Positive Effects Of Brand Extension

The Effects of Brand Extension toward the Brand Image

Loh Jia Cong. Student

Multimedia University

Introduction

Aaker and Keller (1990) define it as, “brand extension occurs when a firm uses an established brand name to introduce a new product into a new product category”. The existing brand name is also called parent brand. Brand extension also representative a company utilizes their brand name to a new product and leverage equity for expansion. Every company hopes to utilize brand extension leverage with its competitors and increase the sales or profits with the new product they offer. The purpose is to attract potential customers and retain loyal customers. When conduct brand extension, company should use a well-known brand

Any dimension of association will link the brand to consumer’s memory (Aaker, 1996 a). The perceived value occur while customer experience something good they used before will lead them to recognize your brand name. For example, people perceived Nike provide quality products due to the good feedback by the users. Therefore, people will purchase the new item Nike launch because of the previous experience told them Nike is quality. Brand image can be analyzed from two characteristics: general brand image (GBI) relating to the brand name and its symbolic aspects, and product brand image (PBI), directly relating to physical attributes and the product’s functional, emotional and self-expression benefits (Martinez; Chernatony, 2004).

Company can gain benefits while using brand extension such as increase brand image, reduced expenses for introductory & follow up marketing program, different items for customers, and cost of developing new brand is reduced. “Brand extensions provide a way to take advantage of brand name recognition and image to enter new markets” (Aaker and Keller, 1990, p. 27). Brand extension may get loss of reliability, if it is extended too far. There can be chances of damaging the image of the brand by the new product. If the brand extension has no advantage over competing brands then it may lead to

Tauber (1988, p. 28) defines fit as an extent to which consumers accept a new product as “logical and would expect it from a [parent] brand”, which is consistent with Murphy and Medin (1985) and Keller (2003). Thus, Schifmann and Kanuk (2000) definition of perceived fit is adopted in the current study. Brand fit is not only restricted to product category similarity. Park et al. (1991, p. 185) also stress the fact that: “two different bases that consumers may use to evaluate an extension’s goodness of fit with the brand category are product feature similarity and brand concept consistency” where brand concept consistency implies consistency with brand associations. A fit may exist in any one of the associations that are made about the brand. Product associations may be based on product category, product attribute/functional benefits, application, technology, channel, user and brand personality/self-expressive benefits (Aaker, 2004, pp.