Why do Brand Extension Strategies Fail Literature review

Why do Brand Extension Strategies Fail - Literature review Example The strategy of brand extension is being used by the organisations in order to cope up with different challenging situations and overcome the competitive pressure in the industry. According to the Han (1998), the brand extension of strategy have been beneficial for the companies in the process of reaping additional benefits from the already established brand. The main reason or rationale behind the introduction of new product under the name of well known and established brand is to make sure that the customers and market is familiar with the brand and the new product category can capture market on the basis of the positive and main characteristics of the parent brand (Buil, Chernatony, and Hem, 2009). Different options available to the brand managers in the process of brand extension are: 1. Horizontal Extension: the horizontal extension is further divided into line extension and category extension. In the line extension a whole new product, within the same category as that of the pa rent brand, is introduced in order to target and capture a new and different segment of the market. On the other hand, in the category extension the same brand is extended into a whole new product category. ... IMPACT OF BRAND EXTENSION STRATEGY ON THE BRAND IMAGE AND BUSINESS: In order to make sure that the brand extension strategy proves to be beneficial and helpful for the organisation and increase the competitiveness of the organisation it is important to identify and understand the implications of the brand extension strategy on the brand image and overall business of the organisation (Serrao and Botelho, 2008). There are several factors which directly influence the impact of the brand extensions on the brand image. According to the research study of Martinez and Chernatony (2004), the perceived brand quality by the consumers and the attitudes and behaviours of the consumers towards the overall extension strategy have positive impact on the general brand image and product brand image. The research study also concluded that the fact that consumers are familiar and aware of the brand only have impact on the general brand image and have no impact on the product brand image. On the other h and the consumers’ perceived degree of fit between the parent brand and new brand only influence the product brand image. The research study of Martinez and Chernatony (2004), have created a difference between the general brand image and the product brand image. They have correctly identified the impact of the consumers attitudes on the general brand image and product brand image. However, their stance about the impact of familiarity and awareness on the GBI and PBI is somewhat shaky. If the customers are aware and familiar with the brand it will definitely affect the PBI also, because the customers will relate the product with the overall brand image and will associate same image with it. The research study by Park, McCarthy, and Milberg (1993), concluded that the