
Ditch the lengthy and expensive new business pitch, says Forrester
Agencies have always hated pitching. Is the answer to reframe pitches into paid projects that make pitch consultants into partners?
BRAND EXTENSIONS
By our News Team | 2023
Given the high failure rate of brand extensions, it is vital for marketers to understand what factors can drive their success.
Researchers from the University of International Business and Economics (China), University of Groningen (Netherlands), University of Cologne (Germany), and University of Chinese Academy of Sciences (China) have published a new Journal of Marketing article that examines the drivers of brand extension success.
Photo courtesy of The Coca-Cola Company
Management typically expects that introducing a new product under an existing brand name can reduce introduction costs, lower the risk of failure and increase profit. However, only 30% of all brand extensions in the US 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.
According to the research team, the study provides three key findings that will benefit chief marketing officers:
Leverage both parent brand equity and extension fit
There is a 60.6% probability of a more positive response to a brand extension if parent brand equity improves. Similarly, there is a 61.4% probability of a positive response to a brand extension if extension fit improves.
Co-author Chenming Peng says: “Managers should leverage both parent brand equity and extension fit to enhance brand extension success. However, pay more attention to extension fit because it is slightly more influential than parent brand equity.”
Consider parent brand equity and extension fit simultaneously
Managers should pay attention to the differential effects of various dimensions of parent brand equity and extension fit. For example, when introducing an extension product, creating and highlighting similarities in product features and images of the parent brand and the extension is beneficial.
“We find that parent brand equity can strengthen the positive impact of extension fit on brand extension success, and vice versa. Therefore, managers should consider parent brand equity and extension fit simultaneously,” explains co-author Tammo H.A. Bijmolt.
Parent brand equity has a positive (though small) effect on brand extension success even if the extension has a poor fit. Similarly, extension fit exerts a positive (though small) effect on brand extension success even if the extension has a low parent brand equity.
“If the parent brand does not have high equity, brand extensions can still be a viable strategy for launching new products, as long as the extension fits well with the parent brand. Likewise, an extension that does not have a good fit can still be successful, as long as the parent brand is strong,” co-author Franziska Völckner adds.
Take a broader perspective on brand extension strategies
Managers should take a broader perspective on brand extension strategies by considering contextual factors related to the parent brand, the extension product, communication, and consumers. For example, managers of brands whose existing core products are services should particularly emphasise the equity of the parent brand (and its dimensions) when introducing an extension product.
You can find out more about the study ‘A Meta-Analysis of Brand Extension Success: The Effects of Parent Brand Equity and Extension Fit’ here.
Agencies have always hated pitching. Is the answer to reframe pitches into paid projects that make pitch consultants into partners?
Well-known Kenyan marketer to head up new hub, which will service Diageo operations in various parts of sub-Saharan Africa.
South African brands again dominate the latest Brand Finance Africa-wide study, but several Kenyan brands put in a strong showing.
Hypothetically, consumers would even go as far as to pay to prevent their personal information being resold to third parties.
The unveiling of the Top 200 brands by the Marketers Association of Zimbabwe culminates in the Superbrand Awards at year-end.
While culture and history still permeate the North African consumer experience, it is also a region undergoing a dramatic evolution.
Company says order-fulfilment software from the US digitises and optimises the picking, packing, staging and distribution of online orders.
Placing goods that are not on promotion next to ones that are being discounted can have both positive and negative effects.
AzamPesa mobile money wallet set to close the gap between urban and rural areas in terms of access to financial products and solutions?
Survey finds people spend a month of their lives waiting for call centre agents to pick up. So insurer unveils ‘#StopHoldMusic’ campaign.
Top brands of the future will not be focused on the products they sell, but rather on serving an ecosystem of stakeholder needs.