Brand Extension and its Impact on the Parental Brand
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Branding is the subsequent creation of a distinct identity of a product or service. Byung, Jongwon, & Robert (2007) argued that branding develops a product or service base within a market, which determines its success. However, they also acknowledge that branding is not the only determinant for a successful brand in the market. It has to incorporate other issues such as factors of production and distribution within the market. As part of re-branding, brand extension has come up and notably recognized by organizations as a strategy when venturing into the same or new markets. The entire process of brand extension is used mostly in many organizations as a way of developing uniqueness in a market and distancing the product or service from others. Park & Srinivasan (1994) was of the view that branding establishes particular perceptions among the consumers because it instils a certain level of knowledge for the product or service and helps them have to establish a comparison with other products in the market. Marketing concepts have been advanced in the consumer market, which are linked to the entire process of branding. One of the major concepts is brand extension, which plays an important role in the market place. Reddy, Holak, & Bhat (1994, pp.276 – 285) asserted that effective brand extension is a great solution especially when establishing strategies for improving sales. In the international market, maintaining quality is the big issue. Therefore, it is important to understand how the entire issue can be handled. Of particular interest is the change expected among the customers. It is known that consumers change in terms of preferences, feelings and tastes (Pina, Martinez, De Chernatony, & Drury 2006, pp. 174-197). Therefore, the main issue is to ensure that the brand changes to fit the customers’ expectations. Chiefly, there is no better way to change brands other than brand extension. Therefore, organizations should work towards knowing issues that relate to brand extension and how best to carry out the practice. However, changing the quality means that the organization should have adequate knowledge of its customers and should have conducted an appropriate assessment in readiness to explore the market and introduce appropriate change to its customers.
Chiefly, it is realizable that the topic for brand extension is well studied. Scholars have detailed a lot in terms of concepts, issues and practices that are related to brand extension. However, these studied have one thing in common which is recommending for further study in the same field. They assert that understanding the brand extension phenomenon is critical for survival of brands in the market.This study will evaluate two fast moving consumer goods in the market including Colgate and Dettol. The two products have been ranked in the U.K.market as having a reputable history in the market and having succeeded greatly from brand extensions. The main problem identified for the study is that within the market, there is huge competition particularly among products. FMCG have therefore sought strategies that could be of value in winning the competitive advantage and maximizing their profits from the vast population by being the preferred brand in the market. However, it is clear that not all strategies succeed and this is a risk to major companies within the market. Therefore, companies are desperate to understand the concept of brand extensions in an effort to succeed in the competitive market. The study will be aiming at analyzing three hypotheses. They include:
H1: high quality perceptions of the parent brand leads to positive attitude towards the extended brand extension
H 2: high quality perceptions of the parent brand contribute to the high reputation of the parent brand.
H3: high similarity in the process of product extension increases the possibility of brand extension
The study will be relevant for the marketers within organizations because they will develop an understanding of the impact of brand extension on the parent brand. It will also be valuable to the consumers in helping them realize the process of brand extension and elements that they need to look into. Byung, Jongwon, & Robert (2007) noted that achieving the first priority of the consumers is a huge change for organizations particularly in terms of their selection criteria to purchases. Understanding brand extension is therefore equally challenging and should be handled as an activity which enables the organisations to create effective marketing strategies.
Background of the Problem
Competition in the global market has increased and more stakeholders continue to join the market. With the high level of competition, competitive advantage has been established as a major issue that needs to be accounted for within any organization. In this case there are many ways of winning the competitive advantage, which an organization can apply. These are strategies that will enhance the uniqueness of an organization and win the loyalty of customers. The common market strategies have been challenged because many organizations have capitalized on the including gifts, offers and promotions (Reddy, Holak, & Bhat 1994, pp.276 – 285). Therefore, it has become excessively difficult to change the strategies as well as approaches used in winning the customers’ loyalty. Pina, Martinez, De Chernatony, & Drury (2006, pp. 174-197) were among the scholars who noted that the only strategy that is still working in the modern market to win the competitive advantage of consumers is brand extension. In this case, other strategies as noted earlier have been so common among organizations and their applications are the same. Kwon & Leslie (2010, pp.276 – 285) noted that brand extension is ideal as one of the strategies because of its diverse nature. Brand extension is unique to the product or service, to the market and to the target audience. Therefore, it is the only way to ensure a successful strategy in the modern day as compared to other strategies. However, Pina, Martinez, De Chernatony, & Drury (2006, pp. 174-197) also noted that organizations have been challenged in the process of brand extension. This is because they do not have the proper knowledge of facilitating the entire process and they lack proper planning in establishing successful brand extension practices (Reddy, Holak, & Bhat 1994, pp.276 – 285). Reddy, Holak, & Bhat (1994, pp.276 – 285) emphasized that there is a wide range of literature on this issue but of major importance is to conduct a study that will facilitate adequate data collection on the brand extension practice.
Literature Review on Brand Extension:
The literature review for this study will be specifically aiming at answering the question for brand extension and its impact on the parental brand. This study will be based mainly on seven studies that investigated the topic identified for this study. Völckner & Sattler (2007, pp. 149-162) are some of the scholars whose studies will provide a base for this study. They looked specifically at the negative impact of brand extensions. In this case, they concentrated on how the parent brand is affected negatively by the extension process basically assessing and criticizing the process of extension as used by different organizations. The general approach from their study is how consumers evaluate brand extensions. From their study, we develop the knowledge of what needs to be done in order to establish appropriate brand extensions which are successful and beneficial to the parent brand. The ideal approach would be appropriate in addressing the main challenges associated with brand extensions and strategizing towards the increased productivity and profitability of a company. Other major scholars that will be a basis for this research include Pina, Martinez, De Chernatony, & Drury (2006, pp. 174-197). Their works was an empirical study which necessitated a model developed to establish an explanation on brand extension.
However, they were also concerned particularly with the service brand and how the extension process affects their position in the global market.Their study is a major contribution on the knowledge required to understand the topic better. From their study, information on brand familiarity, brand equity and other brand terms can be outsourced with proper definitions and explanations making it most relevant for the present study.Pina, Martinez, De Chernatony, & Drury (2006, pp. 174-197) argued that it is important for any brand to establish consistency particularly when venturing into the market. In this case, their efforts were to explain brand extensions and the changes they bring within the market. They highlight the negative changes but also show the positive side of the process in facilitating sales within the market. They also evaluate some of the concepts involved in brand extension practices such as honesty and integrity and the need to have them in place when conducting brand extension. From their works, they also affirm how the extension process needs to be strategized to avoid failure and how organizations can benefit from the entire process.Their works were supported by Kapferer (2004) framework which of the same view arguing that “…identity expresses the brand’s tangible and intangible characteristics – everything that makes the brand what it is, and without which it would be something different” (p. 67). In his framework he aims at explaining brand relations in relations to the heritage of the parent brand and establishing the relationship between the two.
Other scholars whose work will be a basis for this study will be Roedder-John, Loken, & Joiner (1998, pp.276 – 285). The scholars conducted a number of studies, which were related to the topic for brand extension. In their study, they were of the view that risk reduction should be considered as an important aspect in practising brand extension. In this case, risk reduction is particularly considered as a process targeting the reduction of sales for a given product or service brought about by market challenges including competition and level of quality. In risk reduction, the scholars come up with an argument on the need to have a better strategy in shifting from the parent brand to ensure that consumers are happy with the new product. However, they also necessitate the argument that not every extension process is successful and thus every organization needs to know its way of facilitating the extension process to achieve success and benefit from the same.
From their study, we also establish that further study is necessary particular to cover the gaps of knowledge identified in relations to the topic at hand.Martinez & Chernatony (2004, pp. 426 – 432) were other scholars who noted that extension is either a success or failure depending on the strategy established by an organization. However, they also note that in most cases, extensions are successful because the organizations normally strategize in detail and they plan way ahead of time to venture into the market with the new product. However, they also argue that nor all extension strategies are successful and thus there is need to conduct a study that can provide a discussion on the challenges and difficulties that lead to failure of brand extension strategies.Therefore, they also recommend further study in order to establish a better understand of the brand extension practice.
From the works of Chung & Anne (1996, pp.24 – 37), this study draws information on types of extensions which may be relevant for companies in different ways. Their works explain the use of horizontal brand extension. In their discussion, they assess the successful and the failed brand extension strategies to facilitate a better understanding of what happens in the entire process. Their study will be relevant in helping understand horizontal extension. In horizontal extension, a parent brand shares identity with the new brand in an effort to establish their relations. However, it is not clear as to how the relations affect both particularly because of the sharing of identity. Therefore, in their recommendations, they argue that it is important to conduct other studies and link them to this discussion in an effort to establish a deeper understanding of the topic at hand.Chung & Anne (1996, pp.24 – 37) further provide descriptions of vertical brand extension, which is also relevant information for this study. They argue that for vertical brand extension, it involves a firm facilitating a launch in a new or the same market for a new brand. However, they argued that in most cases, the launch involves a new product particularly of different quality. Their argument is that reduced popularity of a particular product provokes the need for brand extension. This is in an effort to renew the product and enhance its market prominence. Once the brand is well-established, the extension targets the increase in sales, which is important for the growth and development of a given company.Therefore, the information obtained from the study will be relevant in understand the topic for this study better.
However Kwon & Leslie (2010, pp.276 – 285) were among the scholars who criticize the need for brand extensions.In this case, their study their argument is that in most of the extension practices, the parent brand is weakened. Therefore, they establish the argument that this is a huge risk that organization cannot afford to take if they are to survive in the vast market. Their study is therefore important in understanding the perceived risk of brand extensions and how to avoid them when practicing. One of the elements they observe as a weakness for brand extensions is the negative perceptions that emanate from the extensions. They argue that in most case, consumers are comfortable with the parent bran. Therefore, any change in the parent brand has negative impacts, which are not desired for a given organization. They are also of the view that it is not necessarily that brand extension fails. The main issue is that a brand extension may succeed but the beliefs and perceptions of the consumers change negatively. Since the consumers are the main target for the extension, such a strategy can be accounted a having failed. However, they are acknowledge that proper planning and strategizing is critical for ensuring that organizations succeed in any given brand extension strategy.
In general, seven studies will be mainly used as the basis for this study. However, the study will also incorporate other studies from other scholars who have also provided results and findings related to this topic. Additionally, this research will be based on the conceptual-theoretical research method. Among the topics that will be covered in this study include role of brand extension, horizontal brand extension, vertical brand extension, brand extensions benefits, risks associated to brand extensions, and impact of brand extension on the parent brand.
This study will use both secondary and primary research methods. The two methods have been used in other studies and they have been successful in proving the research hypothesis and meeting the research objectives, which is why they are verified as applicable for this study.Secondary research will be aiming at looking the previous works of other scholars. The main aim will be to assess what has been done to identify what needs to be done. Primary research will also be necessary after the gaps of knowledge have been identified. This will be in an effort to conduct a study and establish a better understanding of the identified topic. The main aim will be to identify and support the research objectives for the study.A survey will be used in this study to evaluate the people perceptions on brand extension and the impact it has on the parent brand.
A survey will be preferred for this study because it will help the researcher to generally build a holistic research study in a natural setting. This will also be valuable because the research will secure data directly from the consumers who have used the identified products including Dettol and Colgate and have different perceptions regarding brand extensions of the same products. Diversity of perceptions will also be relevant in providing data to be used as a basis in future study.
To test the above-mentioned hypotheses, two fast moving consumer goods (FMCG) brands will be chosen for this study. The choice of the FMCG for this study will be based on the success of previous studies that have also used them to evaluate cases of brand extensions. To identify the brands to use in this study, secondary data will be used. The brands will be purposively selected based on previous data provided by publications in the vast UK market. Of great importance will be surveys that have been conducted in the market on the most trusted brands in UK. Therefore, the information from these publications including the Economic Times and business news daily will be valuable in understanding the brand to choose for this study.
Of particular interest will be columns published between 2004 and 2011, which contained most of the information including fast moving consumer goods reports. The reportswill provide information from over 7000 people across UK regarding the FMCG in the market, which makes it immensely valuable for this study. It is also relevant because information was sought from diverse socio-economic class, age groups, income levels and geographical areas. Therefore, the information is a representation of the perceptions of the entire UK population. Times Intelligence Group which conducted the study ranked the most trusted brands in UK based on different attributes including: price premium, high level of quality, popularity for many years as a brand, evokes confidence and pride among the consumers and has a strong bran recall. Therefore, the brands chosen are definitely appropriate for this study. The two brands chosen in the FMCG category will be Colgate (ranked 1) and Dettol (Ranked 4). They are also great brand used regularly by almost everyone across UK, which makes data collection easier for the study.
Population and Sampling
The vast population for this study will be students within the UK market mainly in institutions of learning. In this case, university students will be identified for the research because it engages participants who are readily available. The population will also be relevant for this study because it integrates all the relevant demographics for the study. Some of the important demographics include age, gender, and education level.
Simple random sampling will be used in this study. The method has been identified as valuable for this study because of the nature of the required participants. Simple random sampling is critical because it gives everyone within the target population a better and equal chance of taking part in the study. Therefore, the method allows for diversity and equality in the research, which are important in collecting reliable and valid data for the study.In conducting huge research studies Creswell (2003, pp. 78 – 81) argued that simple random sampling is better because it is representative of everyone within such a population. Another major reason of using this method is to enhance the selection of unbiased sample. A total of 50 participants have been identified as ideal for this study to represent the entire population of the UK market.
However, the sample will also be divided into demographics of age, gender and education level. These demographics have been identified as important because they will ensure that the sample is representative of diverse views from the different social and economic classes. For age, the diversity is important in ensuring that the range of experience is included in the data provided. Gender equality will also be a key issue that will be relevant in enhancing equal representation of views and perceptions relating to the identified topic. For the education level, this is important in enhancing a greater representation of diverse experiences in marketing particularly in relation to the topic for brand extension.
A structured questionnaire has been proposed for this study. Creswell (2003, pp. 43 – 52) defined a structured questionnaire as an instrument that includes a set of questions, which are standardized in a way that the research respondent only provided direct responses without explanations. In this case, the questionnaire will be in form of choice provided for each question for the study. The respondent will only have to make a selection for the choice that he or she thinks that it matches his or her response. The structured questionnaire has been preferred for this study because it is straight to the point and it generates reliable and valid data for any study. This is because before the questionnaire is used; the questions are set based on the research objectives. Therefore, the researcher is sure that every question set is relevant for the study and that everything will aim at developing data that is critical in answering the research question.
In this study, separate questionnaires for all the two brands including Dettol and Colgate will be developed. Standardized constructs for the structured questionnaire will be used to measure the perceived risk, brand reputation, service quality, similarity fit, and overall brand extension. The questionnaire will incorporate questions on brand satisfaction, consumer attitude and brand reputation. This will be linking the perceptions of the consumers for both the parent brand as well as the extended brand. To enhance validity and reliability of the instrument identified for this study, they will be sent to professionals including my supervisor to ascertain that the questions asked are valid and will be relevant in answering the research questions for this study.
This study will develop the Central Limit Theorem as the basis of analysing the collected data. The theorem explains that parametric research is important for any study that exceeds 0 participants in the selected sample. Therefore, with the sample for this study being 50 participants, this is the ideal method to apply in the analysis process. The study will involve manual calculations for the responses to the questionnaires. Manual calculations will include establishing the frequency of particular responses to the questions and noting them done. Later, percentages will be calculated in an effort to simplify the data analysis process for this study. Figures, charts and graphs will be developed after the analysis to present the data in an easy to understand way. In general a quantitative analysis will be thenature for this study to enhance easy discussion and presentation of data.
Chung K. K., & Anne, M. L 1996, ‘Vertical brand extensions: current research and managerial implications’, Journal of Product & Brand Management, 5(6), pp.24 – 37
Creswell, J. W 2003, Research Design: Quantitative, Qualitative, and Mixed Methods Approaches, SAGE: Thousand Oaks. USA.
Kapferer, J. N 2004, The New Strategic Brand Management: Creating and Sustaining brand equity Long term, Kogan Page, London, U.K.
Kwon, J. & Leslie, T 2010, ‘Searching for boundary conditions for successful brand extensions’, Journal of Product & Brand Management, 19(4), pp.276 – 285.
Leedy, P. D. & Ormrod, J 2001, Practical Research: Planning and Design (7th Ed.), Upper Saddle River, NJ: Merrill Prentice Hall
Martinez, E. & Pina, J. M 2003, ‘The negative impact of brand extensions on parent brand image/executive summary’, The Journal of Product and Brand Management, 12 (6/7) pp. 426 – 432
Pina, J. M., Martinez, E., De Chernatony, L., & Drury, S 2006, ‘The effect of service brand extensions on corporate image’, European Journal of Marketing, 40 (1/2), pp. 174-197
Roedder-John, D., Loken, B. & Joiner, C 1998, ‘the negative impact of extensions: can flagship products be diluted’, Journal of Marketing, 62(1), pp. 19-32
Völckner, F., & Sattler, H 2007, ‘Empirical generalizability of consumer evaluations of brand extensions’, International Journal of Research in Marketing, 24(2), pp. 149-162