[MUSIC] Now that we have understood the process of branding, I want to talk to you about brand extensions. Just as we have talked about product extensions, in the previous week's course, brands, can also be strategic elements for diversifying your product or branding portfolio. So just to look in the product case, we can think of existing brands or new brands, and at the same time, bring in the brands into existing categories or into new categories. Let's look at a couple of examples. For diversification purposes, one can think about line extensions, which is fundamentally the same brand, in the same existing category. Let's take the case, for example, of the iPhone, right. Bigger and smaller screens, more powerful or less powerful processors, and a couple of additional features. But fundamentally it is the same brand in the same category, right. Let's continue with the Apple example into when will you be able to bring the brand into new categories that are where the company is not actually present, right. If you have a powerful brand, it may be important to bring it into new categories, such as watches, right. Apple has done that all the way from computers to MP3 players, to smartphones, to tablets, and lately, into watches. What comes next? Cars, why not? Certainly a possibility, certainly one that is rumored in which Apple is working on. But you can also introduce new brands, which minimize a risk of damaging the existing brands in the existing category. Take the case of Nespresso Dolce Gusto. Nestle was already in the coffee category with its Nescafe brand. Then they introduced Nespresso, right, as a super premium brand, with its own boutiques or selling directly. And then they introduced Dolce Gusto, which had a slight variation. One which is that it makes mixed drinks and the other one is that it's primarily sold through supermarket and hypermarket channels. And sticking with the same company, let's look at another example from Nestle. Nestle, several years back bought the brand Jenny Craig. Jenny Craig is a brand born in Melbourne, Australia that had several thousands of users in Australia and North America, and it consists of a weight loss program. Nestle no longer owns this brand, something that it didn't work for them. But they took the opportunity to buy any existing brand to enter a new category, that of weight loss, without jeopardizing any of its existing brands, okay? So again, just like we did in products, which one of these is less risky or more risky? As it turns out, there are somewhere between 30,000 and 40,000 new products introductions every year. The vast majority of them, more than 80%, are line extensions. That is the most common way of extending brands. Obviously, entering with the existing brand into new categories entails some risks and launching new brands is a very very expensive proposition. You have to invest quite a bit and significantly to come up with meaningful brands in any consumer category. And finally, as we saw in week two, launching new brands into categories is the most dangerous of all things. And as you may suspect, the majority of all new product introductions, and all new brands introductions absolutely fail, more than 90%. [MUSIC]
