Can Brand Extension Endanger a Brand or Is an Essential Brand Growth Strategy - Essay Example

Brand Extension - Can it endanger a brand or is an essential brand growth strategy ID 19714 Order No. 282593 [Name] [University Name] [Course Name] [Supervisor] [Any other details] 20 March 2009 Table of Contents: Introduction: In this short essay, the author presents a theoretical framework of brand extension and an argument whether the same is a sound growth strategy or else can prove to be disastrous to the existing brands in the event of customers getting confused and getting defocused from the primary competencies of the organization thus leading to their dilution. Brand Extensions - A Theoretical Framework Brand extensions are carried out by companies to leverage the equity built up in the established brands to launch new products that never have been their competencies in the past. Boush and Loken in 1991 argued that companies can utilize brand extensions by appropriately planning the organization structure, capital resources and ability of internal people keeping in mind the brand equity of the organization in existing markets and the corresponding expectations that the consumers shall have in the new markets keeping in view the existing perceptions about the organization. The strength of a brand is determined by the degree of positive attitudes that the consumers possess about it which needs to be transitioned very carefully in the new markets - like innovation, value for money, shorter order fulfilment time, effective customization as per customer needs, rewarding premium customers, etc. Loken and John (1993) argued that brand extension planning should comprise of extensive risk assessment of threats to the existing brand equity of the organization. The organization should be specifically cautious about risk of dilution of certain beliefs that the customers may be possessing about the original brand because the extended brand may contain attributes that may be incompatible with those of the established brand. Loken & John et al. extended this theory in 1998 to support the same through extensive research on individual product beliefs and concluded that the risk of brand dilution of flagship products is substantially more in cases of "product line extensions" using brand extension rather than "diversification" using brand extension. Example, if a CRT based television manufacturer introduces computers and fails miserably, there are lesser chances of their flagship brand getting diluted. The researchers focussed on the flagship brand of Johnson's Baby Shampoo and studied impact of extended product line comprising of baby powder, baby oil, baby lotion, bandages & dental floss with respect to brand dilution due to reduced hygiene. They discovered that perception of reduced hygiene in any of these will result in dilution of all other brands including the flagship brand of baby shampoo. Yueng and Wyer (2005) probably have the answer to this phenomenon because they could prove through a complex research that "When a brand spontaneously elicits affective reactions, consumers appear to form an initial impression of the brand's new extension based on these reactions". Volkner and Sattler (2006) could establish determinants of brand extension success as - parent brand characteristics, marketing context of the target brand extension, relationship between parent brand & the brand extension and product category & characteristics of the brand extension in terms of perceived risk & consumer innovativeness. They gave special emphasis to management wisdom in mediating and moderating effects. Author's Perspective on Brand Extensions The author hereby argues that brand extension is an important brand growth strategy but needs specialist class analytics and intensive market research before arriving at the characteristics of the extended branding. This definitely should not be viewed as the short cut to success by using the existing established brand as the vehicle that is easy to drive. Moreover, brand extension should not be carried out without clearly planning the value addition & further strengthening of the parent brand itself. In nutshell, the parent brand cannot be kept immune to the impacts of the extended branding - positive or negative. Literature suggests a broad spectrum of brand extension comprising of two major classifications - product line extension & diversification. The objectives of both these activities are completely different - the former is targeted to extend the grip on the existing markets whereas latter is targeted to capture new market segments. Hence, they need to be managed completely differently - using different objectives, strategies, risk management, and expertise. Discussion Points Modern marketing organizations within a company practice established strategies for branding in the target markets. As explained by Keller and Aaker (1998), building brands, measuring brand equity and managing brand sustenance are key activities carried out by branding professionals in companies. However, are the activities of corporate marketing pertaining to brand extension standardized as well What should be the strategies & actions by corporate marketing professionals when planning for brand extension to achieve extension in existing line of products and to achieve diversification These are proposed as discussion points for the class from the perspective of brand extension practice in the modern world. Empirical generalizations pertaining to brand image, brand attitude and perceived quality is established from the perspective of brand associations as discussed by Low and Lamb (2000). They have tried to present studies to establish a theory how they are related with each other. The discussions proposed herewith are: (a) What is meant by brand association (b) How can brand image, brand attitude and perceived quality be measured from customer's perspective (c) How are they related The last point of discussion proposed herewith is pertaining to risk management in brand extensions. As detailed out by Loken & John et al. (1998), the risk to parent brand from brand extension is more in case of product line extension rather than in case of diversification. The researchers have attempted to prove this fact by analyzing the Johnson's line of products whereby brand dilution of one product can result in dilution of all the other products. The dilution factor that they chose was "reduction of hygiene". However from the author's perspective, all the product lines chosen by the researchers are established brands. Is it also pointing towards a relationship among perceptions of established brands of the same company in addition to the risks to parent brand due to brand extension In the same product line, if an organization owns multiple brand equities, can diluting of one brand affect all other brands in the same product line (or may be across product lines) This is proposed to be discussed from the perspective of interrelations among established brands of the same company and their mutual impacts within and across product lines. Conclusion: This short paper has presented the theoretical framework of brand extension, the author's own perspective about brand extensions and also the discussion points that have evolved as an outcome of this paper. Reference List: Boush, David M. and Loken, Barbara. (1991). A Process Tracing Study of Brand Extension Evaluation. Journal of Marketing Research. Vol. 28. pp16-28. John, Deborah Roedder and Loken, Barbara. (1993). Diluting Brand Beliefs: When do brand extensions have a negative impact. Journal of Marketing. Vol. 57. pp71-84. John, Deborah Roedder and Loken, Barbara et al. (1998). The negative impact on extensions: can flagship products be diluted. Journal of Marketing. Vol. 62. pp19-32. Keller, Kevin Lane and Aaker, David A. (1998). The impact of corporate marketing on a company's brand extensions. Corporate Reputation Review. Vol.1. No.4. pp350-378. Low, George S and Lamb, Charles W. Jr. (2000). The measurement and dimensionality of brand associations. Journal of Product and Brand Management. Vol.9. No.6. pp350-368. Volkner, Franziska and Sattler, Henrik. (2006). Drivers of Brand Extension success. Journal of Marketing. Vol. 70. pp18-34. Yeung, Catherine. W. M. and Wyer, Robert S. Jr. (2005). Does loving a brand mean loving its products The role of brand-elicited affect in brand extension evaluations. Journal of Marketing Research. Vol. 42. pp495-506. End of Document Read More