Can brands extend into services?

Briefing the case Reasons for extending brands: 1. Harvesting the brand When the perception of the brand value seems to be high, the marketer could be tempted to extend the brand into related fields. 2. Exploiting market opportunities The present brand could be used to extend into services if opportunities are recognized in various market areas. 3. Piggyback riding Using the current successful brand to enter into new market areas, making use of its brand promise and image. 4. Trying a new image makeover Extensions could be used to introduce existing brands into new areas and hence, establish a new image and create new perceptions of itself. Theodore Levitts Total Product Concept (Basically deals with brands extending into services) Reasons Differentiation Higher involvement in the delivery of functional and emotional benefits Evolution of the product / offer per se Challenges Positioning Operations management Managing the various unique characteristics of services Exploiting the extended marketing mixes for services

Contemporary examples cited Sr. No. 1 2 3 4 Product / Brand / Company Surf Lakme Asian Paints Godrej Type of Service adopted / introduced Detergent powder Laundry service Beauty care products Beauty salon chain Paint company and manufacturer Painting contractor Consumer products, industrial Appliances repair engineering, appliances (consumer durables), furniture, agricultural products Liquor Air transport services Largest FMCG company Direct retailing arm Camera Film processing lab franchisees Core product offered

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Kingfisher HLL Kodak

Q1. Why has the experience of the above companies been different and inconsistent in extending the product brands to services? A1. As mentioned, there are various reasons due to which a company decides to extend its brands to services. This depends on the perceptions of the marketer as well as the demand and consumption patterns of the target audience. The experience of Kingfisher Air, Lakme beauty salon, Surfs laundry service and Asian Paints contracting service has been negatively different than expected. Moreover, the response received by these services has also been inconsistent and discouraging. On the other hand, Godrej and Sangam Direct have been able to successfully penetrate into the markets with their newly introduced services. The reasons of success and failure differ from one brand to another, hence the brands which havent made successful entry patterns can be claimed to have had an inconsistent experience. Kingfisher was well associated with liquor. Its entry into the airlines industry as lifestyle air transportation with food and entertainment systems did make news for some time. But however, in due course, the airlines industry witnessed an entry of Air Deccan, which declared extremely low pricing of fares. This resulted in bookings with Air Deccan for the consecutive year as well. Here, Kingfisher lost out on their customer base shift to a new entrant in the industry. While the Kingfisher brand is always associated with glamour, vibrancy and lifestyle, the factor of pricing didnt quite work well with its operations. HLL made a smart move by extending itself into services through 3 channels; Lakme, Surf and Sangam Direct. With Lakme, their performance has been inconsistent through its journey. Lakme has a wide range of beauty products to offer to its customers. Their effective distribution channel and a brand name stand as of their strengths. As stated, 11% of the companys turnover comes from LBs, which indicates that it is a profitable business considering that there is an opportunity in the business of beauty parlour. But the fact that, only 1% of Lakme product sales are through LBS outlets; indicates people do not yet prefer to buy Lakme products. The synergy between the service and the product offering is still perceived to be weak and hence, as observed there is a lack of integrated strategy. Asian Paints is a major in manufacturing paints. Their venture into being a painting contractor came in along with many complexities. They faced difficulties managing the delivery of service they has adopted and the intermediary management. Asian paints have been pondering over the issues to make it a profitable business. Their experience has cost them much because, since they deal with home solutions and contracting, their infrastructure costs are soaring high. They should have concentrated on the practical approach of entering into the services sector, weighing the costs and the opportunities. Despite of a 30% growth, their performance seems to be inconsistent.

All of the aforementioned brands faced difficulties due to operations, poor market understanding, price concerns, etc. A few services helped the brands to establish a customer base and maintain a relationship with them, but some couldnt harvest the brand due to improper planning or implementation. These situations were different as different brands understood the dynamics of production, consumption and communication differently and managed operations differently. The operating model in each case was different and thus the experiences were different Q2. Do you think the brand extensions have helped in enhancing the competitiveness of a firm? Explain. A2. Brand extensions have certainly helped in improving the firms performance and given a competitive edge to the firm. While brands extend into services, it tries to be a part of the consumption cycle of the consumer and desires to deliver benefits to the consumer. Brand extensions prove to be successful when they build a better relationship with the customers and be a part of the customers daily routine. While the brand is trying to fill in loops in the market, service becomes an integral part to the customers and hence the brands service creates a position in the market, thus enhancing competition. For example, Godrej had its market research in place and well understood the opportunity that existed untapped. Godrej took a step further and voluntarily approached to repair and maintain household appliances of any brand whatsoever. Godrej fairly made their presence in the minds of the consumers and spread their brand promise through their service named Smart Care. Smart Care has been a very profitable service venture since their aim of targeting home appliances through service was met. Godrej has gained a competitive edge over its rival firms. Their business and operations model has proved to be a successful value added service. Q3. Is marketing services different from marketing goods? Explain. A3. Marketing a good isn't the same as marketing a service. The basic difference is that with the product, it is generally something the consumer can touch. Services are more based on creating an end result Products and services have some key differences in them and these have to be taken care of while marketing each of them. Goods have physical specifications and attributes, so consumers have access to this information can easily compare products to decide which one to opt for. Services differ from each other on a more conceptual level. For many customers, the main reason to pick one service over the other is either the experience they have with the brand or any point of reference. Perceived risk is also different for goods and services.

With products, its easier for the customer to predict exactly what he or she will get. Products can often be returned customers are willing to take risks with the unknown. But you cant return a service. It is likely to involve more money, so people often take service decisions far more attentively. Another difference that is normally found in marketing a service compared to a product is the guarantee. It is harder to guarantee a service, although it can be done, while it is fairly easy to guarantee a product Cost also is an important difference factor. Pricing products is easier then pricing services. It is based on experience and the proof of being able to produce the results the customer wants. Service is more of psychological marketing. Service marketing is more of relationship and value, because the buyer is purchasing something that is intangible. Product marketing is based on a reputation of the brand or its quality or word-ofmouth marketing.

Submitted by: SY~MMS Div. B Sr. No. 1 2 3 4 5 6 7 8 Name Nupur Misal Rhujuta Nadkarny Tejaswini Narvekar Dhanesh Patshetkar Khyati Patel Rujuta Patwardhan Aditya Wadekar Sayali Rege Roll No. 66 70 71 74 76 81 110 113