Drive Brand Extension Success, and How These

¶ … 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).

Even though brand extension is a short cut that companies resort to, hoping to minimize risk and maximize their investment in the brand, they often fail. 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, the extent of support and commitment that the parent brand has towards the brand extension, affects the success of the brand extension as well (Roll, 2011).

An additional factor in brand extension success is retailer experience. In spite of the ever-growing influence of the Internet on shopping of even branded products, retail spaces in the physical world continue to have a stranglehold on distribution. The success of many brands depends on securing shelf space and the marketing push that the retail establishment provides. Likewise, such is the case with brand extensions. If companies that extend their brands are not welcomed by retail stores and are not provided marketing support and push by retail stores, then the success of such products will be limited (Roll, 2011).

Marketing support is another important factor under the control of the parent company that determines the success of the brand extension. With the proliferation of brands in the marketplace, it is to be expected that the company that invests strongly in promoting its brand extension ends up in a better market position. Such support helps facilitate aggressive push and pull demand for the brand extension, and also helps create positive perceptions about the company in the minds of consumers (Roll, 2011).