Brand Extentions
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ANZMAC 2009
Vertical Brand Extensibility: A Conceptual Framework Nicolas Pontes, Monash University, nicolas.pontes@buseco.monash.edu.au Colin Jevons, Monash University, colin.jevons@buseco.monash.edu.au
Abstract Brand extension have been discussed to a great extent during the past two decades, however, most of the work has focused horizontal extensions and little attention has been payed to vertical brand extension. To fulfil this imbalance of existing knowledge, in this article, we propose a conceptual framework that integrates existing brand extension knowledge with insights from the pricing literature. The conceptual framework shows that core-brand evaluations are affected by the step size. Moderating factors that influence this relationship are also identified, namely fit perception and direction of the extension. The framework is subsequently used to develop concrete research propositions to guide further research in the area. Keywords: vertical line extensions, fit perception, step size, core brand evaluation, price-limit theory.
ANZMAC 2009
Page 2 of 8
Vertical Brand Extensibility: A Conceptual Framework Introduction It has been suggested that brand extensions spend less in advertising and promotion when compared to new brands. Introducing a new brand in the market can be risk due to high failure rates and high costs of new products introductions (Aaker, 1991, Pitta and Katsanis, 1995, Reddy, Holak and Bhat, 1994). Brand managers have frequently used brand extensions to target new markets and segments reducing marketing expenditures, while increasing retail shelf share (Kadiyali, Vilcassim and Chintagunta, 1998). This practice is so often used that most of new product introductions are made through extension of existing brands (Kirmani, Sood and Bridges, 1999, Musante, 2007, Pitta and Katsanis, 1995, Reddy, Holak and Bhat, 1994). As Aaker (1991) stated, there are two types of brand extension: line extension and category
ANZMAC 2009
Vertical Brand Extensibility: A Conceptual Framework Nicolas Pontes, Monash University, nicolas.pontes@buseco.monash.edu.au Colin Jevons, Monash University, colin.jevons@buseco.monash.edu.au
Abstract Brand extension have been discussed to a great extent during the past two decades, however, most of the work has focused horizontal extensions and little attention has been payed to vertical brand extension. To fulfil this imbalance of existing knowledge, in this article, we propose a conceptual framework that integrates existing brand extension knowledge with insights from the pricing literature. The conceptual framework shows that core-brand evaluations are affected by the step size. Moderating factors that influence this relationship are also identified, namely fit perception and direction of the extension. The framework is subsequently used to develop concrete research propositions to guide further research in the area. Keywords: vertical line extensions, fit perception, step size, core brand evaluation, price-limit theory.
ANZMAC 2009
Page 2 of 8
Vertical Brand Extensibility: A Conceptual Framework Introduction It has been suggested that brand extensions spend less in advertising and promotion when compared to new brands. Introducing a new brand in the market can be risk due to high failure rates and high costs of new products introductions (Aaker, 1991, Pitta and Katsanis, 1995, Reddy, Holak and Bhat, 1994). Brand managers have frequently used brand extensions to target new markets and segments reducing marketing expenditures, while increasing retail shelf share (Kadiyali, Vilcassim and Chintagunta, 1998). This practice is so often used that most of new product introductions are made through extension of existing brands (Kirmani, Sood and Bridges, 1999, Musante, 2007, Pitta and Katsanis, 1995, Reddy, Holak and Bhat, 1994). As Aaker (1991) stated, there are two types of brand extension: line extension and category
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