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Jijk Essay

8574 words - 35 pages

European Journal of Marketing 33,5/6 450
Received October 1996 Revised May 1997 Revised December 1997

Success factors of line extensions of fast-moving consumer goods
Nijmegen Business School, Nijmegen, The Netherlands and Stern School of Business, New York, USA
Keywords Brand extensions, Brands, Consumer behaviour, Marketing strategy, Product variety, Success Abstract Among the range of strategies available to a company, line extensions are an important way to keep a brand alive and to realize incremental financial growth. In order to be successful at introducing new extensions managers should understand line extensions' key success factors. In this study three market-related factors' ...view middle of the document...

Furthermore, brands provide a launching pad for new products (Tauber, 1981). As new product failure remains high (Urban and Hauser, 1993) and increased competition in distribution channels and rising advertising costs have made new brand launches more difficult (Aaker, 1991), using a familiar brand name to generate new product acceptance is an increasingly popular growth strategy (Buday, 1989; Tauber, 1988). A range of brand leverage strategies exists, varying from line extension to brand extension. Line extensions involve the launch of new products from the same product category or product class under the familiar brand name. Brand extensions stretch the brand franchise beyond the current product class (Tauber, 1981; Aaker and Keller, 1990).
The author thanks Sandra de Jonge and Brenda van Leeuwen for their help with the execution of the research. He also thanks Martha Chorney, Marie Palumbo, Eric Yorkston and two anonymous reviewers of the European Journal of Marketing for their helpful comments.

European Journal of Marketing, Vol. 33 No. 5/6, 1999, pp. 450-469. # MCB University Press, 0309-0566

Aaker (1991) reports that 89 percent of all new products are line extensions, Success factors 6 percent are brand extensions and only 5 percent involves a new brand name. of line extensions Although line extensions are by far the most popular way of introducing new products (Green and Krieger, 1987), most of today's research is focused on brand extensions. An integrated framework for explaining a line extension's success was introduced only recently. Reddy et al. (1994) published a 451 comprehensive study identifying the parent brand's relative strength and symbolic value, the extension's order and sequence of entry, support for the extension, firm size and a firm's distinctive marketing competencies as key success factors of line extension in the US cigarette industry. The framework did not include market-related factors. Although a familiar brand will help acceptance of a new product in the market, the Association of National Advertisers reported that 27 percent of all line extensions fail. Further, even in those cases when extensions are considered successful, they do not always generate extra profits (Tauber, 1988). Therefore, a better understanding of line extensions' success factors is needed, especially as the role of line extension as a growth strategy may be changing owing to more individualistic and fragmented consumer behavior, increased competition between brands, and increased retailer power. Today's consumers want variety and choice (Datta, 1996). This has increased the opportunity for line extensions involving new flavors and sizes, but it has also made consumers harder to reach (Aaker, 1991). Furthermore, retailers are becoming more sophisticated and manage their product categories more efficiently (Alpert et al., 1992). Many have introduced private labels and as a result competition between brands has increased. Additionally,...

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