Brand extensions: A manager's perspective
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EDWIN J. NIJSSEN holds a PhD from Tilburg University and is a professor of marketing at the Nijmegen School of Management, Radboud University Nijmegen, The Netherlands. His interests focus on relationship marketing, strategic and international marketing issues, brand management and new product development. He was a visiting professor at Michigan State University and New York University and his work has been published in the Journal of the Academy of Marketing Science, International Journal of Research in Marketing, Journal of Product Innovation Management and Long Range Planning, among others.
CLARA AGUSTIN is an assistant professor in the Department of Economy and Business, Universitat Pompeu Fabra, Spain. She holds a masters degree in psychology and is in the process of finishing her PhD. Her work has been published in the Journal of Marketing Research.
Abstract Brand extension research has focused on consumers’ evaluations of potential brand extensions. Little attention has been paid to the mental models used by brand extension decision makers, that is, their interpretation of market preferences and successful brand extension strategies. Using conjoint analyses a study was made of what marketing managers consider to be the ideal brand extension. The results show that their mental model for successful brand extension is driven by variables such as the consumers’ perceived fit between parent brand and extension, the positioning of the brand, and the level of added value of the extension product. Other variables, like the breadth of the product line of the parent brand and the number of brands in the company’s portfolio, also play a significant but marginal role. The results suggest that managers use a non-compensatory model of decision making.
INTRODUCTION
Edwin J. Nijssen Nijmegen School of Management, Radboud University Nijmegen, PO Box 9108, 6500HK Nijmegen, The Netherlands Tel: ⫹31 (0)24 361 1868 Fax: ⫹31 (0)24 361 1933 E-mail: [email protected]
In 2003 alone, some 27,000 new food and household products were introduced to the US market.1 While the number of brand extensions cannot be derived from these data, the use of existing brand names on new products in different categories has become a major means to maximise the value of a firm’s intellectual property. Marketing managers use their company’s brand names to increase the rate of acceptance of new products by both retailers and consumers, while keeping advertising and promotion costs low.2,3 Thus brands have become an important launching platform for new products.4,5
Earlier brand extension research has aimed to explain the underlying mechanism of consumers’ evaluation and purchase intention regarding brand extensions. With a few exceptions6–8 this research has predominantly focused on consumers’ evaluations.9 Drawing mainly from psychological theories, it has provided an understanding of the key variables that consumers use for evaluating brand extensions.10 Recently, researchers have been more concerned with the external validity of their models, and
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