Brand Extension Success Factors

Brand extension success factors

Problem definition and objectives

In a highly competitive environment, organizations are convinced that the launch of new products in order to stratify the need of consumers can lead to an increase the success of a company. The strategy of launching new products can be successful but it remains some risks. Indeed, the launching from 30 to 35 % of new products has failed. Because of some factors like the high level of advertisement costs and the increasing competition, it becomes more and more difficult to introduce new products on the market.

A strategy to reduce these risks that becomes more and more popular is to follow a brand extension. Indeed, this strategy gained grown since 1984. In the USA, until 1984, the share of extension products in total new product introductions in the fast-moving consumers goods segment was only 40% (Aaker & Keller 1990, p. 27), the share amounted to 90% in 1991 (Rangaswamy & Burke & Oliva 1993). During the two decade, more than 40 studies have been made all over the world in order to determine the conditions that make a successful brand extension but some aspect are unknown or unexplored.

In this work, our goal is to determine exactly what the factors of a successful brand extension are and how these factors are valorized regarding the consumer’s perceptions. In order to maximize our chances of efficiency, we will first focus on the theory and after we will ask different segment of the population to respond to a questionnaire about a brand that we choose previously: Virgin.

Tell that we will apply our theoretical approach to two brands, one which failed and another one which is a full success. The questionnaire will understand the impact of consumer’s behavior and expectation in a typical brand extension’s situation.

Then we have to describe a problematic like:

What are the factors that the group Virgin uses to lead its brand extension strategy successfully?

In other words,

In which sectors have Virgin succeed or failed in terms of extension strategy?

Theoretical grounds

Description of the brand extension’s concept

First, we will base our approach on a theoretical basis in order to explain the foundations of our work and our questionnaire.

The brand extension is a marketing strategy that uses the same brand name to different product, to product in different category or the same category. It is a risky strategy that has to aim to increase the sales or the brand equity.