Sunday, January 15, 2012

Marketing Funda : Determinants of Brand Extension Success

Professor Franziska Volckener and Professor Henrik Sattler of Institute of Marketing and Retailing, University of Hamburg, published a very insightful article  titled Drivers of Brand Extension Success in Journal of Marketing in 2006 which spoke about critical success factors that drive brand extension success. The authors through extensive empirical research distilled five factors that determine whether a brand extension will succeed in the market place. 
The study which was conducted in German FMCG industry gives valuable insights for marketing managers across the world.
The five factors that determine the success of brand extensions are as follows

1. Fit between parent brand and brand extension : Whether the extension is in line with the parent brand's positioning and consumer perception
2. Parent-brand conviction : The brand equity of parent brand , the trust of consumers on the parent brand's quality are critical factor that help extension success.
3. Parent-brand experience : The previous experience of the consumer towards the parent brand will affect the consumer's response to the extension
4. Retailer acceptance of brand extension : Retailers play an important role in the brand extension's success.
5. Marketing support : The investment in brand promotion also has a strong role to play in the success of the brand extension.

My Two Cents : The above cited research throws important light into the critical determinants of brand extension acceptance by consumers. Marketers should view these factors holistically because all these factors collectively contribute to the success of extensions. These factors like parent-brand experience and parent-brand conviction take time to develop. Hence haste in extending a brand without these factors can be risky.
 While I am personally critical of brand extensions, market pressures and opportunities make brand extensions a vital element in the marketing strategy . The research of Professors Volkener and Sattler is very relevant in this context.