Analysis of Brand Expansion Strategy for Pace®
Option 1: Pace® Tortilla chip
* The risk is lower than creating a new brand
Since Pace® already enjoyed a good reputation and big market share, and salsa sauce lovers are probably also tortilla chip consumers, a new tortilla chip with the brand name Pace® on it could be eye-catching on the shelves. The chips markets are highly competitive, so adapting Pace® brand name would guarantee a better chance of surviving. * The cost is lower than creating a new brand
Branding Pace® Tortilla chip can be more effective and cost efficient than creating a totally new brand. Lowering the cost is important since it would be extremely difficult for Pace® to gain enough profitability battling with Tostito® and other good-famed snack products without taking advantage of its Pace® brand name. * Helps revitalize the brand and create emotional bond
Salsa sauce is a low-involvement product which is bought frequently and with a minimum of thought and effort. Introducing Pace® Tortilla chip can help revitalize the brand and attract new consumers, especially those young generations. When they build certain emotional bonds with Pace®，they will probably buy Pace® salsa for their family when they grow older. * Win back some market share taken by Tostito®
Salsa sauce and Tortilla chips are companion products which means the sale of one product may lead to that of the other. So introducing Tortilla chips can help win back some salsa market share taken by Tostito®’s salsa products. Cons:
* Diminish identification with any one category
Since Pace® has always been very single-minded in maintaining its high-quality salsa brand image, introducing Pace® Tortilla chip may make the brand category line boarder, but may also lead to the a weaker brand image and confuse consumers what Pace® is about. Customers may no longer consider Pace® as the best salsa. Instead, Pace® may represent tortilla chips in some people’s minds. * Hurt parent brand image
Facing extremely tough competition from all those famous snack and chip products that have been around for so many years, the chance of success for Pace® Tortilla chip is not that satisfactory for investors. Although we believe that the new product will appeal to certain segments, but it is still at high risk of damaging the parent brand even if it survived but did not perform well in the market.
Option 2：South of the border ® Tortilla chips
* Do not hurt parent brand
In customers’ minds, Pace® represents salsa. Introduce the tortilla chips branded by ‘South of the border ®’ will not dilute this brand meaning and “damage” the parent brand than using Pace® on the new product. If ‘South of the border’ did a terrible job in the market, it will not hurt the parent brand too much. * More options in the future
If this brand succeeds, Pace® can handle it more flexibly. In the future, Pace® could keep South of the border ® and build on volumes as a cash cow; Or increase its line extension just like what other chips brand did; Or sell it to other companies. Pace® can adopt different strategies according to its own need and the parent company Campbell®’s overall strategic needs.
* Keep the independence of sub brand/endorse brand
Using a new brand to introduce tortilla chips can keep the brand independent from parent brand. When consumers think of Pace®, the first impression is salsa sauce. Using the same brand for tortilla chips will not easy to highlight the features of tortilla chips. That’s why almost every major snack producers introduce different brand name on different categories. This strategy allows a brand build its own brand characteristics which is a vital thing in the long run. Cons:
* The risk is too high
This market has developed for a long time. There are many strong competitors such as Tostito®, Lays®. They did well in line extension and brand establishment. The shelves are full of...
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