Literature Review: Brand Management and Brand Extension Strategies

This report presents a literature review on brand management, specifically focusing on brand extension as a marketing strategy. It explores the concept of brand management, which involves evaluating and determining techniques to establish a brand's position and significance in the market. The review highlights the importance of developing and maintaining relationships with the target market for effective outcomes. It delves into the tangible and intangible elements of brand management, with a particular emphasis on brand extension, a strategy used by firms to leverage their brand reputation to introduce new products under the same brand name. The review discusses various aspects of brand extension, including its benefits, requirements for execution, and the opinions of different authors on the subject. It also examines the factors that influence consumer behavior and the success of new product launches, such as brand reputation, perceived similarity, and pricing strategies. The report emphasizes the importance of market research and understanding consumer perceptions to ensure the successful implementation of brand extension strategies and the potential for positive outcomes like increased market share and brand visibility.

Running Head: LR on Brand Management
Brand Management
Literature Review

Brand management is the process of evaluation and determination of the techniques in order to
observe the position and significance of brand in the market. It is necessary to develop and
maintain good relations with target market in order to attain effective outcomes from brand
management process. Brand management includes tangible and intangible elements, under which
tangible elements are price, packaging, and all those things which are essential for promoting a
product and service effectively in the target market. Intangible elements are relationship
developed by the company with consumer and the experience which consumer had with the
brand. Thus, it is the duty of a brand manager to look into all aspects which could affect the
reputation of the brand in the target market. Apart from this, brand manager is also responsible
for managing all these aspects in an effective manner so that desired outcomes could be acquired.
While executing brand management, there are several other aspects which need to be considered
as those are the part of brand management technique only. These attributes are brand extension,
brand revitalisation, managing brand reputation, etc. (Dwivedi, Merrilees & Sweeney, 2010).
Under this report, literature review will be conducted in relevance with the brand extension
which plays crucial role in introducing new products under the same brand name in the target
market. It is a marketing strategy and used by firms in order to utilise the reputation and good
image of the brand in order to introduce the products and services of different category under the
same brand name. In this literature review, certain components and aspects of the brand
extension will be discussed. In addition to this, opinion of various authors and philosophers will
be observed and discussed in relation with the brand extension.
According to Kushwaha (2012), primary factor which is responsible for the success of a product
depends upon its positioning strategy and it is directly linked with the brand name. According to
him, definition of brand name describes name, sign, symbol and design or it can be combination

of all these elements which describes the identity of manufacturer and seller. All these elements
plays essential role in order to differentiate one brand’s product from its primary competitor’s
product. Author has also described various benefits of brand extension. It is majorly used for
launching a new product or modified product in the target market in a totally new product
category using the successful brand name. Following are certain requirements for executing
brand extension strategy:
 Primary usage of brand extension is done to influence customers’ brand choices. It helps
the companies to promote their new products in the existing as well as in new markets
with the objective to gain success. As per Völckner & Sattler (2006), using the successful
brand name helps the organization to attain its desired goals and the objectives which are
correlated with the introduction of new and modified products in different category.
 Hussain & Rashid (2016) has recognised that brand acts as the powerhouse and it has the
sufficient power and energy which is required to brighten other territories. In the same
manner, organization could use the effectiveness and efficiency of its brand name in
order to successfully launch company’s new products and services in the market.
 Using the acquaintance with the consumers in relation with the brad for introducing the
new products in the market increases the chances of acceptance by them. Hence, it can be
observed that the risk related to the introduction of new product in the market will be
reduced through using e successful brand name.
 It has been observed that customers generally prefer to adopt the products and services of
well-known brands. This is because, there is an assurance related with the product’s
quality behind the successful brand name.

 Organizations need to adopt various unique and advanced measures in order to promote
the new products manufactured by them in the target market. This is necessary as per
Monga & John (2010) in order to develop a significant image amongst the target and
potential audience. But using existing brand name for promotion of new products and
services in the target market is much easier and effective strategy.
 Organization could utilise the benefit of ‘Spillover of advertising’ for the products which
are associated with the brand. In the scenario, where promotions are being done for a
newly launched product under the same brand name, it will also help the organization to
promote the existing products affiliated with the same brand (Batra, Lenk & Wedel,
2010).
 Visibility of brand enhances with the help of brand extension.
According to Dwivedi, Merrilees & Sweeney (2010), there are two types of brand extension
which are:
 Extension into unrelated category
 Extension into related category
(Source: Kushwaha, 2012).

Apart from the types of extension, there are few extension dimensions which describe the ways
to extend the brand. In addition to the fact that brand extension could be done in both ways i.e. in
the same product category as well as in the different product category. Hence, it could also be
said that horizontal and vertical extension (Spiggle, Nguyen & Caravella, 2012).
According to Sattler, Völckner, Riediger & Ringle (2010), it has been observed that the brand
extension is implemented in order to influence the existing potential customers of the
organization towards the new product or service introduced by the same company affiliated with
the same brand name. This helps the customers to easily trust upon the quality and other
measures of the product. Basic concerns of a consumer while consuming a newly launched
product are its quality, efficiency to fulfil needs and wants of consumers and its prices related
with the other products of the same category. When the same product is launched under a brand
name, chances of product’s success increases as well as it extracts relatively better outcomes for
organization. It has been observed from market research that consumers’ trust level is much high
on the new products launched by any well-known existing brand in relation with the new
products launched by the new companies (Sattler, Völckner, Riediger & Ringle, 2010).
For instance, Zara is apparels manufacturing multinational company and they are deciding to
produce perfumes and deodorants and a newly established company is also planning for entering
into the same target market and they are also launching perfumes and deodorants. After one year
of their launching, when results were analysed, it was observed that Zara has acquired a big
portion of the market share while the newly established organization is still struggling for
developing the appropriate image in the customer’s mind-set’s in relation with their products.
Thus, the fact cannot be denied that well-known brand name plays crucial role in the success of
newly launched product irrespective of the product category, hence, brand extension is an

important aspect for business. On the basis of Sood & Keller (2012), brand extension should be
executed after successful implementation and execution of market research in relevance with the
introduction of new products. Primary reason behind this is conducting evaluation regarding
whether the new product launched in the market will be successful or not using name of the
brand and that too without affecting the existing brand equity.
Apart from this, cost of launching has also been considered an important aspect in introduction
of new product. Launching of new product requires huge cost while a large part of cost could be
saved by introducing the new product under existing brand name. While examining consumer
reactions towards introduction of new products under existing and reputed brands, it was
observed that if consumers finds appropriate connection amongst the produced introduced by the
company with the company’s core functionalities. Success of new product is highly dependent
over this factor and thus, it is necessary for an organization to consider this on priority basis. For
instance, Zara enters into food and consumable goods industry and launches coffee under their
brand name. No matter, Zara has a high reputation in apparel industry, consumers will think
many times before choosing their new product i.e. coffee over existing and reputed brands of the
same product category (Song, et. al., 2010).
Thus, it has been observed by Anwar, et. al., (2011), that consumers look for a certain level of fit
degree between the core functionality of the brand and the newly launched product before
choosing the particular product. It is the duty of the marketing managers to analyse the marketing
environment and the demand of the particular product which is will be soon produced by the
organization in order to expand its business. In relation to this, managers are required to analyse
the perfect launching category of the product as well as the risk of cannibalisation should also be
considered so that the performance of the brand could not be affected in negative manner. Apart

from these factors and scenarios related to brand extension, Chen & Chen (2002), had examined
certain negative impacts which are directly linked with the brand extension. Primary negative
impact which could affect brand’s goodwill due to brand extension is the failure of new product
launched in the market and because new product is linked with the brand name, demand and
success of its existing products will also be affected. Sichtmann & Diamantopoulos (2013) has
conducted a research under which impact over evaluations of brand extension has been discussed
through brand reputation, perceived similarity, consumer innovativeness, perceived risk and
other factors. Result obtained from study describes that the perceived similarity is a crucial factor
which affect the evaluation of services brand extension. Apart from this, brand’s reputation plays
crucial role in the success of brand extension and while executing brand extension, organization
must consider the price of the competitor’ product. While entering into new product category
with the existing brand name, prices plays crucial role in the success of the new product. For
instance, Zara is planning to enter into food and consumable goods category and they had
planned to introduce their coffee in the market. But before introduction of coffee, it is necessary
for the organization to understand the factors related with the product launching such as
competitors in the market, prices of the competitors’ products, primary competitive products, etc.
From this evaluation, organization will be able to execute brand extension in an effective manner
along with attaining success in the target market. Pricing model for the new product and the
quality measures must be adopted in relevance with the nature of the product and on the basis of
marketing conditions. Consideration of these factors will help the organization to promote its
products in the market along with attaining desired goals and the objectives (Stankeviciute &
Hoffmann, 2010).

Magnoni & Roux (2012) has also conducted research for evaluating the perceptions of different
consumers with relevance to the brand extension. Companies divide the big market into small
segments on certain basis in order to target the appropriate market for promoting their products
and services efficiently. Organization will identify a particular market before promoting its
products and services and it will also help the organization to gain its goals and the objectives
along with gaining appropriate image in the target market. In relation to the introduction of new
product in the market under the existing brand name, the same strategy needs to be applied with
the objective of acquiring desired goals and the objectives. With the research conducted by He &
Li (2010), it has been analysed that consumers generally does not prefer to switch brands until
they face any challenge or dissatisfaction from their current brand. In these scenarios, companies
who are planning to introduce new product in the same or different product category using
brand’s goodwill needs to showcase their products more advantageous from its competitors’ in
every possible aspect. For instance, Zara has planned to introduce coffee in the market while
certain reputed brands already exist in the market such as Nescafe, Maxwell House, etc. They are
old manufacturers and distributors of coffee and performing their functionalities in international
market. Hence, it is necessary for Zara to analyse certain weak points of the companies who are
already exists in the market with the objective to work upon them and provide most appropriate
coffee to the target audience. This will help the organization to attain its desired goals and the
objectives in an effective manner along with gaining an adequate competitive advantage in the
target market (Joji, 2011).
According to a study done by Müge Arslan & Korkut Altuna (2010), they have analysed certain
factors which will affect the brand extension strategy. Tastes and preferences, brand loyalty,
habit of consuming, satisfaction and the customer centric approach adopted by the companies.

Apart from these, there are numerous factors which could affect consumer’s choices. In this
study, author realised that there are certain factors linked with the brand extension and all these
factors should be considered before executing this step. Almost eighteen factors have analysed
which plays crucial role in the success of brand extension. All these factors are clubbed in seven
groups which are as follows:
 Certain level of fit degree should be found between the core brand and the brand
extension product.
 Quality measures adopted by core brand
 Past performance of the core brand
 Product category should be categorised to the extent to which core brand is extended
 Measures adopted by the core brand in terms of spreading awareness in the target
audience
 Firm’s characteristics which are also implemented on the brand extension
 Promotional and advertisement strategies implemented for brand extension (Dwivedi &
Merrilees, 2013).
Along with the impact of above factors over brand extension, Ma, et. al., (2010) has also
analysed various stages which will affect the brand’s image in the market after extension.
Primary factor which affects the image of brand is strategies used and implemented for brand
extension. Apart from these factors, variables such as brand’s goodwill before extension,
perceived quality of the extension and the correlation amongst the parent brand and the newly
launched product also affects the brand’s image. Consumer’s perception towards the brand also
plays crucial role in the success of brand extension. Brand reliability and its past performance
should be considered as significant factors which could directly affect core brand’s image along

with the introduction of new product in the market. While evaluating the success of brand
extension from the previous research, it was observed that brand extension could also lead to
brand dilution. On the other hand, author also reviewed that due to large number of products
associated with the core brand, chances for the brand extension increases. For instance, Nestle
Company was initially engaged in production of chocolates but slowly and gradually they
adopted brand extension strategy under which Maggi, cereals, coffee, dairy products, etc.
products were launched. This is the perfect example for the success of brand extension strategy
due to large number of products is associated with the brand. With the help of large number of
products, organization’s goodwill in the market increases as well as it also increases
opportunities for attaining success and growth in relevance with the introduction of new products
in the target market (Mariadoss, et. al., 2010).
Choi, et. al., (2010) has also analysed certain limitations and benefits attached with use of brand
extension strategy which helps to determine the success and failure of this strategy and one can
reach to the decision in relevance with the usage of the strategy. Following are those advantages
and disadvantages related to the implementation of brand extension:
Advantages-
 Brand extension increases the acceptance chances by the target customers for new
product.
 Brand image increases
 Using existing brand image for promoting the new products reduces promotional and
advertisement costs.

 Development of new brand is a risky and costly procedure and this could easily be saved
with brand extension (Walsh & Lee, 2012).
 Due to brand image, success for new products increases.
 Brand extension also increases core brand value.
 Success of new product ultimately affect the goodwill of parent brand
 Brand extension revives the parent brand
 Subsequent extensions are allowed
 Market share for the parent brand increases along with the increase in the brand
reliability
 Customer base also increases due to introduction of new product
Disadvantages-
 If brand will be extended in unrelated markets, it will decrease the chances of attaining
success for the new product as well as it will also affect the parent brand’s image
 With the introduction of new product, risk exists which generates inferences through
which parent brand’s image may get damaged
 Brand extension should be done in the areas where chances are high to acquire the market
share through beating the existing companies in the market (Dwivedi & Merrilees, 2013).
Thus, it can be evaluated from the above discussion and from every aspect discussed with
regards to the brand extension which is a marketing strategy used for expansion and
diversification is effective if it is applied in the related markets with the parent brand otherwise it
will lead to negative outcomes. In order to realise the significance of brand extension, perception
regarding various authors and scholars have been reviewed in this report. It is a marketing

strategy which is used for the company’s expansion and diversification. Diversification is the
nature of business and it helps the management to adopt innovative and advanced measures for
expand the business in the market. In relevance to brand extension, various objectives have been
discussed under this literature review. The final outcomes which have originated from a long
review over various author’s thinking related with the brand extension is that it is effective but
certain conditions must be considered.
Apart from this, it has also been observed that brand extension strategy should be followed after
analysing the marketing conditions related to the particular product. Along with this, it is also
essential with the objective of determining the factors which will play crucial role in
organizational success and expansion. In relevance to these points, it is necessary for the
organization in order to attain desired goals and the objectives in relevance with the introduction
of new product under existing brand name.