Academic journal article ASBM Journal of Management

Brand Extension Strategy : Literature Review and Conceptual Model Development

Academic journal article ASBM Journal of Management

Brand Extension Strategy : Literature Review and Conceptual Model Development

Article excerpt

Introduction

According to David Aaker, the brand is not just a name, term, sign or symbol of a product, but the extremely priceless asset of that company. A robust brand always helps in increasing the customer loyalty of the company which will eventually result in higher profits for the company (Aaker, 1990). The commonly accepted fact in the market is that acquiring new customers is relatively more complex than retaining the available pool of customers. Strategies are inevitable for organisations which are planning to rope for success and launching new products in the market irrespective of consumer durables or non-durables. The usage of brand extension, to be precise "using established brand names for launching new products", is increasingly popular and influence on new product starters (Volcker et al, 2010). Arslan & Altuna (2010) had defined brand extension as 'Using a successful current brand for the introduction of new products". The majority, say up to 95%, of novel product offerings in the market place are some form of brand extension. Brand extensions also control a firm's most precious unknown asset, brand equity (Jap, 1993). Researchers and academic practitioners had recognised brand extension as a prevalent stratagem for growth (Aaker, 1991; Kwun, 2010; Keller and Lehmann, 2009; Kumar, 2005). Through a review of literature, it was identified that more than 200 studies on brand extension have been conducted in Europe and the USA, even though the number of studies is very less in the Asian continent and especially in India (Boush and Loken, 1991; Kim and Park, 2013; Chowdhury, 2007).

This research paper attempts to critically review the literature on brand extension strategies. 39 research papers published in international reputed journals on business management have been thoroughly analysed and an effort has been made to gain key insights on brand extension strategies. Based on the review of the literature, key dimensions, hypotheses and conceptual framework have been formulated in the following sections.

Literature Review

The motive behind literature review is to collect and generate structure reference related to the research problem from research articles, books and other reliable and valid sources of information which have been published in the recent past.

According to Aaker (1990), and Kotler & Keller (2006), branding is classified as a "distinguishing name or symbol which is intended to identify and differentiate". American Marketing Association has defined branding as "A name, term, design, symbol, or any other feature that identifies one seller's goods or service as distinct from those of other sellers". The legal term for the brand is a trade mark. A brand may identify one item, a family of items, or all items of that seller. If used for the firm as a whole, the preferred term is trade name.

Brand extension is a strategy used by companies to utilize the traditional brand names to move into a novel product class or classes (Aaker andKeller, 1990). Alexander & Colgate (2005) use the expression "brand franchise extensions" and explain it as utilisation of a prevalent brand name that is well-known among the consumers to enter into new product categories. Sharp (1993) defines brand extension as usage of an established brand name of one segment to get into another similar or broad category subsequently; he also refers to it as "brand stretching". According to Kotler and Keller (2006), "when a firm uses an established brand to introduce a new product, it is called a brand extension".

David Aaker (1996) expounded four brand extension strategies that can be used by an organisation to leverage its brands. Establishing line extension is leveraging the name of an existing brand for a new product in order to enter into a new market segment under the same product class by making an alteration in the product such as flavor, colour, size of the pack or in its ingredients. …

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