CHAPTER – 2
2.1 INTRODUCTION
The objective of this study is to investigate the effects that brand extension strategies may have on brand image. Taking into account the most relevant variables considered in literature.
The purpose of this chapter is to present a review of the study about both brand image and brand extension.
2.2 DEFINITION OF BRAND
A brand is a symbol or a representation of all information related to the company product (Kotler Philps 2006, 441) the top most brands do what they say they are going to do, and they do it without fail time and again, day in and day out, no matter what the state of affairs are.
According to Philip Kotler (2006), “A brand is in essence a symbol that identifies the seller or maker. Thus brand differs from other assets such as patents and copyrights, which have expiration dates. A brand is essentially a seller's promise to consistently deliver a specific set of features, benefits, and services to buyers. The best brands convey a warranty of quality. If a company treats a brand only as a name, it misses the point of branding .” (Kotler p.443)
Brands, not only represent a name, logo or image. They also represent a customer's complete experiences with product, service or company. The power of a brand lies in the minds of consumers and what they have experienced and learned about the brand over time ( Taylor 2002, p.131).
2.3 IMPORTANCE OF BRAND
A brand is given the most importance in marketing strategy tends to highlight the brand that is being sold. Companies are taking advantage of it in their business strategy and using branding to create a favourable perception in the mind of consumers (Martinez & M.Pina, 2003).
Brand plays a critical role in a company's marketing strategy. Brand plays a key component in company's overall marketing strategy. In particular, a branding strategy provides a means to enhance the company's visibility and to integrate a strategy across national markets. Branding help creating perception, a uniqueness of a brand which differentiates it with the brands, uniqueness of brand can be associated with the brand image of the product. (Kotler Philps 2006, 443)
Brands are directly or indirectly associated with consumers. A brand transmitting a good image can command higher price, but on the other hand consumers may have both negative and positive image in their mind (Ries and Trout 1996).
Brand perceptions are created by the experience with the products. Such experiences are being developed on the basis of its use, and through the influence of design, advertising and word of mouth. Consumers willingness to rely on a brand and wait for a product to be launched or wait if their favourable product is unavailable, such perceptions are directly relates to a positive brand image. Like real life, the relationship between the consumer and the product is based on trust. The willingness to purchase the brand or even a higher price of the brand is because of its greater trust. (Jacoby & Chestnut 1978)
2.4 BRAND DEVLOPMENT METHOD
2.4.1 Brand Extension
In recent years companies are using brand extension as a strategy for launching new products. The reason why this strategy has been popular is the fact that it decreases the risk of failure of new products. Due to this fact, the most adaptive strategy of a brand is brand extension. (Aaker 1990)
Brand extension can benefits from the established brand to easier and faster way of acceptance, using established brand names. To enter new product categories or class, can substantially reduces the introductory marketing expenses. (Shienin 1988; DeGraba and Sullivan; Pitta and Katsanis 1995).
While in introducing a new brand, expenses are estimated in the range of millions (Brown 1985), the level of spending is too high in launching a new brand, this is due to its media marketing cost. Even the marketing cost for a new brand is necessarily high still the success of a new brand is at higher risk.
Many researchers have identified the cost and revenue benefits of brand extensions primarily in terms of building and communicating a strong brand positioning (Park, Jaworski and MacInnis 1986; Aaker 1990), to enhance brand awareness and quality associations (Aaker 1992; Aaker and Keller 1990), and increase the probability of trial by lessening product risk.
Brand extension can have several advantages, like brand extension can enjoy the perceived high quality which is transmitted from its parent brand. Though, the most adaptive branding strategy, brand extension is seemed to be profitable, because of the brand existing perception about original brand. This is not to say that to say that brand extension cannot damages the core brand.
Ernst & young (1999) states that, “Brand extension at same time not only fails but also brings damage to the core brand equity”.
An introduction of a brand extension can increase the likelihood of acceptance, as well as building up consumer perceptions. One of the important benefits of successful brand extension would be that they can facilitate the acceptance of additional extension. By introducing a series of extension a company could potentially extend its brand into more different ranges of categories. (Keller & Aaker, 1992).
There are many determinants of successful extensions which are defined by researchers in their research. Researchers like (Aaker & Keller 1990) have examined the factors of success and separated the unsuccessful factors to eliminate them.
A successful brand extension can be dependent on determinants, few of the relavent to this research are included in this literature review.
Defined by zeithaml (1988) as the, “global assessment of the consumer opinion about the superiority or excellence of a product”, consumers may have perceptions about a brand .Perceived quality has a broader meaning in the area of extension of a product.
Aaker and Keller (1990) demonstrate that the relationship between perceived quality and the positive attitude towards the extension is only shown in the case of high similarity (fit) between the original product and the extended product.
Keller and Aaker (1992) – verify that quality can exercise a direct effect on the evaluation of the brand extension, regardless the fit.
Researchers have also discussed the highly important factors like fit between the parent brand and brand extension. Consumers may have prior beliefs, and they may transmit their beliefs about the brand to the extension if they observe a fit between both elements (Fiskes and Pavelachak, 1986).
Some researchers like Broniaczyk and Alba (1994) have mentioned that the' fit' in between brand and brand extension does not exercise any influence.
According to Boush and Loken (1991) the perception of fit will depends on the variability between the kinds of product marketed under the same umbrella .When overall similarity or fit between the core brand and the brand extension product is great, the core brand is likely to be seen as relevant to the proposed extension.
Aaker and Keller (1990) demonstrate perceived difficulty impacting significantly and its evaluation .Perceived difficulty in manufacturing the extension has had less follow-up by other researchers. Further theses author verify that extended products hardly have any innovation or that they are ordinary or very simple to manufacturer may experience rejection by consumers.
Company's creditability depend upon the product and services that fulfil the expectation of the consumers ,if consumer finds the quality of the product is similar to the parent brand a good perception towards the company and a brand is automatically created. A company's creditability should depend on the perception of the company's expertise and trust worthiness. The company will appear more trust worthy if it already has successfully introduced a product. (Bottomley and Holden 2001).
Brand extension can reduce the risk of failure and establish trust in the brand. Brands providing something new to existing brand and reinforce the consumer perception of parent brand. (Kotler & Philips, 2006).
In the market place, most of the brand extensions are very well accepted because of the brand extension good product area. Introducing new products in to the market can involve costs of introducing it and is quite obvious that a massive amount of investment is required (Brown 1985 & Tabur 1988).Entering a new market with a massive investment can be risky business, this amount of risk forces companies to organise their existing brand in new categories.
Among all variables of brand extension, companies are very much convinced about the brand names, which is considered to be the most precious and priceless assets. (Keller 1993 ,Quelch & Smith 1996). Brand name is one of the company's most valuable assets with the equity or association that have been built up for the original brand name product.
Many researchers like (Jacoby 1997) have examined the attitude behaviour towards purchase. Situational factors like, unavailability on willingness to wait. Linked to attitude of a consumer towards the brands, continuing from the paragraph of brand extension, it is clear that brand extension revolves one product and one extension.
For the past few decades companies are adapting the strategy of introducing an extension in the same or as well as in different product categories. Multiple brand extension in various categories are being introduced as umbrella brands, It is very important to know that how a consumers evaluate a brand and its extension.
Some studies shows that extension in sequence can modify the perception towards brand, where as others find that there are no effects of extension towards family brands or brand image (Keller and Aaker, 1992).
Advantages of Brand Extensions (Keller 1998)
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Table: 2: Advantages of Brand Extensions (Keller 1998)
2.5 EFFECTS OF BRAND EXTENSION ON PARENT BRAND
Many researchers have examined the effects of brand extension on parent brand. Aaker (1992) states as the effects of brand extension on parent brand can be measured typically by brand name dilution.
Aaker (1990) suggest that “advertising of brand extension can make advertising for the parent brand more effective them by influencing its choice”.
The entire parent brand is used to introduce the brand extension. An ill-fitting of the product my dilute the product brand image. An inappropriate brand extension could create damaging associations which may be very difficult for a company to over come (Lane and Jacobson 1995; Rise and Trout 1986).
Aaker and Keller (1990) carried out a study to understand consumer evaluation of brand extension. In a laboratory setting they had asked student respondents to evaluate 20 hypothetical extensions of 6 well known brands. On the basis of the results they put forward the learning, which later came to know as Aaker's & Keller's Generalized Model of Brand Extensions.
Further focusing on brand extension impacts, we know that a good image is required to enter a new market. The leverage of a strong brand name can substantially reduces the risk of introducing a new product.
When introducing a new product, decisions are considered to be a very critical stage for any organisation. Reaction of consumers is examined and analyzed to avoid wrong judgement. The success of a brand mostly depends on the previous research and predictions of consumer behaviours (Ries and Trout 1981).
2.6 NEW BRAND VS BRAND EXTENSION & UMBRELLA BRANDS
Brand extension has been the source of strategic growth of many firms (Aaker 1990; Farquhar 1989; leuthesser 1988) (Keller & Aaker, 1992). Many companies consider brand extension as an advantage, to enter in new product category; this is because it avoids the risk of improper fitting of the product with the category.
If we see brand extension as a thought of a researcher many researchers have suggested that strategy as a reduction of introduction costs (Buday & Kene 1989).But still other researcher, have raised the issue of new brand implication like (McCarthy 2001) have examined the new and extension effect, attitude and choice behaviour.
A new brand can also attract the consumer due to its new brand curiosity. (Aaker & Keller, 1991).It can be an advantage and disadvantage, but it is very difficult to say who will be performing better.
To compare a new brand, brand extensions have more preference and superiority than the new brand. If we review the new brands, since they are new they does not have any history of quality and trust etc. Further consumers are uncertain about the quality. If a company launches two products which are good in quality and consumer have experienced it. The consumer will buy the old product, but the company who launches a new product are likely to expect from their consumer and claming that old and the new are both good in quality.
Their consumers are expected to buy the product to learn about the quality, this practise is called an umbrella brand. (Boush et all, 1991).
Nowadays consumers are very much aware of the meaning of quality to maintain present and future honesty with reputation. Company's cannot dare to cheat with low quality of the product (Boush et all, 1991).To avoid this circumstance, company's are using umbrella branding as an assurance about the quality of new product.
2.7 EVALUATING BRAND EXTENSION
2.7.1 CONSUMER ATTITUDE & BEHAVIOUR TOWARD BRAND EXTENSION
When the new extension is launched, consumers evaluate it on the basis of their attitude towards the parent brand and the extension category. If a consumer does not know the parent brand and its products at all, they will evaluate the new extension solely on the basis of their experience with the extension category (Sheinin, 1998).
Conversely, if the extension product category is new to them, an attitude towards the extension will be formed only on the basis of her attitude toward the parent brand. If the consumer knows the parent brand and the extension category, a third effect arises: the perception of fit between the parent brand and the extension category. Research has shown that the perception of fit influences extension attitude in two ways. First, it can mediate the transfer of attitude components from the parent brand and extension category to the new extension. Second, fit can moderate the relative influence of brand and categorise attitude on extension. (Sternthal & Craig 1982)
The perceived quality of the brand is variable which is considered in various brand extension studies. The belief and attitude regarding the original brand will be transmitted to the extension, and a greater perceived quality in the original brand will have a positive effect on acceptance of the extension (Martinez & M.Pina 2003).
2.8 CONSUMER ASSOCIATION WITH PARENT AND BRAND EXTENSION
The information stored in the mind of consumer in the form of perception or belief can be described as brand association (Desai & Keller 2002). Brand association can be high or low, it depends on the prior information present in the mind of consumer.
Consumer compares the new brand information with the existing information. Such strength of recalling can be defined as association with brand (Faquhar 1990).High perceived association with the parent of brand extension can have positive effect toward the brand image
2.9 POSITIVE EFFECT OF BRAND EXTENSION
The reason behind the popularity of brand extension is that it facilitates new product acceptance .brand extension creates high quality perception while reduces the cost of introductory marketing process (Keller 1998).
Brand extension can favourably affect the image of the brand, brand extension can play a very vital role in changing consumer negative perception or beliefs.(DeGraba & Sullivan 1995).
Brand extension not only enhances the brand image, it also brings new consumers, by revitalizing the brand and permits the subsequent extension (Keller 1997).
However, the high quality brand has high quality extensions, and a high quality extension will have positive effects towards the brand. (Balachnder & Ghose 2003).
2.10 EFFECT OF BRAND EXTENSION ON BRAND IMAGE
Brand extension help facilitate new product acceptance , A product accepted in the can develop association in the mind of consumer (Keller 1996) .According to Martinez & M.Pina (2003) brand association can be created with a good brand image. A brand image can be known as psychological perspective of consumers, while Keller (1993) defined “defined “perception about a brand association existing in the memory of the consumer”.
Lau & Lee (1999) state that, a good brand image can develops brand trust in the mind of consumer, and a good brand image can help in creating a perception in the mind of consumers.
Many researchers like (Keller 1993) have mentioned about the multi-dimensions of brand image about the product and the brand. Keller (1996) had examined different aspects of the brand image and suggested a method in research to measure the dimension of brand image.
One of the biggest challenge brands are facing is the brand competences, to differentiate with the other brands, a perception about a brand is created (De chernatony 1998).
Regarding this research, the aim is find out the effect of brand extension on brand image. A brand image can not be always static, it can grow bit it can also decline, to keep this image developing in a good way companies are taking numerous decisions with the passage of time. One of the most popular and successful street for the growth of companies brand image is the brand extension strategy. A brand extension can also create negative information which can distort the consumers association with the brand (John et al, Morrin, 1999; Ahluwalia & Gurhan-Canli, 2000).
At the end of this chapter, this study will explain the perception of consumers with their brands and how those brands due to that relationship are possibly extendable or not. Thus, it is clear that How a brand extension affects the brand image and the change that occurs towards a brand image as a result of brand extension.
2.11 CONSLUSION
This chapter have begin with the definition of brand extension, it importance and it effects towards the brand image. Regarding this research many previous relevant researches about brand extension and its effects are included in this chapter, which evidently provide an understanding brand extension likely to leave effects toward the brand image.
In this chapter a multi-dimensions of brand image is also evaluated. A brand image can not be always static, brand image can also rise or go in decline state. To keep this image in shape companies take numerous decisions with the passage of time. One of the increasingly popular strategies to gain growth in branding is brand extension.
Further , focused on brand extension effects also focusing on brand image, because it is very clear that a good image is required to enter new market.
In order to achieve the objective of this study, Aaker and Keller, (1990) hypothesis is designed to investigate the effects of brand extension on brand image. Mainly this study will revolve around (Aaker & Keller, 1990) generalized effect based model of brand extension.
CONTINUED .....................
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