Researchers from University of International Business and Economics, University of Groningen, University of Cologne, and University of Chinese Academy of Sciences published a new Journal of Marketing article that examines the drivers of brand extension success.
The study, forthcoming in the Journal of Marketing, is titled “ A Meta-Analysis of Brand Extension Success: The Effects of Parent Brand Equity and Extension Fit ” and is authored by Chenming Peng, Tammo H.A. Bijmolt, Franziska Völckner, and Hong Zhao.
When a company uses one of its established brand names on a new product or category, it is introducing a brand extension. For example, Google began as a search engine and that continues to be its core focus, but it also has a variety of products such as Google Cloud and Google Play. Almost 70% of new products in the consumer-packaged goods market in the U.S. are brand extensions.
Managers expect that introducing a new product under an existing brand name can reduce introduction costs, lower the risk of failure, and increase firm profit. However, only 30% of all brand extensions in the U.S. consumer packaged goods market survive the first two years, a success rate similar to new brands. Given this unexpectedly high failure rate of brand extensions, it is vital for marketers to understand what drives the success of brand extensions.
This new study offers insights into the drivers of brand extension success. It explores how companies can devise more successful brand extension strategies in terms of contextual factors (parent brand, extension, communication, and consumer factors) and the research methods used.
The study provides three key findings that will benefit chief marketing officers.
In summary, this study develops empirical generalizations and findings about the main effects, relative importance, and interaction effect of the two key drivers of brand extension success – parent brand equity and extension fit. It suggests how to devise more successful brand extension strategies in terms of five groups of moderators: contextual factors (parent brand, extension, communication, and consumer factors) and research method factors.
Full article and author contact information available at: https://doi.org/10.1177/00222429231164654
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Journal of Marketing
A Meta-Analysis of Brand Extension Success: The Effects of Parent Brand Equity and Extension Fit
6-Mar-2023