As more and more firms realize that the brand names associated with their products or services are among their most valuable assets, creating, maintaining and enhancing the strength of those brands has become a management imperative. One of the key advantages of a strong brand is that it facilitates the acceptance of brand extensions — new products launched using that brand name. Because brand extensions reduce consumer risk and significantly lower the cost of introductory marketing programs, they have become, over the past two decades, the predominant new product strategy. Brand extensions, however, can be a double-edged sword. When managed well, they not only provide a new source of revenue, but also reinforce brand meaning, thereby helping to build brand equity. But what happens when brand extensions are not successful? After all, most new products fail, and brand extensions are no exception. Will a failed brand extension damage the parent brand, squandering the millions of dollars and countless man-hours invested in building its equity? If so, brand extensions could pose the considerable risk of brand equity dilution, and managers would have to develop much more cautious brand extension strategies.
Initial Research
Because of its fundamental importance to product marketing, a great deal of academic research has been directed at understanding brand equity dilution. The good news emerging from this research is that, by and large, parent... To read the complete article, login or sign-up using the form below.
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