New Brand or Line Extension?

The question, "New product or line extension," is basic and often asked in both undergrad and grad schools. It's a question at the heart of many marketing concepts and courses.

It's a question many automakers got wrong.

From a New York Times article about the success of the Toyota Prius:

"The Prius has become, in a sense, the four-wheel equivalent of those popular rubber 'issue bracelets' in yellow and other colors — it shows the world that its owner cares.

In fact, more than half of the Prius buyers surveyed this spring by CNW Marketing Research of Bandon, Ore., said the main reason they purchased their car was that 'it makes a statement about me.'"

And this:

"Honda actually beat Toyota to the hybrid market with its Insight, but it has since discontinued that car. And it is dropping a hybrid version of the Accord, whose gas mileage was not much better than the gas-powered Accord, and carried a higher price.

Honda, which sells a hybrid Civic, said it planned to come back with a new hybrid designed from the ground up as a hybrid, not a converted car."

Said an exec at the Sierra Club, "The Prius allowed you to make a green statement with a car for the first time ever." Being eco-friendly is important to many consumers, but what is driving their purchases is a brand that allows them to show off. In the Prius they have a total, unmistakable statement. In many other hybrid cars they have brands with connections to non-hybrid vehicles. Driving a Prius says much more to your neighbors than does driving a brand extension of the Civic.

Comments

[wes]

so glad you started this one, i had a need for this a fellow MBA person :)