RESEARCH PROPOSAL

THE EFFECT OF BRAND EXTENSION STARTEGIES UPON BRAND IMAGE

INTRODUCTION:

A strategy to connect any current brand name to a new product introduced in another
product grouping is popularly called a brand extension strategy (Swaminathan, Fox and
Reddy, 2001). Brand extension strategies are extensively used because it is generally
believed that these strategies construct and communicate solid brand positioning, increase
awareness and quality associations, and enhance the prospect of trial by lessening new
product risk for consumers (Taylor and Bearden, 2002).

The brand extensions lend a hand to enhance the chance of a new product success and
lower its launch costs (Kapferer, 1997). Through the history of brand extensions, multiple
successes have been observed. However, not all brand extensions have been successes
(Gronhaug, Hem and Lines, 2002). Launching any brand could earn millions of dollars to
the company but it also entails great risk, as well. According to Aaker (1990) “an ill-
conceived brand extension may seriously damage the original product and preclude the
establishment of another brand with its unique associations and growth potential”.

Brand extension research has focused mainly on the consumer perception of brand
extensions. Two factors have emerged as important in extension evaluations, one is the
effect of the parent brand and, second, the similarity between the original and the
extensions categories.
Brand extensions can have a positive effect on the brand (Keller and Aaker, 1992) but a
bad extension can dilute the parent brand (Loken and Roedder-John, 1993) Brand quality
plays an important part in brand extension strategy (Dacin and Smith, 1994) and Dawar
an Anderson (1994) showed that undertaking brand extensions in a consistent direction
also increased purchase likelihood.

Therefore, the objective of this proposal for research is to analyze the effect that a brand
extension strategy has on brand image.
The majority of studies in the literature consider perceptions when evaluating the
variables that can have a positive or negative influence on the extension, as well as
attitudes towards the extended brand. Furthermore the majority of studies are based on
experimentation with groups of students.

There fore the primary question is for the research proposal "the effect of brand
management strategies upon brand image” is to analyze that whether this brand extension
strategies have an impact on the brand image or not and find out the findings. Since the
number of researchers have focused their attention to analyze the effect (details will be
available in my thesis), this study will focus on the model constructed by Hem &
Chernatory (2003). The proposal focuses on studying different constructs related to
analysis of the effect of brand extension upon brand image. The study, either proved
positive or otherwise, will help brand managers to adjust their brands related strategies
and concentrate on those areas which can have major impact on brands image.
Academics and researcher can use the results for further studies.

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JUSTIFICATION FOR THE RESEARCH:
Hem & Chernatory 92003) initially constructed a model with four components. To find
out the true relationship of the components, four different models with different
relationship of the same constructs were develop. Having proved the proposed construct,
the schematic model was then studied on Low involvement product categories of FMCG.

As stated earlier, Researchers have recommended the same model to be tested on High
involvement product category as a future study. Therefore this study will be focusing to
fill the gap identified by the researchers themselves.

Since the methodology is same as it was used in prior study i.e. data collection by survey
method and questionnaire and then compare the perception of image, before and after the
line extension change/doesn’t change and pair T-test will be used. This study has also
considered & focused on FMCG product sector, i.e. two low involvement product
categories – Lotions and Shampoos. To remove any confusion only brand new products
will be considered and the research will be conducted within Pakistan. Around 20 Cities
will be studied in this study covering almost all the major cities of the country hence it
would be sufficient to represent the Pakistan (Population Census Organization).

The outcome would help brand managers to use the single model for both the Low as
well as High involvement product categories thereby can create the synergy in managing
brand image and line extension related strategies thus decreasing cost of managing brand
image.

PRELIMINARY LITERATURE REVIEW THEORITICAL FRAME WORK:

A basic premise underlying the use of brand extensions is that stronger brands provide
greater leverage for extensions than weaker brands (e.g., Aaker and Keller 1992; Smith
and Park1992). As can be seen in the widely noted definition of brand equity, which is In
conceptualizing how customers evaluate brand equity, it is viewed as consisting of two
components – brand strength and brand value (Srivastava and Shocker, 1991). Brand
strength constitutes the brand associations held by customers. On the other hand, brand
values are the gains that accrue when brand strength is leveraged to obtain superior
current and future profits. Brand strength has been articulated implicitly in terms of
consumers’ predispositions towards the brand (Keller 1993). In the context of brand
extension research, brand reputation has been defined in terms of consumer perceptions
of quality associated with a brand (Aaker and Keller 1990; Barone, et al. 2000, p. 390). It
has been reported that high perceived quality brands could be extended further and
receive higher evaluations than low perceived quality brands (cf. Aaker and Keller 1990;
Keller and Aaker 1992; Sunde and Brodie 1993; Dacin and Smith 1994; Bottomley and
Doyle 1996). Reputation of a brand in these studies is considered as the outcome of
product quality, the firm’s marketing activities and acceptance in the market place, i.e.
more akin to the views of Fombrun and van Riel (1997).

Brands with higher perceived reputation should provide consumers with greater
risk relief and so encourage more positive evaluations than brands of lower reputation.
This notion should be true for FMCG, durable goods, and particularly for services. When
a new brand is launched in the services sector, consumers have neither experience, nor
concrete attributes, to judge its quality. Consequently, consumers rely heavily on cues

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 such as brand reputation (Wernerfelt 1988; Zeitham, Berry, and Parasuraman 1996).
Conversely, with goods, consumers can obtain useful information about quality through
visual inspection and thus the importance of inferences based on brand reputation may be
reduced. These observations suggest that the evaluations of brand extensions could be
even higher for brands extending in services than for goods. Perceived risk is a multi-
dimensional construct (e.g., Gemünden 1985; Roselius 1971), which implies that
consumers experience pre-purchase uncertainty regarding the type and degree of
expected loss resulting from the purchase and use of a product (Bauer 1960; Cox 1967).
The literature shows that consumers often rely upon a recognized brand as a mean
of coping with perceived risk. A brand, which is extended into a new product category,
offers a new alternative to consumers, but also impacts on consumers’ perceptions of
risk. We believe, based on the literature, that a well-known brand is a risk reliever and
enhance the likelihood of product trial. Berlyne (1970) argued that novel stimuli (cf
brand) tend to be highly arousing and trigger aversive reactions. As a person gains
familiarity with a brand through repeated exposure, perceived risk tends to decline and
positive affect tends to increase. Some researchers draw a distinction between product
category risk and product risk. They define the first type of risk as “the person’s
perception of the risk buying an average product in the product class”, while the second
type of risks, reflects the perceived risk of the specific alternatives being considered.
When consumers evaluate a brand extension both types of risk are relevant. We focused
on the perceived risk of the product category into which the brand was extended.

We focus on the acceptance of brand extensions for FMCG, durable goods and services.
Specifically, we focus on perceived similarity, brand reputation, perceived risk and
consumer innovativeness as factors influencing the acceptability of brand extensions.

A schematic representation of the variables

Perceived
Similarity FMCG

Brand
Reputation
Brand Extension
Durables
Perceived Success
Risk

Services
Consumer
Innovativeness

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CONTRIBUTION OF THE RESEARCH:
In Pakistan most of our researchers and institution not give an importance to the research
study for the product or product extension. (outcome and importance). In our region the
most of the countries having same culture and norms in which they are progressing.
Many multinational companies are also working in these countries like Pakistan, India,
Bangladesh and Iran, but in someway due to some cultural differences. The research
work and hypotheses is not evolved same as in develop countries.

The results of this study would generate interesting results for future researches as well as
for the managers for adjusting their marketing activities. The study will suggest as if it is
workable even for high involvement product or it is only restricted to Low involvement
product category. Besides managers can use this model (if accepted) for high and low
involvement product hence can save time and resources which can be utilize in any other
development process. Acceptance and non-acceptance of this model can fill the gap left
for future research by the earlier researchers.

LIMITATION:

The fining suggests advances knowledge of brand extensions in several ways.

First, we found that perceived similarity is a crucial factor in the evaluation of services
brand extensions. Second, the reputation of the parent brand is a crucial factor
influencing the likelihood of a successful brand extension. Building a favorable
reputation for a parent brand is an important contributor to the success of brand
extensions. This is equally important for FMCG, durable goods and services brands.
Third, we found that consumers’ perceptions of the risk associated with new product
categories are an important factor influencing brand extension judgments for durable
goods and services. This supports the postulate that a well-known brand acts as an aid for
consumers to cope with heightened perceived risk (Aaker 1991; Keller 1998, p. 456; Cox
1967; Roselius 1971). Finally, more innovative consumers evaluate services brand
extensions more favorably. Building on the diffusion of innovation literature, targeting
more innovative consumers could be an efficient way of developing brand extension
strategies.

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THIS ALL THE EXTRE MATTER FOR WHICH I CUT FROM THE PAPER
OK!!!!!!!!!

Perceived risk is usually conceptualized as a two-dimensional construct (e.g., Bauer

1960; Derbaix 1983; Gronhaug and Stone 1995; Mitchell 1999) i.e.: (a) uncertainty about
the consequences of making a mistake; (b) uncertainty about the outcome.

The outcome of our study shows that brand extension effect brand image. It was observed
that the parent brand always gave benefits to the brand extension and always helpful in
promoting the extensive brand without effecting the parent brand. This research study
met for the profile products but it is useful and applicable for high profile product.

2 Justification for the research

This section is about one page and justifies the research, usually on four dimensions:

• Scope of research or area of the industry involved,

• Gaps in the literature (provide several references in support and refer to section 3
below),
• Unusual methodology to be used (provide several references in support and refer
to section 4 below), and
• Possible benefits of outcomes for policy and for practice.

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This section may become section 1.3 in the thesis.

Since the number of researchers have focused their attention to analyze the effect (details
will be available in my thesis), this study will focus on the model constructed by Hem &
Chernatory (2003). The proposal focuses on studying different constructs related to
analysis of the effect of brand extension upon brand image. The study, either proved
positive or otherwise, will help brand managers to adjust their brands related strategies
and concentrate on those areas which can have major impact on brands image.
Academics and researcher can use the results for further studies.