¶ … drive brand extension success, and how these factors affect the decision to introduce a new product. Brand extension refers to the corporate activity whereby companies introduce new products, new product variants or product improvements by leveraging the brand equity of the existing parent brand (Roll, 2011).
The use of established brand names to launch new products is a frequently used branding strategy. In general, extending brands both within and beyond the original product category is profitable because it is assumed that brands are already known and recognized. As a result, the new product therefore requires lower introduction expenses, such as advertising, trade deals, or price promotions (Volckner and Sattler, 2006).
Even so, brand extension success is uncertain. According to Volckner and Sattler (2006), studies have shown failure rates of approximately 80% in many fast-moving consumer good product categories. Their research also reveals the kinds of success factors that play an important role in the success of an extension product. For example, studies reveal that the quality of the parent brand and the fit between the parent brand and extension product categories are significant brand extension success factors (Volckner and Sattler, 2006).
The reason for brand extension failure is that the equity of the parent brand is only one of many factors that affect the success of this strategy. Research studies explore some essential factors impacting brand extension success (Volckner and Sattler, 2006).
The fit between the parent brand and the brand extension is probably the most significant factor that affects the success of the brand extension. In general, fit refers to the compatibility of the brand extension's product category, product attributes and associations to the parent brand's product category, product attributes and associations. The better the fit between the parent brand and the brand extensions, the higher the probability of the success of the brand extension (Roll, 2011).
Another important factor that influences the success of the brand extension is the quality of experience that consumers have had with the parent brand. Such brand experience may include the physical quality of the product, service encounters, price and value perceptions, post-purchase service, retail atmosphere etc. Also, parent brand conviction,…
