Extend Brand a tightrope?
SM Research Team

Barbie, who has been smiling for decades at our haven side and shaping the dreams of the little girls, has become ubiquitous now. Today, the market is flooded not only with those fair-haired beauties but also with Barbie stationeries, T-shirts and other small things for which the little ones can go crasy. Brand extension is thus the order of the day.

In recent years, companies have been using brand extensions as a strategy for launching new products since this decreases the risk of failure of new products, because consumers are more willing to accept products marketed under known brands. The estimates vary, but in general, eight out of every ten new products are introduced as an extension of an existing brand.

Far from brand extension enhancing the parent brand or giving it greater exposure, there is a considerable risk that the extension will damage the image of the parent brand. The risks can be summarised as: consumers not “getting” the connection - confusion and negative effects in the perceptions of the consumers about the parent brand that can translate into a dilution of the brand’s image and sales; issues around product quality; and forgoing the chance to develop a new brand.

The criticism fall into three categories:

• The problems with the extension brand cannibalising the parent brand: Rather than adding sales to the total brand, an extension brand eats into existing sales.
• Consumer confusion and perceptions of quality changes that result from an extension: By launching an extended brand, we run the risk of giving out a negative or confusing message about the original brand.
• Brand extension is a lasy option: Rather than going through the trouble and expense of creating a new brand, the firm simply uses an existing brand. The problem is that this approach can cause more problems than it can solve.

The Fit and brand extension
As brand extension has been a widely accepted product development strategy, marketing researchers have attempted to explain the reasons behind consumers’ acceptance of brand extension. The consensus to date is that the perceived “fit” between the brand extension and the parent brand is the essential factor to understand the success of brand extensions. Perceived “fit” is the unique (box)
brand-specific associations in the extension that forms the feature overlap between the parent brand and the extension category. (See Box: Disney: Discovering the child in you)

Studies have revealed that:

• Extensions with good fit are evaluated more favourably than those with poor fit.
• Extensions with good (poor) fit result in greater enhancement (dilution) of the core brand than those with poor (good) fit.
• The higher the level of core brand quality, the lower the impact of fit on consumer evaluations of (1) an extension and (2) the core brand.
• The higher the level of consumer knowledge, the greater the impact of fit on consumer evaluations of (1) an extension and (2) the core brand.
• A composite branding strategy reduces the negative impact of an extension with poor fit on consumer evaluations of (1) an extension and (2) the core brand.
• The more related the products are in a brand’s portfolio, the greater the impact of fit upon consumer evaluations of (1) an extension and (2) the core brand.
• The higher the level of consumer certainty, the less the impact of fit on consumer evaluations of (1) an extension and (2) the core brand. The brand essence should be able to help the consumers understand the basis of “fit” because it is

Box Consumers ....... (category)
Box Consumers’ ..... contexts.
the core of the brand identity and can consist of both product-related and non-product-related attributes. It has been largely observed that the consumers evaluate brand extensions primarily by evaluating brand essence consistency rather than just product-similarity or concept-consistency, no matter what kind of extension it is.
In addition, the consumers would feel the degree of extension’s distance (i.e. closeness or remoteness) by estimating the perceived fit of the original brand essence in extensions. Original brand’s essence would be a required part of both close and remote extensions. However, perhaps it is more critical in remote extensions because very remote extensions would more likely keep only the original brand’s brand essence, while most of the other parent brand associations do not exist. Hence, it might be better for companies to explicitly ensure their consumers that the original brand essence are in the brand extensions, by communicating and reminding the appropriate essences.

Cont