As a result, many PC manufacturers buy
chips from Intel at a premium price rather than buying equivalent chips from other
suppliers.Brand Repositioning
However well a brand is currently positioned, the company may have to reposition it
later when facing new competitors or changing customer preferences. Consider 7-Up,
which was one of several soft drinks bought primarily by older people who wanted a
bland, lemon-flavored drink. Research indicated that although a majority of soft-drink
consumers preferred a cola, they did not prefer it all of the time, and many other con-
sumers were noncola drinkers. 7-Up sought leadership in the noncola market by call-