MarketPlace

Why associating new brand with parent firm sells out

diamond

Tanzanian musician Diamond Platnumz has partnered with Safaricom to stream his music through the Songa platform. PHOTO | KANYIRI WAHITO | NMG

Telecommunications company Safaricom has launched several products this year most notably, Songa, a music streaming application launched in February that has incorporated the parent company’s name.

Studies show that brand extensions do well in a market compared to standalone product launches.

The application allows consumers to play music offline and online plus download music albums. In the play store, it is named Songa by Safaricom and has so far garnered over 100,000 downloads, and is in the top 10 free music and audio apps.

In incorporating the parent brand name, the product is leveraging on the association of consumers to the established brand name in order to drive sales or in this case downloads, According to a 2015 case study by Anita Nzisa for the University of Nairobi on the effect of brand extension on product brand image: a case of Safaricom Kenya Limited; she showed that customer attitude and perception of the quality of the brand should be positive for an extension to be successful.

This is because customers place high value on the quality of the product before they adopt it.

“Brand extension can be a very challenging strategy as it puts the status and image of the core brand at stake.

“The study found that respondents were familiar to the Safaricom brand and since it is a top brand in Kenya, the levels of perception on quality was high and thus it would not affect the parent brand’s image,” reported Nsiza.

Perceived quality is important as it offers a company competitive advantage by distinguishing it from other companies. It also provides value to consumers, indicating to firms that their consumers’ quality consideration matters in its overall performance.

However, with separate product launches, companies are not guaranteed of success despite launching a whole marketing strategy in order to grow the product’s awareness and visibility in the market for customer acquisition and to garner sales.

“A brand extension is likely to survive in a market if it adopts the parent company’s name but at the same time there is the risk of it ruining the reputation of a brand as a whole if it fails to deliver. For example, if the new product is of low quality, despite the initial perceived quality eventually consumers will stop using it and will refrain from using future brand extensions from the parent company,” said Stella Kimani, a brand strategist.

Indeed, research by US university Massachusetts Institute of Technology (MIT) revealed that despite a company spending as much as $100m to launch a new product in the market, it does not guarantee success as much as does brand extension.

READ: Safaricom takes on music streaming with 'Songa' app

Using an established brand name can substantially reduce introduction investment and increase the probability of success of a new product in the consumer market but still, a brand name can fail to help an extension or worse, hurt the extension and even lose the parent brand customers.

“A strong brand name is an invaluable asset; managers must know when to exploit it, when to protect it, and how to tell the difference between the two.

“Because using an established brand name substantially reduces new-product introduction risks, there is an almost irresistible pull to ‘extend’ brand names to new products.

“In doing so a company can gain profits but it has negative implications as well: it may harm the original brand and inhibit the establishment of other products with unique associations and growth potential,” reported MIT.

For instance, in 1992 when beverage company Pepsi launched its variant Pepsi Crystal Clear, it only lasted a year in the market before it was pulled off supermarket shelves due to low sales.
It has since been relaunched twice; 2016 and 2017 and been withdrawn due to failure to pick up in the market.

- African Laughter