Brand expansion for leveraging brand equity

Brand expansion for leveraging brand equity

Brand extensions are one of the most popular approaches for leveraging brand collateral. By launching new products under popular brand names, firms hope that buyers will respond even more favorably to the brand new offering, because of their knowledge of the parent brand, confident feelings toward the mother or father brand, and positive attribute and non-attribute associations they possess with the mother or father brand.

A brand may be the identity of a specific product, service, or business. Brand extension denotes to the corporate activity in which companies bring in services, new product variants or product improvements by leveraging the manufacturer equity of the prevailing parent brand.

It is thought that compared to launching a fresh product under a fresh brand, brand extensions can raise the efficiency of promotional efforts, improve usage of distribution channels, and reduce consumers’ perceived threat of purchasing a service or product (Keller, 2002). Another significant factor for which Businesses prefer to use company extension is lower cost. Introducing a fresh brand into consumer industry can be relatively higher than introducing new item or product variants beneath the same brand name. This price can range above an incredible number of rupees and can certainly not guarantee of any achievement. So instead of launching entirely a fresh product, most firms prefer brand extension. Good examples such as Diet Pepsi and Diet Coke benefited from the manufacturer franchise of their parent products. Coca-Cola unveiled six extensions and captured a larger market share than the original brand. For instance, Coke’s expansion, Cherry Coke, was powerful even without extensive advertisement.

On the other hand, the potential of brand extension complications can ranger from failure of the brand or partial failure such as for example brand Dilution and company cannibalism. Instead of success, the failed expansion might tarnish the image and decrease the market share of the parent product. Associations that are exclusive to the brand, strongly held, and favorably held, are vital for success. However, since the specific associations a consumer holds are reliant on personal values and individual purchase conditions, managers must study what they are and when they operate. For instance in case of different Coke, Coca Cola did not focus on what the core brand meant to are a symbol of. It mainly focused on the taste and thought that the taste is the only factor which individuals are looking for. This concept was incorrect. Coca cola was struggling to determine the attachment of the consumer with the initial coke before launching New coke, despite the fact that Coca Cola spent big money on conducting analysis before launching New coke.

Brand dilution takes place when consumers loss the initial grasp of manufacturer perception on the minds no longer associate the brand with a specific product. For example, Sunsilk may experience company dilution by loosing its solid identity of hair care and attention and shampoo array by running a number of different types like mashed potatoes, powdered milk and soups. Also broad varieties of product types run under same manufacturer can frustrate consumers in thinking which variants of products that actually fit with their perceptions. For Example, way too many ranges of Sunsilk shampoo incorporate Sunsilk black, pink, bright white, yoghurt, dandruff can make customers confused in investing in a suitable product that actually fit with their needs. Even though today’s individuals are selective within their buying behaviors and expect innovation, the reality of brand extension achievements is still low. The reason being most of new product extensions are not unique , nor satisfy consumer needs. There are several factors that cause company dilution. Among those incorporate perception in consumer minds comparing between parent brand and product extension, level of knowledge of parent brand, match level transferred from mother or father brand to extension and consumer’s perception to different product. Level of brand loyalty proven by a person can switch to radical level for brand extension case. When loyalty and level of knowledge of parent brand is substantial, new product extension failing may drastically diminish trust level to complete brand portfolio. Subsequently, low familiarity to brand influences low dilution when product failure occurs in brand-new extension.

As per early research regarding brand extension brings about brand dilution, Aaker and Keller (1990) discovered insignificant evidence between unsuccessful manufacturer extension leads to label dilution. Conversely, in a research Loken and Roedder-John (1993) pointed that inconsistency of merchandise and brand beliefs may bring about brand dilution. Manufacturer dilution and inability of brand can occur when consumer find it hard to associate the extension with the parent company, too little similarity and familiarity and discrepancy between Integrated advertising communication messages.

Brand extension is a technique which most of the companies are using, to reduce risk associated with introducing a totally new brand and maximize their revenue from the brand new brand. But in a number of the cases brand extension fails, and associated with the weak brand collateral of the parent brand that bear after the success of the brand expansion. If the equity of parent company is strong, brand expansion can be effective and vice versa.

Both Functional and non useful attributes of a company can harm and eventually dilute the collateral of a oriented brand, this means because of the weak brand equity, company dilution can occur over the parent brand. Such kind of failures of extensions can make customers to make a negative association with the mother or father brand as well as with the brand family members. These failures can also agitate and blur the initial identification and meaning of a company even positioning as well.

Managers seem to understand the dangers and great things about extending their company franchise. Yet the number of failed extensions in the past few years indicates that some refinement inside our understanding of the brand extension procedure is needed.

What factors determine whether a brand expansion will be successful? The most important factor discovered by prior study is perceived fit. Customers respond more favorably if they are in a position to perceive a fit between your extension and the parent brand and this contributes to the accomplishment of the brand expansion. Conversely, If consumers are struggling to perceive a fit between expansion and the parent company, the brand expansion might become a failure and may lead to brand dilution.

According to Martinez and de Chernatony (2004) brand impression has two types: the general brand image and the product brand image. According to them there will be no negative impact on general brand photo if the brand graphic is strong. For instance, Nike or Sony. Dilution effect would be more on product impression rather than general brand image. Consequently, mostly the clients would adhere to their beliefs about the parent brand with respect to its attributes and emotions. Nevertheless their study implies that “brand image can be diluted by brand extension, and beliefs and association with the parent brand can even be changed.

In producing countries like Pakistan it is even more effortless for multinationals to try brand extensions. The reason is that the majority of the multinational companies result from created countries like America, United Kingdom and Japan. Goods from these countries enjoy confident country of origin impact in mind of consumers because of their previous track record regarding customer satisfaction. This consequently lowers the money spend over recognition creation and since they already enjoy good marketplace and media presence, so more affordable for them to launch company extensions in Pakistan.

For instance, Pakistan Tobacco Company Small (PTC) that is a part of British American Tobacco who sells their brands to millions of buyers in 180 countries worldwide. They were the foremost makes entering Pakistan as early as 1947. Ever since then they have launched brand-new reputed brand extensions such as for example Benson & Hedges, Embassy, Gold Flake, Gold Leaf and just lately Capstan make of cigarettes (Organization


The failure prices of new product over the last few years have increased tremendously; so, organizations have resorted to brand extensions, due to inherent advantages incorporating its acceptability, low advertising expense and comparatively lesser amount of failures. Despite these advantages, the failure amount of brand extension has remained significant within the last one decade. Accordingly, the researchers have been focusing in identifying the factors that buyers use for “evaluating the manufacturer extension”, or the elements that

will be contributes towards the victory or failure of company extensions. The focus of the study is to recognize whether the brand expansion is favorable or bring about brand dilution.

Researches on company extensions have focused largely over consumer evaluation of brand extensions. Even so as a matter of fact consumers generally cannot examine brand extensions in undifferentiated fashion (Aaker and Keller, 1990, Keller and Aaker, 1992; Dacin and Smith, 1994; Smith and Andres, 1995). In spite of the intensive body of knowledge on consumer evaluations of manufacturer extensions, hardly any or negligible attention has been paid in regards to what is brand or advertising managers view stage over brand extensions technique ( Nijssen and Agustin, 1999). Having less brand managers view level type in the literature is definitely odd as their analysis of consumer and competitors reactions in conjunction with their personal preferences are a fairly very good indicator of accomplishment of a brand expansion strategy. Accordingly along with consumers’ perception about brand expansion, viewpoint of manufacturer managers of couple of companies will also be regarded as in this thesis.

Over the past handful of decades we have witnessed a great number of firms both domestic and multinationals participating in brand extensions in Pakistan. For example some of the well known domestic brand extensions bargains in retailing and style (Chen One Pvt Ltd), healthcare products (Z-Jans Pvt Ltd), Medicam tooth paste and Sweetener (Medicam Pvt Ltd Pakistan), Rafhan pudding blend and Custard (Rafhan Ideal Meals Ltd), National Pickel, Salt and Spices (National foods Ltd), Haleeb Milk Pack, Yogurt and Cream (Haleeb Foods Ltd Pakistan). So far as multinationals are concerned Nestle and Uniliver Pakistan contain carried out most of the brand extensions. For instance, Nestle (Mineral Water, Milk Pack, Cream & Yogurt), Uniliver has manufacturer extensions (Lifebuoy Shampoo & Soap, Exhibit Surf, Colgate toothpaste, Surfaces Ice-cream). In this relation a study of manufacturer extensions from manufacturer manager’s perspective is significant to determine successful practices which will be prerequisites for a manufacturer extension in Pakistan.

SIGNIFICANCE drosophila lab report OF THE STUDY

The need for this thesis is usually to explore the use of brand extension strategies in the Pakistan context. Whether the strategy of brand extension is favorable or certainly not, or because of brand extension, brands gets diluted or cannibalized? Since brand extensions is among the most popular approaches for leveraging brand collateral, this study will also concentrate on brand extension influence on brand equity.

This thesis will give attention to brand extension tactics of products from numerous companies such as Z-Jans Pvt Ltd, Haleeb Foods Ltd Pakistan, Servis Shoes or boots, Lakson Group, and Chen one, Nestle, Sunsilk, Pakola and Fair & Lovely. Different companies’ insights regarding company extension can help us to review favorability or unfavorability of company extension in a very well manner.

We will try to do this purpose by answering the next research questions.

Brand extension is more beneficial than launching services regarding customers understand how about the parent brand.

Brand extension is beneficial with regard to Consumer Knowledge and Client Trust about the quality and association of Parent brand?

Brand extension is effective in terms of refreshing Parent brand.

Brand extension can bring about dilution of Parent Manufacturer.

Brand extension can decrease the credibility of Parent Brand.

Brand extension can cause cannibalization of Parent Company Sales

Brand extension could be a disaster and may result in brand dilution if extension isn’t fit (Similarity and regularity) as per the concept of Parent brand.

Moderating factors like manufacturer quality, customer understand how, customer certainty and manufacturer equity affect brand expansion?

By answering above question, we will come to learn whether brand extension is certainly favorable or it causes model dilution, and whether manufacturer extension is favorable for all those companies who prefer extension and are involved with brand extension from handful of decades. This thesis will be beneficial in indentifying the success rate or failure fee of brand extension of those companies which have been chosen because of this thesis.


The study is completed from a viewpoint of company extension inside our home country (Pakistan). The study conducted for this thesis is based on limited and chosen item category and Another constraint confronted during the course of research was the actual fact that majority of multinationals (MNEs) formulate manufacturer extension strategies at their brain quarters abroad. Finally, it had been learnt that because the concept of brand supervisor in Pakistan is usually in infancy phases therefore normally it’s the marketing manager who bears out the tasks of brand manager with regards to brand extensions.



According to (American Marketing Association 2007 company is: “A brand, term, indication, symbol, or design and style, or a blend of them, intended to identify the products and services of 1 seller or band of sellers and to distinguish them from those of competition”.

Brand extension

Using an established name of 1 product class for entering another merchandise class (Aaker 1991). Utilizing a successful brand for launching a fresh or modified item or line is known as brand extension approach (Kotler 1991). An expansion strategy in which firms use currently established and successful brand name for introducing a fresh or modified product (Kotler & Armstrong 1990). Employing an established brand for introducing a fresh product into merchandise category which is not used to the company is called franchise strategy (Hartman & Price & Duncan 1990).

Product Line Extension

A product line extension is the utilization of an established product’s brand for a new item in the same item category.

Line Extensions occurs whenever a company stretches its products and introduces extra products in the same merchandise category under the same brand name for example new nips, forms, colors, added ingredients, package deal sizes. That is a little different from brand extension when a new product is introduced within an completely new category, While Range extension occurs when the business increases its products outside its current chain. Product line can be stretched as down market stretch or more market stretch.

Brand Dilution

Brand dilution is the subverting of a brand though its overutilization. This sometimes happens when brand extension is performed poorly. Price cut may also bring a company down and can damage the brand, even though it increases the volume of the product. Brand dilution can be a severe headache for companies that rely mostly on their strong brand for higher profits. Companies who possess strong brand image desires to leverage its collateral to market and earn as very much profit as they can, however the same strategy to leverage a brand equity can also cause damage a brand and eventually cause brand dilution.

Brand Cannibalization

Brand cannibalization pertains to a decrease in volume, revenue of sale and diminution of marketplace share of something which benefits from the introduction of new products by the same maker. For example, when diet plan coke was launched by Coca Cola, revenue for unique coke diminished, but sooner or later it led in expansion of diet soft drink market.

Brand Equity

Brand equity is a marriage between customers and brands, resulting in a income to be recognized at a future date (Solid wood 2000). Kotler and Armstrong (1996) were of the judgment that measuring brand collateral is a tedious job. Nevertheless, a robust brand means high company collateral that helps in reaching ‘higher brand loyalty, name awareness, perceived quality, and strong brand associations’. A few of the major great things about brand equity are manufacturer awareness and customer loyalty which will help in reducing marketing costs. Brand is an important equity; therefore, it ought to be properly preserved by adopting approaches that would assist in maintaining or enhancing brand awareness, perceived company quality and great associations. (Kotler & Armstrong 1996)

Brand Association

Brand association identifies level by which a brand is acknowledged by a customer in a deep fashion. If a brand is certainly deep seated grant proposal in the mind of the consumer in a positive manner, it’ll be recognized positively. Company associations will be the properties of a brand which buyers recall whenever company is talked about. Consumer relates a brand using its implicit or explicit meanings. Brand association can even be termed as the particular level to which a specific product/provider is acknowledged amongst its product or service family. When choosing a brand name, it’s important that the name selected must reinforce an important sizes and specification or profit association that forms the position of something.