Success factors of line extensions of fast‐moving consumer goods

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’ impact on line extension success were investigated, i.e. the level of competition in the market place; retailer power; and consumers’ variety seeking behavior. Data collected from 49 marketing and product managers in the fast‐moving consumer goods industry showed that line extensions have very little added value over existing products, and that cannibalization is very much related to a line extension’s success. Of all line extensions, those involving new flavors and new packaging/sizes were most successful. Extensions that improved product quality were found to be unsuccessful. The market‐variables: level of competition; retailer power; and variety seeking behavior all had a negative influence on line extension success. Dominant brands were hurt more by variety seeking behavior’s negative impact than less dominant brands.

[1]  R. McKenna.  Real-time marketing , 1999 .

[2]  Y. Datta,et al.  Market segmentation: an integrated framework , 1996 .

[3]  Robert H. Ducoffe.  ADVERTISING VALUE AND ADVERTISING ON THE WEB , 1996 .

[4]  Stephen J. Hoch,et al.  How Should National Brands Think about Private Labels , 1996 .

[5]  Tony M. Dubitsky,et al.  CHANGING NEEDS FOR BRANDS , 1996 .

[6]  Paul R. Messinger,et al.  Has Power Shifted in the Grocery Channel , 1995 .

[7]  E. Nijssen,et al.  Accelerating New Product Development: A Preliminary Empirical Test of a Hierarchy of Implementation , 1995 .

[8]  Charlotte H. Mason,et al.  An approach for identifying cannibalization within product line extensions and multi-brand strategies , 1994 .

[9]  John A. Quelch,et al.  Extend Profits, Not Product Lines , 1994 .

[10]  Srinivas K. Reddy,et al.  To Extend or Not to Extend: Success Determinants of Line Extensions , 1994 .

[11]  Robert G. Cooper,et al.  New Products : The Factors that Drive Success , 1994 .

[12]  F. Glémet,et al.  Solving the Brand Leader's Dilemma , 1993 .

[13]  Deborah Roedder John,et al.  Diluting Brand Beliefs: When Do Brand Extensions Have a Negative Impact? , 1993 .

[14]  F. Glémet,et al.  The Brand Leader's Dilemma , 1993 .

[15]  J. Guiltinan.  A Strategic Framework for Assessing Product Line Additions , 1993 .

[16]  Raymond R. Burke,et al.  Brand equity and the extendibility of brand names , 1993 .

[17]  G. McWilliam.  The Effect of Brand Typology on Brand Extension Fit: Commercial and Academic Research Findings , 1993 .

[18]  David M. Boush.  How advertising slogans can prime evaluations of brand extensions , 1993 .

[19]  Kevin Lane Keller.  Conceptualizing, Measuring, and Managing Customer-Based Brand Equity , 1993 .

[20]  Michael A. Kamins,et al.  An Examination of Reseller Buyer Attitudes toward Order of Brand Entry , 1992 .

[21]  Mary W. Sullivan.  Brand Extensions: When to Use Them , 1992 .

[22]  David A. Aaker,et al.  The Effects of Sequential Introduction of Brand Extensions , 1992 .

[23]  D. Aaker.  Managing brand equity : capitalizing on the value of a brand name , 1992 .

[24]  Sandra J. Milberg,et al.  Evaluation of Brand Extensions: The Role of Product Feature Similarity and Brand Concept Consistency , 1991 .

[25]  Kevin Lane Keller,et al.  Consumer Evaluations of Brand Extensions , 1990 .

[26]  T. Buday,et al.  Capitalizing on Brand Extensions , 1989 .

[27]  C. Lance.  Residual Centering, Exploratory and Confirmatory Moderator Analysis, and Decomposition of Effects in Path Models Containing Interactions , 1988 .

[28]  E. Tauber,et al.  BRAND LEVERAGE: STRATEGY FOR GROWTH IN A COST-CONTROL WORLD , 1988 .

[29]  Paul E. Green,et al.  A Consumer-Based Approach to Designing Product Line Extensions , 1987 .

[30]  Bernard J. Jaworski,et al.  Strategic Brand Concept-Image Management , 1986 .

[31]  L. Phillips.  Assessing Measurement Error in Key Informant Reports: A Methodological Note on Organizational Analysis in Marketing , 1981 .

[32]  Edward M. Tauber,et al.  Brand franchise extension: New product benefits from existing Brand Names , 1981 .

[33]  John R. Hauser,et al.  Design and marketing of new products , 1980 .

[34]  R. Schmalensee.  Product Differentiation Advantages of Pioneering Brands , 1980 .