Thesis Sample on Management: Connected TV in L’Oreal Brand Extension
L’Oreal Brand Extension Strategy in the Connected TV Technology
INTRODUCTION
Connected TV is really a term used to describe the integration of internet features into tv's. In the past decade, technological convergence between TVs and computers has somewhat increased. IKEA and Target are a number of the new entrants in the connected TELEVISION sector. Connected TVs usually focus more on on line interactive media rather than concentrating on convention broadcasts, such as previous television sets (Technology, 2011). Most multinational businesses are well aware that their business’s leading role in the international market is sustained by established brands that help acquire loyal customers. For that reason launching a brand new product employing a brand extension strategy assists the company begin a strategic market position in a economy that demands constant adjustments and responses to emerging trends.
Following current trend in content production whereby programming will be offered by nonconventional sources such as for instance Red Bull, Lego, IKEA and Target, L’Oreal could form itself in the connected TV technology by exploring different network operators. L’Oreal is one of the world’s largest beauty and cosmetic companies. Like IKEA and Target, L’Oreal can adopt a brand extension strategy that is aimed at benefiting from the brand knowledge already achieved in its current market. Based on most researchers, the cost of marketing and failure rates are significantly paid off when a company launches a brand new product underneath the umbrella of a well-known brand (Media, 2010).
This paper is aimed at discussing what sort of multinational brand such as L’Oreal can develop it self in the connected TELEVISION technology. The initial section will explore brand extension strategies while the 2nd section will evaluate the performance of these strategies. The third section will identify the superlative extension strategy in terms of performance. Finally, the paper will offer you a comprehensive SWOT analysis.
Brand Extension Strategies
In accordance with most researchers, brand extension is absolutely influenced by the parent brand (Bermingham, 2011). L’Oreal has strategically positioned it self in the global market with its selection of beauty and cosmetic services and products. The company could use brand extension as a marketing strategy, a move that has been more attractive in the modern economy since creating a new product is expensive and consumes a lot of time. Brand extension is definitely an important aspect through the brand management process. There are many brand extension strategies that L’Oreal can implement. One of these is capitalizing the extended brand on the equity of the already established parent brand. This strategy’s success is dependant on the fact that individuals are already acquainted with the existing parent brands, which significantly helps a new brand to enter the market (Group, 2011). The strategy also assists the extended brand to capture new market segments.
Capitalizing the extended brand on the equity of the parent brand is a strategy that is highly beneficial. It is because market research on the new product is somewhat reduced, in addition to, the advertising costs. The strategy also offers a higher potential for success due to the superior preference derived from the parent brand’s equity. Nearly all brand extension strategies frequently produce reciprocal effects that enhance the over all equity of the core brand. The global market is viewed as a location whereby competition and introduction costs of new brands increases the threat of failure. Because of this, many businesses use brand extension to enter new markets. Research has shown that in the past decade more businesses have preferred to extend their brand instead of introduce a fresh product under a new brand. Market research concludes that brand extensions are evaluated favorably by clients since consumers tend to transfer the positive attributes of the core product of the extended brand (Handout, 2010).
Your choices of the brand extension strategy may help the company determine the level where it can extend the brand. Before L’Oreal extends to the connected TELEVISION sector, it has to answer the following questions. First, would the brand extension strategy remain in line with the company’s vision strategy? Secondly, will the selected brand extension strategy increase the parent brand’s image? Finally, will the brand extension strategy remain consistent with the company’s brand positioning strategy? These dilemmas will assist L’Oreal to identify a few of the impacts the brand extension will have on the brand (Harris, 2009).
A number of the possible guidelines of brand extension include Taylor’s style of consumer brand extension. This model has contributed to varied researches in brand extension strategies and useful here is how extension constructs influence the entire attitude of consumers toward the extended brand. The diagram below illustrates that brand extension strategies frequently come in two forms, horizontal and vertical (Harris, 2009).
In a horizontal brand extension, an existing manufacturer is applied into a new product. The introduction can be quite a related product class, that will be also known as basic extension, or it can be in a product category that's new to the organization, which is also called total extension. There are different technologies that provide solutions for connected TELEVISION for different markets and commercial models (Hem, 2009). L’Oreal would first need certainly to select the preferred brand extension strategy before choosing a network proviidder who does offer such technologies in the connected TV sector. The diagram above also shows a vertical brand extension. This extension strategy entails the introduction of a new brand in the exact same product category as the parent brand. Nevertheless , the extended brand is generally at an alternative price category and quality level also called direct extension. The product category may have less connection to the fundamental product line called indirect extension.
In the last few years, the connected TELEVISION market has emerged to the mainstream forcing network providers to establish forums that offer support for critical players driving the sector. Currently, you will find hundreds of organizations delivering innovative software and online services, hence, it is crucial for the connected TELEVISION sector in the future together to generally share insight and network. L’Oreal can use a few of the forums that will accelerate researching the market and bring critical players together to operate a vehicle the connected TV sector forward (Lane, 2011).
L’Oreal has two possible options in entering the connected TV sector using the vertical brand extension strategy. First, the brand extension could be introduced at a lower price and lower quality level as compared to the parent brand. A second brand can also be introduced alongside the parent brand with the purpose of demonstrating the hyperlink between the brand extension and the core brand name. L’Oreal brand extension into the connected TV sector will notably aid in generating acceptance by linking the brand new brand with the already known company name. But brand extension also risks diluting the parent brand’s image by harming the equity built within the parent brand (Lock, 2011).
The maximum risk all through brand extension is fading of the first personality of the core brand. When L’Oreal is deciding on the brand extension, it needs to consider the following: first, the place at which to expand the brand. This may involve distinguishing new markets and reaching new customers. 2nd, the company should decide on what product to expand. It might choose to offer related or unrelated services and products under the same core brand in new or existing markets. Finally, L’Oreal will need to identify just how to expand the connected TELEVISION brand. L’Oreal can expand the brand independently or collaboratively by having an already established business in the connected TV sector. Researchers make use of the categorization theory when exploring the effects of brand extension (Manning, 2000). According to the theory, when individuals are forced to pick from thousands of products and services, they often categorize such products through their brand association given their previous experience (Media, 2010).
Most literature has shied far from the adverse effects of brand extensions. Consequently, most people find no significant evidence that the brand name may be diluted by unsuccessful brand extensions. Nevertheless , research indicates that a parent brand may be diluted if the extension is inconsistent with the product category and brand beliefs (Nakamoto, 2009). The general equity of L’Oreal may be diluted from functional or non functional base variables whereby, dilution occurs throughout the extended brand all the way to the core brand. Brand extension failures make consumers create a negative or new association that's related to the core brand, which eventfully distorts the identity and meaning of the original brand. Connected TVs provide content from other computers or networks either through Digital Living Network Alliance or Network attached storage (Virakul, 2011). The performance of L’Oreal’s brand extension strategy will be considerably affected by the reliability of the network provider.
Brand Extension Strategies Performances Evaluation
This section offer a comprehensive analysis of different strategies accumulated by competitors such as IKEA, Target, Red Bull, and Lego in extending their advertisement policy on the connected TELEVISION market. Evaluating the performance of a few of the brand extension strategies employed by these competitors will assist in understanding how a multinational brand such as L’Oreal can develop it self in the connected TELEVISION technology. Through performance evaluation, multinationals can investigate the impact of product similarity, brand reputation, as well as, the perceived risk and consumer innovativeness on the success of brand extensions.
IKEA brand extension strategy centered on leveraging the company’s brand equity on the new connected TV services. However , Red Bull and Target opt for different brand extension strategy. Instead of relying only on brand equity, Red Bull and Target launched themselves in the connected TELEVISION market through strategic partnerships with network providers. Strategic partnership enables a firm to launch it self in a fresh market. Both Red Bull and Target also leveraged their Brand equity with the connected TV since extensions on categories which are more like the original brand usually will be more readily accepted (Vukasovič, 2010). Therefore , the reputation of the initial brand is really a significant factor that influences the success of the extension. But the perceived risk on the extension category frequently enhances the acceptability of extensions for durable goods and service brands…
