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Drivers of brand extension success Brand Management | Andreea Dicu
Conceptual framework Drivers of brand extension success | Brand Management
Introduction
Introduction  Lower product introduction expenses +
Introduction  Uncertain success of brand extension ? ? -
Gap in previous literature 1 2 Little is known about the  relevance  of different success factors in brand extensions Only...
Conceptual framework <ul><li>Direct effects – Model 1 </li></ul><ul><li>PB Characteristics </li></ul><ul><li>Quality (stre...
Conceptual framework <ul><li>Direct effects – Model 1 </li></ul><ul><li>PB Characteristics </li></ul><ul><li>Quality (stre...
Determinants of band extension success Successful brand extension Parent-Brand Characteristics H1) Quality (strength) of t...
Determinants of band extension success Extension’s Marketing Context  H5) Marketing support Advertising support Firm’s mar...
Determinants of band extension success Relationship of parent brand to extension product H7) Fit between PB and BE product...
Determinants of band extension success Extension’s product category characteristics H9) Perceived risk H10) Consumer innov...
Mediating effects Dependence relationships between success factors Quality of the parent brand Retailer acceptance Marketi...
Mediating effects Dependence relationships between success factors Quality of the parent brand Retailer acceptance Marketi...
Mediating effects Dependence relationships between success factors Quality of the parent brand Retailer acceptance Marketi...
Mediating effects Dependence relationships between success factors Quality of the parent brand Retailer acceptance Marketi...
Moderating effects Derived from previous research Quality of the PB BE success Fit between PB and BE History of previous B...
Moderating effects Derived from previous research Quality of the PB BE success Fit between PB and BE History of previous B...
Moderating effects Derived from managerial wisdom Fit between PB and BE BE success PB conviction H24) Marketing support BE...
Research design Drivers of brand extension success | Brand Management
Model specification Main (direct) effects only H1 – H10 MODEL 1 Direct effects Moderating effects Step by step procedure M...
Research design Pretest & brand selection 2 pretests: N=40; N=171 22 parent brands with three extensions selected Conceptu...
Research design <ul><li>Conceptualization & measurement </li></ul><ul><li>Extension success= perceived extension quality <...
Research design Administration & sample Door-to-door interviews 2426 completed the questionnaire 7278 cases were obtained ...
Results Drivers of brand extension success | Brand Management
Effects of PB Characteristics M1 M2 M3a M3b Quality of PB on extension success History of previous BE PB experience PB con...
Effects of the extension marketing context M1 M2 M3a M3b Marketing support Retailer acceptance Direct effect plus 3 indire...
Effects of the relationship between PB and BE M1 M2 M3a M3b Linkage of utility Fit Most important determinant of BE succes...
Effects of the extension’s product category characteristics M1 M2 M3a M3b Perceived risk Consumer innovativeness Only mino...
Moderator effects Moderator effects play a  minor role Only 2 interaction effect were statistically significant Fit x qual...
Moderator effects Degree of consumer familiarity as a moderating variable Results: notable differences only on 3 variables...
Empirical application M1 M2 Indicated 10 success factors, but not their relative importance weights Was tested to illustra...
Conclusion and implications Drivers of brand extension success | Brand Management
Conclusions 1 2 3 4 Nine out of ten factors significantly influence brand extension success Five of these had a particular...
Managerial implications 1 Identifies  success factors  that managers should care about Managers can distinguish between es...
Limitations <ul><li>How to influence success factors? </li></ul><ul><li>Small fraction of success factors investigated at ...
Thank you for your extension Drivers of brand extension success | Brand Management
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Brand Extensions

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How can the success of brand extensions be determined?

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Transcript of "Brand Extensions"

  1. 1. Drivers of brand extension success Brand Management | Andreea Dicu
  2. 2. Conceptual framework Drivers of brand extension success | Brand Management
  3. 3. Introduction
  4. 4. Introduction Lower product introduction expenses +
  5. 5. Introduction Uncertain success of brand extension ? ? -
  6. 6. Gap in previous literature 1 2 Little is known about the relevance of different success factors in brand extensions Only direct effects were tested, no potential interaction between success factors
  7. 7. Conceptual framework <ul><li>Direct effects – Model 1 </li></ul><ul><li>PB Characteristics </li></ul><ul><li>Quality (strength) of the PB </li></ul><ul><li>History of previous BE </li></ul><ul><li>PB conviction </li></ul><ul><li>PB experience </li></ul><ul><li>BE’s Marketing Context </li></ul><ul><li>Marketing support </li></ul><ul><li>Retailer’s acceptance </li></ul><ul><li>Relationship Between PB and the BE </li></ul><ul><li>Fit </li></ul><ul><li>Linkage of utility of the PB to product attributes of OP </li></ul><ul><li>BE’s Product Category Characteristics </li></ul><ul><li>Perceived risk </li></ul><ul><li>Consumer innovativeness </li></ul><ul><li>Mediating effects – Model 2 </li></ul><ul><li>Quality of the PB -> retailer acceptance </li></ul><ul><li>Marketing support -> retailer acceptance </li></ul><ul><li>History of previous BE -> PB conviction </li></ul><ul><li>PB experience -> PB conviction </li></ul><ul><li>Marketing support -> fit </li></ul><ul><li>PB conviction ->quality of the PB </li></ul><ul><li>History of previous BE -> quality of PB </li></ul><ul><li>History of previous BE -> retailer acceptance </li></ul><ul><li>Fit -> retailer acceptance </li></ul><ul><li>Perceived risk -> consumer innovativeness </li></ul>BE Success <ul><li>Moderating effects – Model 3 </li></ul><ul><li>Quality of the PB x fit </li></ul><ul><li>Quality of the PB x history of previous BE </li></ul><ul><li>History of previous BE x fit </li></ul><ul><li>Fit x PB conviction </li></ul><ul><li>Marketing support x retailer acceptance </li></ul>
  8. 8. Conceptual framework <ul><li>Direct effects – Model 1 </li></ul><ul><li>PB Characteristics </li></ul><ul><li>Quality (strength) of the PB </li></ul><ul><li>History of previous BE </li></ul><ul><li>PB conviction </li></ul><ul><li>PB experience </li></ul><ul><li>BE’s Marketing Context </li></ul><ul><li>Marketing support </li></ul><ul><li>Retailer’s acceptance </li></ul><ul><li>Relationship Between PB and the BE </li></ul><ul><li>Fit </li></ul><ul><li>Linkage of utility of the PB to product attributes of OP </li></ul><ul><li>BE’s Product Category Characteristics </li></ul><ul><li>Perceived risk </li></ul><ul><li>Consumer innovativeness </li></ul><ul><li>Mediating effects – Model 2 </li></ul><ul><li>Quality of the PB -> retailer acceptance </li></ul><ul><li>Marketing support -> retailer acceptance </li></ul><ul><li>History of previous BE -> PB conviction </li></ul><ul><li>PB experience -> PB conviction </li></ul><ul><li>Marketing support -> fit </li></ul><ul><li>PB conviction ->quality of the PB </li></ul><ul><li>History of previous BE -> quality of PB </li></ul><ul><li>History of previous BE -> retailer acceptance </li></ul><ul><li>Fit -> retailer acceptance </li></ul><ul><li>Perceived risk -> consumer innovativeness </li></ul>BE Success <ul><li>Moderating effects – Model 3 </li></ul><ul><li>Quality of the PB x fit </li></ul><ul><li>Quality of the PB x history of previous BE </li></ul><ul><li>History of previous BE x fit </li></ul><ul><li>Fit x PB conviction </li></ul><ul><li>Marketing support x retailer acceptance </li></ul>
  9. 9. Determinants of band extension success Successful brand extension Parent-Brand Characteristics H1) Quality (strength) of the parent brand H2) History of previous brand extensions H3) Parent brand conviction H4) Parent brand experience (high) (successful) (high) (high)
  10. 10. Determinants of band extension success Extension’s Marketing Context H5) Marketing support Advertising support Firm’s marketing competence H6) Retailer acceptance (high) (high) Successful brand extension
  11. 11. Determinants of band extension success Relationship of parent brand to extension product H7) Fit between PB and BE product High global similarity High ability of owner brand to make the product High relevance of the extended associations for the extension product H8) Linkage of the utility of the parent brand to product attributes of the original category (high) (low) Successful brand extension
  12. 12. Determinants of band extension success Extension’s product category characteristics H9) Perceived risk H10) Consumer innovativeness (low) (high) Successful brand extension
  13. 13. Mediating effects Dependence relationships between success factors Quality of the parent brand Retailer acceptance Marketing support Fit between PB & BE History of the previous BE PB conviction PB experience Perceived risk Consumer innovativeness - Derived from previous previous research and managerial wisdom Derived from previous previous research Derived from managerial wisdom
  14. 14. Mediating effects Dependence relationships between success factors Quality of the parent brand Retailer acceptance Marketing support Fit between PB & BE Derived from previous previous research and managerial wisdom Derived from previous previous research Derived from managerial wisdom
  15. 15. Mediating effects Dependence relationships between success factors Quality of the parent brand Retailer acceptance Marketing support Fit between PB & BE History of the previous BE PB conviction PB experience Derived from previous previous research and managerial wisdom Derived from previous previous research Derived from managerial wisdom
  16. 16. Mediating effects Dependence relationships between success factors Quality of the parent brand Retailer acceptance Marketing support Fit between PB & BE History of the previous BE PB conviction Perceived risk Consumer innovativeness - Derived from previous previous research and managerial wisdom Derived from previous previous research Derived from managerial wisdom
  17. 17. Moderating effects Derived from previous research Quality of the PB BE success Fit between PB and BE History of previous BE H21) H22)
  18. 18. Moderating effects Derived from previous research Quality of the PB BE success Fit between PB and BE History of previous BE H21) H22) H23)
  19. 19. Moderating effects Derived from managerial wisdom Fit between PB and BE BE success PB conviction H24) Marketing support BE success Retailer acceptance H25)
  20. 20. Research design Drivers of brand extension success | Brand Management
  21. 21. Model specification Main (direct) effects only H1 – H10 MODEL 1 Direct effects Moderating effects Step by step procedure MODEL 3a Direct effects Structural relationships MODEL 2 Moderating effect of consumer familiarity MODEL 3b 2 group analysis
  22. 22. Research design Pretest & brand selection 2 pretests: N=40; N=171 22 parent brands with three extensions selected Conceptualization & measurement Administration and sample
  23. 23. Research design <ul><li>Conceptualization & measurement </li></ul><ul><li>Extension success= perceived extension quality </li></ul><ul><li>Perceived overall quality of extension </li></ul><ul><li>Market position of the extension </li></ul><ul><li>Perceived overall quality compared to competitors </li></ul><ul><li>Success factors= previous studies </li></ul>Administration and sample Pretest & brand selection 2 pretests: N=40; N=171 22 parent brands with three extensions selected
  24. 24. Research design Administration & sample Door-to-door interviews 2426 completed the questionnaire 7278 cases were obtained (2426x3=7278) Sample split : Sample 1: calibration sample Sample 2: validation sample <ul><li>Conceptualization & measurement </li></ul><ul><li>Extension success= perceived extension quality </li></ul><ul><li>Perceived overall quality of extension </li></ul><ul><li>Market position of the extension </li></ul><ul><li>Perceived overall quality compared to competitors </li></ul><ul><li>Success factors= previous studies </li></ul>Pretest & brand selection 2 pretests: N=40; N=171 22 parent brands with three extensions selected
  25. 25. Results Drivers of brand extension success | Brand Management
  26. 26. Effects of PB Characteristics M1 M2 M3a M3b Quality of PB on extension success History of previous BE PB experience PB conviction Mixed results n.s. PB experience has a significant and positive effect on BE due to the positive impact on PE conviction , even in the absence of a direct effect - History of previous BE has a positive impact on PE conviction, quality of the PB and retailer acceptance.
  27. 27. Effects of the extension marketing context M1 M2 M3a M3b Marketing support Retailer acceptance Direct effect plus 3 indirect effects thorough fit and retailer acceptance Total effect= .52 compared to .09 in M1 and .22 in M2 Direct effect overestimated
  28. 28. Effects of the relationship between PB and BE M1 M2 M3a M3b Linkage of utility Fit Most important determinant of BE success n.s. n.s. n.s. n.s. 32.37%. 22.94% 22.69%. 22.59%.
  29. 29. Effects of the extension’s product category characteristics M1 M2 M3a M3b Perceived risk Consumer innovativeness Only minor relevance
  30. 30. Moderator effects Moderator effects play a minor role Only 2 interaction effect were statistically significant Fit x quality of parent brand Fit x parent brand conviction M2 emerged as the best model Degree of consumer familiarity as a moderating variable Sub-group analysis on median split sample Operationalization of familiarity : “ How often do you use the extension product?”
  31. 31. Moderator effects Degree of consumer familiarity as a moderating variable Results: notable differences only on 3 variables Consumer familiarity Low High <ul><li>Stronger impact of: </li></ul><ul><li>Quality of parent brand </li></ul><ul><li>Marketing support </li></ul>Stronger impact of fit
  32. 32. Empirical application M1 M2 Indicated 10 success factors, but not their relative importance weights Was tested to illustrate managerial relevance of findings Intuitive model; equal importance weights assumed 12 typical, realistic brand extensions from six well-know FMCG brands in Germany that had not been introduced yet Shows that use of equal importance weights leads to faulty interpretation Assumption of equal weights substantially underestimates effect of marketing support on expected performance
  33. 33. Conclusion and implications Drivers of brand extension success | Brand Management
  34. 34. Conclusions 1 2 3 4 Nine out of ten factors significantly influence brand extension success Five of these had a particularly strong contribution in the success Important structural relationships among success factors Statistically significant, but small, effects for two interaction terms: interaction of fit with the quality of the PB and with the PB conviction Fit between parent and extension product Parent-brand conviction Parent-brand experience Retailer acceptance Marketing support
  35. 35. Managerial implications 1 Identifies success factors that managers should care about Managers can distinguish between essential and less relevant factors Indicates the relative importance of success factors Equal importance weights should not be assumed; this leads to faulty interpretation and inappropriate allocation of resources
  36. 36. Limitations <ul><li>How to influence success factors? </li></ul><ul><li>Small fraction of success factors investigated at one time </li></ul><ul><li>Mediating effects could help identify ways to influence success factors </li></ul><ul><li>Study is more appropriate for understanding relative importance </li></ul><ul><li>  </li></ul><ul><li>Hypothetical brands vs. External validity? </li></ul><ul><li>  </li></ul><ul><li>Only FMCG were investigated -> Generalizability? </li></ul><ul><li>  </li></ul><ul><li>What constitutes fit? </li></ul>1 2 3 4
  37. 37. Thank you for your extension Drivers of brand extension success | Brand Management

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