Brand Extension Report: Tesco's New Chewing Gum (MG412)

This report provides a comprehensive analysis of Tesco's brand extension strategy, focusing on the introduction of a new sugar-free chewing gum product. The report begins with an executive summary and an introduction highlighting the need for brand extension in the competitive retail market. The methodology section explains the use of secondary data analysis. Key findings reveal Tesco's application of brand extension to attract customers and increase sales, employing the Kapferer prism to build brand identity. The report details the identification of the target market using the STP model (Segmentation, Targeting, and Positioning), focusing on demographics and product placement. A PESTLE analysis assesses the external factors influencing the market, including political, economic, social, technological, legal, and environmental considerations. The report concludes that Tesco adopted a product development strategy, launching the chewing gum with natural flavors and sugar-free ingredients, targeting a specific demographic. The report also compares Tesco's product with its major rival, Wrigley's. References to relevant books and journals are provided.

MG412 CW2 Brand
Extension Report

Executive summary
 The PPT is describing about brand extension of Tesco.
 Here, a new product has been developed to earn more revenue. moreover, method taken
to collect data is secondary. Then, the outcomes are obtained by evaluating data.
 Besides that, target market is identified with help of STP model. In addition to it,
pestle and Ansoff matrix is done to identify strategy.

INTRODUCTION
 Every business needs to expand in different market to compete with rivals and gain
competitive advantage. In this brand extension is process of using a brand name to
launch new products.
 The aim is to attract new customers and increase sales. This also enables in improving
brand image and creating positive image in mind of customers. Tesco is retail brand
that operate at global level. it provides various products.
 The market share of company is 28.4% in UK. Also, the market value of Tesco is 22.2
billion. Now, they are introducing new flavoured chewing gum.

CONT..
Tesco market value

Methodology
 The research was conducted through secondary method. The data was gathered from
old articles, journals, etc. and analysed.
Findings
 By collecting secondary data, it is evaluated that many times company opt for brand
extension to increase sales and attract customers. In this new product is launched into
either existing or new market.
 Brand extension is process of using a brand name to launch new products. But a little
difference is product is sold in different category. However, branding refers to doing
marketing of a logo, symbol, etc. in order to generate awareness. This make it easy for
people to differentiate it from competitors.

CONT..
Thus, Kapferer prism is applied which enable in building a brand and creating identity. there are
six factors considered in it which is as follows :
 Brand physique- it is brand physical qualities and specifications. Also, it includes product
features.
 Brand personality- it shows the way in which product or service reflect what kind of person
 Brand culture – it reflects the ethics and values that brand shows. Moreover, what type of
population or culture does brand target.
 Relationship – this factor depicts relationship that allow people to engage with brand.
 Reflection- it is related to views and perception of people towards brand. A strong reflection of
people will allow buyer to recognise it.
 Self image - As stated self image is reflection of target customer. It reflects their internal
feelings and thoughts.

Cont..
Target market
It is important for Tesco to identify their target market so that product can be
developed and marketed accordingly. For this STP model is used that is as :-
 Segmentation– Here, segmentation refers to dividing population on basis of factors
that are demographic, geographic, behavioural, etc. the segmentation is demographic
means on basis of age and gender.
 Targeting – it is done after segmentation. The target market is both male and female
and of age between 15- 30.
 Positioning – here, positioning refers to placing product or service in the market. the
product will be offered to people as free samples. Also, with certain retail items it will
be offered free to taste. It will be available in different flavours.

Cont..
As Tesco operate in fluctuating business environment, there are several factors that can
impact on emerging markets. Also, changes can be observed in market trends as well.
Therefore, with help of pestle and Ansoff matrix new market is found out.
 Political – the change in government will impact on product. Defra has said that
chewing gum must be classified as litter.
 Economic- it refers to change in GDP, inflation rate, etc. of UK. But it has been
identified that in UK inflation rate is 0% and people disposable income is more.
 Social- It is related to change in trend and taste of consumers. However, in UK people
are now becoming health conscious. So, they prefer to buy sugar free gum.

Cont..
 Technological- The change is related to technological advancement is quite high. UK
is a developed country where people uses high and advance technology. Thus, tesco can
use social media and other digital platforms to market and advertise its product.
 Legal- Here, changes are related to employment and health and safety. Thus,
ingredients used in chewing gum has to be tested and verified by government
regulations.
 Environmental – In this factors are related to change in environmental laws and CSR
policies. so, if there occur any change in environment laws will impact on Tesco
operations.

Cont..
 From above data, it is stated that Tesco have selected the product development strategy.
In this they will develop a new product that is chewing gum and sell in existing market.
Through it, they will be able to attract more customers and generate more sales and
profits.
 The chewing gum will contain natural flavour. It will be sugar free and no chemical or
flavours will be added to it. Alongside, new flavours included in it are lime, mint,
mango, raspberry, chocolate, etc. but on other hand, company will face competition
from Wrigley’s
Sugar free gum Wrigley’s
It is under brand name of tesco. The chewing gum is sold under
Wrigley’s
No existence of market share. Its overall market share is 87% in
UK.
No sour flavours, it includes only
sweet one
Both sour and sweet flavours gum.

CONCLUSION
 From presentation it is summarised that sugar free gum is launched by tesco in existing
market. This is because they want to earn high profits and sales.
 The gum contains natural flavour and is sugar free. Target market is both gender but
between age 15-30. However, product development strategy is followed.
 The firm major rival is Wrigley’s

REFERENCES
Books and journals
 Fang, X. and Lin, S., 2017. The influence of status differentiation on vertical brand extension:
Intercultural and intracultural comparisons. Nankai Business Review International, 8(4), pp.404-423.
 Miniard, P.W., and et.al., 2018. What brand extensions need to fully benefit from their parental
heritage. Journal of the Academy of Marketing Science, 46(5), pp.948-963.
 Moon, H. and Sprott, D.E., 2016. Ingredient branding for a luxury brand: The role of brand and
product fit. Journal of Business Research, 69(12), pp.5768-5774.
 Prajapati, K. and Bhatt, V., 2019. A Study on Perception of Brand Extension by FMCG Consumer in
Ahmedabad. Research Journal of Humanities and Social Sciences, 10(3), pp.747-753.
 Tripathi, V., Rastogi, P. and Kumar, S., 2018. Direct and Moderating Influence of Perceived Fit, Risk
and Parent Brand Trust on Brand Extension Success of a Personal Care Brand in India. Global
Business Review, 19(6), pp.1681-1692.