Factors influencing successful brand extensions
Dr Leif E. Hem Associate Professor Norwegian School of Economics and Business Administration Breiviksveien 40 N-5045, Bergen Norway Tel No. Int. Code + 47 55 95 96 85 Fax No. Int. Code + 47 55 95 98 74 email: firstname.lastname@example.org Leslie de Chernatony* Professor of Brand Marketing Birmingham University Business School The University of Birmingham Winterbourne 58 Edgbaston Park Road Edgbaston Birmingham B15 2RT England Tel No. Int. Code + 44 121 414 2299 Fax No. Int. Code + 44 121 414 7791 email : L.Dechernatony@bham.ac.uk Nina M. Iversen Norwegian School of Economics and Business Administration Breiviksveien 40 N-5045, Bergen Norway
* Author for correspondence
About the authors: Leif E. Hem is Associate Professor at the Norwegian School of Economics and Business Administration, NHH in Bergen, Norway. He defended his PhD in February 2001. His research interests focus on branding in general and with specifically focus on brand extension. Hem has already published papers focusing on brand extensions and he has presented brand extension papers on four international conferences in 2001: EMAC, ACR-Europe, IAE La Londe, and ACR-US. Hem is also running several branding schools for the business, both in Norway and in Europe. Leslie de Chernatony is Professor of Brand Marketing and Director of the Centre for Research in Brand Marketing at the Birmingham University Business School, England. With a significant number of papers on brand management in European and American journals, he is a regular presenter at international conferences. His two most recent books are Creating Powerful Brands and From Brand Vision to Brand Evaluation, both published by ButterworthHeinemann. Leslie has run brand strategy workshops internationally, helping organisations develop more effective brand strategies. Nina M. Iversen is a doctoral candidate at the Norwegian School of Economics and Business Administration (NHH). Her research interests focus on country stereotypes, brand personality, country of origin, and service management. She is at an early stage in international publishing, but she has presented several promising papers on international conferences (e.g., ACR-Pasific and ACR-US).
Factors influencing succesful brand extensions
Organisations frequently follow brand extension strategies. This paper investigates the impact of category similarity, brand reputation, perceived risk and consumer innovativeness on the success of brand extensions in FMCG, durable goods and services sectors. A set of hypotheses were developed and tested in a study amongst 701 consumers. The findings show that extensions into categories more similar to the original brand tend to be more readily accepted. Likewise, the reputation of the original brand is an important factor influencing the success of the extension. These findings are consistent across FMCG, durable goods and services brands. However, perceived risk about the extension category was only found to enhance acceptability of extensions for durable goods and services brands. Innovative consumers are more positively disposed towards service brand extensions than FMCG and durable goods brand extentsions.
Key words: brand extensions, similarity, reputation, perceived risk, innovativeness
Launching new products can be an attractive growth strategy, however this is not without risks. Some estimate that 30-35% of all new products fail (Montoya-Weiss and Calantone
1994; Booz, Allen, and Hamilton 1982) while others (e.g. Crawford 1977) are even more pessimistic, citing that only two out of ten new launches succeed. Due to factors such as high advertising costs and the increasing competition for shelf space, it has become more difficult to succeed with new products (Aaker 1991; 1996). An increasingly popular approach to This is
reducing risk when launching new products is to follow a brand extension...
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