Brand extensions

Abstract

Brand extension is a widely used new product introduction strategy for firms. It has gained significant attention both from academia and the business world. While firms can benefit highly from well-implemented extensions, they can significantly suffer from unsuccessful ones. In this chapter, we review research dating from the 1990s that addresses success factors of brand extensions. Our chapter is structured as follows: First, we provide a brief discussion on the meaning and advantages of brand extensions. Then, based on a review of extant literature, we identify three major psychological processes that underlie consumers’ extension evaluations, namely categorization, motivational processes and thinking styles. Subsequently, we distinguish among four main factors (i.e., brand content, brand structure, market structure and consumer characteristics) that moderate the process by which consumers evaluate brand extensions. Finally, we discuss the spillover effects of extension evaluations on the parent brand, and address avenues for further research.