Leverage Brand Equity

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This chapter contains background of our study, statement of the problem, significance and delimitation of the study. Furthermore Definitions of the terms used in this dissertation are also explained in this chapter.

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1.1 Introduction

One of the most famous strategies to leverage brand equity is brand extension. It is believed that consumers will favor new extension if new products are under the label of already established brand name.Familiarity and trust with the parent brand is one of the factor due to which companies hope that their consumers will react in a favorable manner. It is beneficial for the companies because of the positive association which consumers already have with the parent brand.

A brand is the identity of a specific product, service, or business. (Kotler 1996). Brand extension denotes to the corporate activity in which companies bring in new products, new product variants or product improvements by leveraging the brand equity of the existing parent brand.

It is believed that instead of establishing an entirely a new brand, extension of brands can be favorable for companies in terms of promotional and awareness activities, distribution, customer perceived risk in buying any product of service. (Keller, 2002) stated that another major factor for which Companies prefer to use brand extension is lower cost. Introducing a new brand into consumer market can be relatively much higher than introducing new product or product variants under the same brand name. This cost can range above millions of rupees and can not guarantee of any success. So instead of launching entirely a new product, most companies prefer brand extension. Successful examples such as Diet Pepsi and Diet Coke benefited from the brand franchise of their parent products. Coca-Cola introduced six extensions and captured a larger market share than the original brand. For example, Coke’s extension, Cherry Coke, was successful even without considerable advertisement.

Apart from benefits of brand extension there are some potential problems associated with brand extension, such as failure or semi failure of brands like brand dilution or brand cannibalization. Rather than success of brands, failed extension might maculate the parent brand name thus the result would be reduced market share of the parent brand. Brand association in terms of quality and consistency are crucial for any brand extension to be successful in the eyes of the consumers. Association with the brand is also dependent on consumers own values, preferences, taste, buying situation and manager should always focus on what these dependent variables are and when they come into action. Take an example of new Coke; Coca Cola did not pay attention to what the core brand meant to stand for. It mainly focused on the taste and thought that the taste is the only factor which consumers are looking for. This concept was wrong. Coca cola was unable to identify the attachment of the consumer with the original coke before launching New coke, even though Coca Cola spent a lot of money on conducting research before launching New coke.

Brand dilution occurs when consumers loss the original grasp of brand perception on their minds and no longer associate the brand with a specific product. For instance, Sunsilk may experience brand dilution by loosing its strong identity of hair care and shampoo range by running a number of different categories like mashed potatoes, powdered milk and soups. Too broad varieties of product categories run under same brand can frustrate consumers in thinking which variations of products that actually fit to their perceptions. For Example, too many ranges of Sunsilk shampoo include Sunsilk black, pink, white, yoghurt, dandruff can make customers confused in buying a suitable product which actually fit to their needs. Consumers these days have now become selective and demand innovative products. Those brands which are not unique or innovative in any means eventually got tarnished. Consumers do not prefer such extensions which do not offer any innovation or new features in extended brands. Consumers’ perception about parent brand and extended brand is one of the factors which may lead to either success or dilution of brand. Success and failure of brand is also dependent on familiarity with the parent brand and concept of fit between parent brands and extended brand. Brand loyalty by a consumer can be changed in case of brand extension. If brand extension is favorable it may lead to more loyalty towards the parent brand and if brand extension in unfavorable then the effect would be opposite.

As per early research regarding brand extension leads to brand dilution, Aaker and Keller (1990) found insignificant evidence between unsuccessful brand extension leads to brand dilution. Conversely, in a research (Loken and Roedder-John 1993) pointed that inconsistency of product and brand beliefs may lead to brand dilution. Brand dilution and failure of brand can occur when consumer find it difficult to associate the extension with the parent brand, a lack of similarity and familiarity and discrepancy between Integrated marketing communication messages. Brand extension is a strategy which most of the companies are using to minimize risk associated with introducing an entirely new brand and to maximize their profits from the new brand. But in some of the cases brand extension fails, and the reason is the weak brand equity of the parent brand that bears upon the success of the brand extension. If the equity of parent brand is strong, brand extension can be successful and vice versa.

Both Functional and non functional attributes of a brand can harm and eventually dilute the equity of an integrated oriented brand, which means due to the weak brand equity, brand dilution can occur across the parent brand. Such kind of failures of extensions can make customers to create a negative association with the parent brand or even with the brand family. These failures can also agitate and blur the original identity and meaning of a brand even positioning as well. Brand managers already know that there are some advantages and disadvantages associated with brand extension. Nevertheless couple of unsuccessful brand extension in past years was noticed. To be successful in brand extension knowledge related to brand extension should be refined.

Brand extension is successful or not is decided by what factors? One of the most important factors is concept of fit. Fit with the parent brand in terms of quality and image. It is customer perceived fit which plays an important role in making consumers to decide whether extended products are favorable or unfavorable. If fit between parent brand and extended brand is as per consumers’ perception then consumers will respond more favorably to that extension and if fit between parent brand and extended brand are not as per consumers’ perception then consumer will respond to that extension unfavorable and it might lead to the failure or dilution of the brand.

According to Martinez and de Chernatony (2004) brand image has two types: the general brand image and the product brand image. According to them there would be no negative impact on general brand image if the brand image is strong for example, Nike or Sony. Dilution effect would be more on product image instead of general brand image. Therefore, mostly the customers would stick to their beliefs about the parent brand with respect to its attributes and feeling. Nevertheless their study shows that “brand image can be diluted by brand extension, and beliefs and association with the parent brand can also be changed.

In Pakistani environment companies especially MNCs prefer brand extension because they consider it more convenient. Top most cause for this is that products from multinationals already have an image of developed countries. Due to the past record of products from these developed countries, consumers give them positive response. Due to the image of product from these countries in the mind of the consumers, less cost is incurred by the companies on creating awareness and communicating about the product message with the target audience. These products already have good market share and media coverage; therefore it becomes easy to launch brand extension in Pakistan for such companies.

1.2 Statement of the Problem

Since last couple of years, new product failure has been observed quite a few times. As a result companies now are relying on brand extension instead of launching new products. There are couples of other reasons instead of new brand failures, which companies consider for brand extension, such as low promotion and awareness cost, acceptance and less chances of being failed. Though these advantages are considered by companies to use brand extension as a part of their branding strategy, but apart of these advantages there couple of failed extensions have also been observed in last couple of years. Researchers are now focusing to identify the factors which are useful in evaluating brand extension and factors which play a role in either failure or success of brand extension. In this Thesis we will also try to find about the favorability or unfavorability of brand extension.

Most of the researches which were conducted to know about the favorability or unfavorability of brand extension were focused on consumers’ point of view about brand extension. But as a matter fact it is quite difficult for consumers to evaluate whether brand extension is favorable or unfavorable. They can not evaluate it in undifferentiated fashion (Aaker and Keller, 1990, Keller and Aaker, 1992; Dacin and Smith, 1994; Smith and Andres, 1995). Brand extension according to consumers’ point of view was taken into consideration many a times, but very low attention was given to the managers’ point of view about brand extension (Nijssen and Agustin, 1999).Managers’ point of view regarding brand extension can give an extensive knowledge about brand extension because of their deep analysis about consumers and competitors and their personal experiences about the market and the brands. Hence in this thesis we will focus on managers’ perspective about brand extension along with consumers’ point of view.

Both local and multi nationals are into brand extension from a long time. Such as Nestle , Pakola (Pakola, bubble up, Applesidra, double cola, Pakola milk), Sunsilk (Sunsilk black, Sunsilk white, Sunsilk pink, Sunsilk yoghurt, Sunsilk egg), Haleeb food Pvt Ltd (Milk, Juices, Cream, yoghurt), National Food (Pickle, salt, spices), Shan Food(spices, pickle, food), Unilever Pakistan (Lifebuoy, Soaps, Shampoo, Ice creams, Washing powder), P&G (Soaps, Shampoo, Ice creams, Washing powder) Pakistan By keeping above relation in mind, it will be beneficial to have brand managers’ point of view about the success or failure of brand extension.

1.3 Significance of the Study

The significance of this thesis is to explore the use of brand extension strategies in the Pakistan context. Whether the strategy of brand extension is favorable or not, or due to brand extension, brands gets diluted or cannibalized? Since brand extensions is one of the most popular strategies for leveraging brand equity, this study will also focus on brand extension effect on brand equity.

This thesis will focus on brand extension strategies of products from various companies which include Haleeb Foods Ltd Pakistan, Nestle, Pakola and Head & Shoulders. Various companies’ insights regarding brand extension will help us to study favorability or unfavorability of brand extension in a well manner.

We will try to achieve this purpose by answering the following research questions.

RQ1. What are the reasons to choose brand extension as a part branding strategy?

RQ2. Is brand extension favorable or Unfavorable?

Above mentioned two research questions were divided further into a set of questions. Purpose was to gain a deep insight to answer these two research questions. By answering above question, we will come to know whether brand extension is favorable or it leads to brand dilution, and whether brand extension is favorable for those companies who prefer extension and are involved in brand extension from couple of decades. We will also come to know that for what reasons companies in Pakistan are using brand extension, and whether brand extension is in accordance with the successful brand extension concept or not. This thesis will be beneficial in indentifying the success rate or failure rate of brand extension of those companies which have been chosen for this thesis.

1.4 Scope and Delimitation

This thesis focused on brand managers of those companies which are operating here in Pakistan. Only four products have been chosen for which research is conducted to identify whether brand extension is favorable or unfavorable. So the product range is limited to four companies only. Another limitation faced during the course of this study was that brand extension strategy for most of the multi national companies are crafted in their home country and then implemented here in Pakistan. Furthermore, Interview process is chosen to know about brand managers’ point of view about failure or success of brand extension. Out of 4 brand managers, 2 interviews were taken on telephone and 2 were taken face to face. Due to the limitation of telephonic interview, non verbal responses could not be gauged. Other limitation confronted during the course of research was the fact that majority of multinationals (MNEs) formulate brand extension strategies at their head quarters abroad. Lastly, we came to know that in Pakistan brand extension responsibilities is handled by marketing managers instead of brand managers in some companies.

1.5 Definitions

1.5.1 Brand

According to (American Marketing Association 2007 brand is: "A name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition”.

1.5.2 Brand extension

According to (Aaker 1991) brand extension can be defined as utilizing an already established brand to enter from one class of product category to another class of product category. (Kotler 1991) defined brand extension strategy as exploiting a well known and successful brand name either to launch a new or modified product can be termed as brand extension process. As per (Kotler & Armstrong 1990) defined brand extension strategy as an expansion strategy, where companies try to further extend their already established and well known brands into either different other categories or in same category with some modification.

1.5.3 Product Line Extension

(Kotler & Armstrong 1990) defined product line extension as a process of using already established brand name to introduce new items with some extra innovation or modification in the same category. For example Pakola has extended its soft drink named “Pakola” into Pakola raspberry, Pakola leeche, Pakola orange, Pakola lemon. (Aaker 1991) elaborates product line as line extension occurs in the form of introducing new items under the same brand name in the same category with some modification in flavors, colors, specification, ingredients and package sizes. Product line extension is somehow differs with brand extension because brand extension is about using an established brand name to introduce new product and brand in different categories, while line extension leveraging and established brand to introduce new products in same category with some improvements, modification and enhancements.

1.5.4 Brand Dilution

According to (Aaker 1991) brand dilution is depraving of a brand via its overexploitation. This failure of brand occurs when extension is done in a poor manner, or when a brand with poor equity is leveraged to extend it into different other categories. This failure can also occur when an extension becomes unfavorable in the mind of consumers. As per (Kotler & Armstrong 1990), unfavorability of a brand in the mind of the consumers can be due to lack of quality, over pricing, lack of consistency with the parent brand, lack of innovative feature and lack of trust. Brand dilution can be a disaster for a company. Companies use their well known established brands to leverage their equity and image to further extend it for entering into different market segments, which gives them a chance to earn higher profits. This can be true when parent brand equity is strong. But if equity of any brand is weak, then consequences might include dilution or failure of a brand.

1.5.5 Brand Cannibalization

(Kotler 1991) defined brand cannibalization as reduction in sales revenue and diminishing of share of market resulted as the introduction of new products in the same category For example, when diet coke was introduced by Coca Cola, sales for original coke diminished, but eventually it led in expansion of diet soft drink market. In case of Haleeb food, introduction of tea whitener diminished the sales of UHT milk, because consumers previously were using milk for making tea, but with the introduction of tea whitener, some consumers started to prefer tea whitener instead of milk, which resulted in cannibalization of milk category.

1.5.6 Brand Equity

According to (Wood 2000) brand equity can be defined as a profitable relationship between a brand and its consumers. (Kotler and Armstrong 1996) reported that it is quite difficult to measure equity of a brand. Yet a strong brand results in strong brand equity which can be leverage to extend into different other categories. Conversely weaker brand means weak brand equity which can result in failure if extended into different other brands. Strong brand equity may lead to achieve brand loyalty, quality, brand association and awareness. These benefits help companies to incur less cost on communication and awareness.

1.5.7 Brand Association

(Kotler and Armstrong 1996) defined brand association as refers to a degree where consumers discern a brand in rich fashion. Positivity of any brand depends upon how deeply that brand is penetrated in the mind of the consumers in positive fashion. Brand associations are the properties of a brand which consumers recall whenever brand is talked about. Consumer relates a brand name with its implicit or explicit meanings. Brand association can also be termed as the level to which a specific product/service is acknowledged amongst its product or service family. When choosing a brand name, it is important that the name selected must reinforce an essential dimensions and specification or benefit association that forms the position of a product.


In this chapter we will discuss and justify methodological choices which we have made for our research. Below mentioned figure presents an overview of the research method which will be used in this chapter for our research.

Source: Adapted from Foster (1998), p.81

2.1 Research Purpose

(Yin 1994) and (Wiedersheim-Paul and Eriksson 1998) found in a research that there are basically three types of research:

  • Explanatory
  • Exploratory
  • Descriptive

According to (Wiedersheim-Paul & Eriksson, 1998) basis purpose of the explanatory research is to craft and specify the issues of the research. This type of research is beneficial when the problem is quite difficult to analyze. According to Patel and Tebelius (1987) explanatory research is used when researcher want to gain more and more information about any specific issue. Moreover, Reynolds (1971) said through explanatory research, researcher can get comprehensive information about research defined problem. (Saunders, Lewis & Thornhill, 2000) found that descriptive research is useful when the problem of research is properly defined and crafted in a well manner. For this purpose, researcher must have complete information about the problem defined in the research. Collection of data must be started after having a clear understanding about the problem defined form research. Furthermore, (Wiedersheim-Paul & Eriksonn 1998) described that the main objective of descriptive research is to identify the applicable facets of the problem of the research. For conducting descriptive research researcher has to deeply define these facets, and there must be a relation between and describe these aspects more thoroughly without researching connections between reasons and indications.

For our research we will initially try to define the reasons behind brand extension. Why do companies in Pakistan prefer engaging in brand and line extension activities? Furthermore, we will also try to identify the favorability and un-favorability of brand extension in Pakistani markets and company’s perspective. For gaining deep understanding about the research question defined previously, we have considered exploratory research as a part of our research. The reason is that before this research no study has been taken into consideration to know about brand extension activities in Pakistan and we want to gain as much information as we can. Along with exploratory our research is explanatory as well. We will try to explain the result which we will get through our research. On the basis of our respondents responses we will try to draw a conclusion.

2.2 Research Approach

To gain a deep information about brand extension strategies in Pakistan and whether it is beneficial or not beneficial for Pakistani market we have to consider two approaches, First one Qualitative and second one is Quantitative research. (Ponteerotto, 2006) found that quantitative research approach is used when we have to gain lean descriptions and we use qualitative research when we have to gain comprehensive descriptions.

In our previous chapter, we explained our research question which includes the reasons behind brand extension in Pakistan and advantages and disadvantages of brand extension in Pakistani market’s perspective. We will also try to know about the factors leading to the success and failure of brand extension. (Ponterotto 2006) found that to conduct qualitative research, most beneficial instrument can be in-depth interviews because in-depth interviews researcher can define the different facets of human experiences which results in having a deep understanding about the research topic.

(Holme and Solvang 1991) compared quantitative research as a conventional and integrated research approach. In quantitative research approach final results can be presented in the forms of facts and these results are also measureable. One of the main purposes of quantitative research approach is make the consequences of the research of few variables to higher numbers of entities. According to (ibid 2000) qualitative research approach uses qualitative data to draw a conclusion. It draws conclusion on the basis of factors like peoples’ attitude, perception, values, likes and dislikes. By using qualitative research approach, results can be drawn by gather information through specific number of entities. This process can provide us the opportunity to gain a deep understanding of the research.

By keeping the above mentioned description in our consideration, our research focus would be qualitative. One reason for choosing qualitative research approach as our research approach is that we want to gain as much information regarding our topic as much we can. This research approach would give us deeper information regarding brand and line extension activities in Pakistani perspective. For conducting our research for brand and line extension activities in Pakistan and its favorability or un-favorability, initially we approached many companies, out of which four companies agreed to provide us information regarding our research topic. Before conducting our interviews with our respondents, we sent a questionnaire to our respondents.. These interviews were not recorded and average time for an interview was approximately thirty to fifty minutes. Finally, to clear some doubts regarding the first three telephone interviews the companies were re-contacted to clear the doubts in some questions.

2.3 Respondents of the study

Following companies were chosen to gain an insight about brand extension favorability or un-favorability from brand managers’ perspective. Initially, we approached many seasoned companies, out of which four companies’ brand manager agreed to give us time for interviews.

  1. Haleeb Foods Limited Pakistan
  2. Pakola
  3. Nestle
  4. Head & Shoulders (P&G)

2.3.1 Haleeb Foods Ltd Pakistan

Haleeb Foods Limited is one of the biggest Dairy company of Pakistan which is operating in many different categories such as Juices, UHT milk, Tea whitener, and other dairy products. Haleeb foods came into existence in 1986 Haleeb foods initially started to produce Haleeb Milk. Later on Haleeb foods entered into different other segments of the market and different other categories. Since from its establishment, Haleeb food came up with many of brand and product line extension which Haleeb foods did successfully.

Mr. Adil Suleman brand manager of Haleeb foods limited Pakistan was contacted via telephone to have this interview and to gain insight about brand extension of Haleeb in Pakistan.

2.3.2 Pakola

Pakola is a beverage company which came into existence in 1950 by Haji Ali Muhammad. Initially Pakola focused on producing a soft drink which represented the drink of Pakistan. Later on as a part of brand and product line extension, Pakola introduced couple of other products which includes flavored soft drink and milk range, mineral water and juices.

Mr. Mubeen Munnawar Marketing Manager of Pakola was contacted to have an interview to gain information regarding brand extension activities of Pakola in Pakistan. It was a face to face interview, and during the course of this interview, we gained deep insight about brand extension activities, favorability and unfavorability of Pakola brand extension.

2.3.3 Nestle

Nestle was founded in 1866 by Henry Nestle and today Nestle if one the world’s largest beverage and food company. Nestle since from last couple of decades is into brand extension and product line extension. As a result of brand and product line extension Nestle has introduced couple of successful brands. Nestle has integrated innovation and renovation techniques in its principles. Nestle extend its brands through innovation and renovation.

Mr. Adnan Tariq, brand manager of Nestle was contacted via telephone to get an insight about Nestle brand extension activities in Pakistan. During this interview Mr. Adnan Tariq gave us some valuable information regarding brand extension activities of Nestle in Pakistan and favorability and unfavorability of Nestle brand extension in Pakistan.

2.3.4 Head & Shoulders

Head & Shoulders is an anti dandruff shampoo range introduced by P&G. After a thorough research a new anti dandruff formula was developed which they used in developing Head & Shoulders and it was first introduced in 1950. Head & Shoulders have got a ranges of shampoo which includes classic clean, citrus breeze, refresh, extra volume, dry scalp care.

Mr. Shaif Shafiq, who is associated with P&G from a long time, was contacted to gain valuable information about brand extension strategy of Head & Shoulders in Pakistan. Information the success or failure of Head & Shoulders was also gained. During the course of this interview questions related our topic were asked and responses were noted down for future consideration.

2.4 Research Instrument

2.4.1 Interviews

As per (Breakwell 1995) interviews as a research instrument can be useful because it is considered as a very flexible tools and due to its numerosity of phase in the research work. According to (ibid 2000) it is easy to use interviews as a part of research instrument because of its multi faceted nature of the research design. Observations and questionnaire can be used as a part of interviews to collect data for our research approach. Using interviews as a part of our research, we first took our research framework into our consideration. By keeping our research framework in our mind we developed a questionnaire which consisted of series of questions regarding reasons for brand extension and its favorability or unfavorability. Some irrelevant questions were late on excluded from our questionnaire before conducting our interviews.

2.5 Sources of Data

(Wiedersheim-Paul and Erikson 1997) purposed two types of data collection method. First one is Primary data and second one Secondary data collection. Primary data is the first hand information which is collected for some specific purpose while second hand data is already published data which was collected for some other purpose or some other research. Moreover, (ibid 2000) shed some light on data collection methods as, there can be three different types of data collection method. First one is observation, second one is interviews and the last one is documentation. As per (Yin 1994) interviews can be one of the most reliable source for collecting data. Using interviews as a data collection method, interviewee and interviewer both can focus on the topic. Furthermore, (ibid, 2000) elaborated that interviews can be useful when it comes to gain insights of the interviewee about any specific topic.

2.5.1 Primary Data

In previous section we focused more on that secondary data collection method for research can not be ample to identify more accurate and reliable information about any specific topic of research. When it comes to identify about the reason behind brand and product line extension and its favorability or unfavorability, it is important to determine what companies and their brand managers think about brand extension and product line extension. For this purpose use of primary data collection can be beneficial. Thus interviews are selected as an instrument for primary data collection method. These interviews include face to face and telephonic interviews. According to (Churchill, Gilbert A., Iacobucci and JR. Dawn, 2005), “proper communication can be a reliable and beneficial instrument for data collection. The reason is that in communication method no one forces researchers to wait for a certain event to be occurred”. (p. 167). Nevertheless, communication techniques have some drawbacks. In communication techniques it is not confirmed whether the answer to the research question will be obtained in an accurate manner. Using communication has some weaknesses. One of a reason for this is that responses are dependent on interviewees’ will to pass on the expected information.

2.5.2 Secondary Data

For our research regarding brand extension and product line extension in Pakistani perspective, we also focused on collecting some secondary data. As per (Churchill, Gilbert A., Iacobucci and JR. Dawn, 2005) “for conducting any research, we must begin with searching for secondary information”. (p, 167). Using secondary data collection for gaining information can be beneficial in terms of having an initial idea about what have already been researched about the topic. Some useful information about research topic, already published information can also be gained in a timely fashion. Apart from advantages of secondary data collection method, there are some drawbacks associated with secondary data collection method. Secondary data can not be sufficient to give complete information regarding specific question of research. Furthermore, already published information was collected for some other purpose which not necessarily answers the question which you have included in your thesis. Indeed, according to them first of all, the data had been “collected for someone else’s purposes”, so it is unusual that they can answer your problem perfectly.

By keeping above mentioned literature about primary data and secondary data in our mind, we focused both on secondary data and primary data. For primary information, we chose interviews as a data collection method and for secondary data collection we considered various research papers of different profound authors. We also considered companies’ websites, magazines and other sources.

2.6 Treatment of the data

(Miles and Huberman, 1994) purposed that basically to analyze any data collected for a specific purpose can be analyzed in three stages. First stage is reduction of data collected. Second is displaying data and third one is verification of data or drawing conclusion on the basis of collected data. Datareduction can be defined as a process of collecting data, making it simple and then transform it into well structured form so that on the basis of this data conclusion can be drawn in an effective manner. Datadisplaycan be termed as presenting collected data in an organized fashion so that a conclusion can be made on the basis on this presented data. Conclusion drawing/verification can be defined as the process of analyzing the collected data and then identify the importance of the findings by mentioning regularities, casual flows and prepositions.

By keeping above mentioned three stages of treatment of collected data in our mind, we firstly reduced the collected data as per the requirement of our research question. After refining the collected data, in presentation of data section, we presented the data in a well fashion. Lastly on the basis of collected data we try to find a conclusion in our final chapter.


In this chapter, model of our thesis has been defined. Main areas related to brand extension were focused to be introduced in this chapter, which created a basis for our analysis, it also helped us to craft the way towards the main purpose of this thesis. Therefore, this chapter starts with a brief elaboration about what is the theory of brand, branding, brand extension, logic forextension of brands, and benefits and disadvantages related toextension of brands. Reasons which result in either the success or failure of brand extension will also be discussed in this chapter.

3.1 Related Literature

3.1.1 Brand

According to American Marketing Association a brand is: "A name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition," (American Marketing Association 2007). Kotler and Armstrong (2007) has defined brand as a name, term, sign, symbol, design or a combination of these attributes used by the firms for identifying their products and to differentiate the competitor’s brands. Brand also helps customers to find the manufacturers, which is a very important element of brand.

As per (Daivs 2002), companies now have paid more attention towards brands because of the increasing importance of brand extension among consumers. Previously companies were paying more attention towards strengthening their assets which include capital and equipments. (Nilsen, 1998) found in a research that word band was deduced from a term named ‘branna’ which means to burn. Therefore, branding since from a very long time has been used for the purpose of identification and to create differentiation of their belongings. Branding used to be a way in which owner used to place a type of mark to it belongings. (Ibid, 2000)elaborates that in early ages people used branding to make their belongings unique and identifiable as compare to the belongings of others. Mostly people of early ages used to place a mark or symbols on their cattle through burning stamps.This branding was adopted in early ages for making it easier for customer to identify their cattle.

As per (Saif & Awais 2007), to symbolize quality, brand name was used in previous ages, and even today it is used for the same purpose. In Egypt, branding was used to identify their animals, and in case of theft, animals could be identified easily. According to (Farghuhar 1990), Egyptians brick producers used to mark symbols even on bricks for the purpose making their bricks unique among customer as compare to the bricks of competitors. As per (Keller, 1999), some of the known advantages of brands include easy penetration in the market and credence by dealers. These advantages are very important because search cost is reduced for retailers and consumers due to these advantages.

(Czinkota & Ronkainen, 2001)found that creating awareness about any product is not limited these days, as the world has now become a global village, so creating awareness and communicating with customer is not a difficult task these days. Due to this new world which can be termed as ‘global village’ has itself created a lot of awareness about international brands. Couples of international brands such as Mr. Burger, KFC, and McDonald were already famous even before they launched their franchises here in Pakistan. As per (Blois 2000), twentieth century continued the evolution of brands, and many of the recognizable brands were introduced in this era. By the mid of twentieth century, branding concept gained acceleration. Branding became an important strategic marketing activity for marketers. (Nijssen 1999) stated that since the nineties, branding became an important asset for the companies. Mostly all the powerful corporations have some strong brands, which proves the significance of brands.

3.1.2 Branding

(Kapoor 2005)said that identification of products is not the only reason form branding these days. Branding is used to reflect quality of the products, and to gain a competitive advantage over competitors. It also helps consumers to make their purchase decision in a well manner. Brands not only reflect quality but it helps in creating competitive advantage and helps customers in making purchase decisions Keller (1996) elaborates that one of a core purpose of branding is to create association and awareness about the brands, which should go with the accordance of company’s strategic goals and objectives. (Ambler & Styles, 1996) stated that there are two basis views of branding, product and Holistic view. Product view states that brands are an addition to the product category while the holistic view states that brands are not limited to product only, but all the 4p’s of marketing mix reflects in holistic view of brands. Brand posses some specific kind of attributes, which provides satisfaction to the consumers. It is beyond just offering a product or service. These attributes are not restricted to tangibility or rationality but are inclusive of intangible or invisible features

According to (Wells & Burnett & Moriarty 2000) branding is not just about making different identity of the product. Branding is also used to build a relationship with the customers and to create preferences and loyalties between customers and a brand. Therefore, brands are not only used for being distinguished by the customers but also to build positioning of brand in the eyes of the customers. Through brands, more value can be added to the products. So instead of creating an identity, brands are also about creating value in the mind of the consumers.

3.1.3 Brand Extension

As per Aaker (1991), "Brand extension is using an established name of one product category for entering another product category.” While according to Kotler (1991), "Brand extension is the strategy of using a successful brand name for introducing a new product." Another popular definition is which (Hartman & Price & Duncan 1990) defined as, " Utilizing a popular brand name to launch new products or services into a product class that is new for the company is called franchising strategy”

According to Kotler & Armstrong (2007) firms can follow many strategies for brand extensions such as new product launching, multi-branding and or launching a totally new brand. The concept of multi- branding infers launching extra brands under the same product in which the firm is already competing. The main advantage lies in this strategy as the firm can target a larger customer base through its additional value added services and features

(Kotler Philip, 2006) gave an example of P&G who is using same strategy by launching many brands of shampoo range, which capture different segments of customers. On the other hand, it follows a strategy of launching a completely new brand, when an existing brand (Cash Cow) turned into a dog as per growth share matrix, which also known as BCG matrix.

Concepts of brand extension and line extension are not alike. Brand extension and line extension both are different. Ambler & Styles (1997) describes line extension as when any company introduces a new product in the same category under the same brand name by improving or adding some extra components or flavors or new packaging and colors, this extension is known as line extension. While, introducing marginally changed product in a new product category under a successful brand name is know as brand extension.

3.1.4 Brand Equity

According to (Wood, 2000) Brand equity can be defined as a relationship between brands and customers, which result in a future profit. As per (Kotler and Armstrong, 1996)it is quite tiresome to measure equity of any brand.However powerful brand name leads to higher brand equity and it also helps companies to gain higher loyalty, awareness, association and quality perceived by the customers. Brand equity has some major advantage which includes brand awareness and loyalty of consumers. These benefits help in reducing cost incur in marketing of products. Through brand equity, companies can improve brand awareness, quality of the brand as perceived by the consumers and association of brand with the consumers. Thus Brands should be used diligently to achieve these objectives. (Kotler & Armstrong 1996) and (Ambler and Styles, 1997) purposes that there are two aspects through which equity of a brand can be measured. Financial evaluation approach and consumer based approach. Monetary value of a brand is associated with financial evaluation approach to measure the equity of any brand, and consumer based approach is measured through focusing on the brand. It is measured through how much value consumers give to a brand.

(Keller 1998)described that the function of brands is not only creating differentiation or competing for gaining higher market shares, but to gain competitive advantage over competitors through creating association with customers and building awareness about brand and making high quality image in the mind of the consumers. (Keller 1998) further stated that a strong brand name always go with a proper understanding about the needs, wants, demands and preferences of consumers which in return give a competitive advantage over competitors. While weak brand names do not comply with this strategy and consequently loose their share comparatively to strong brand images. Strong brand images always focuses on effective marketing programs which exceeds the customers’ expectations and eventually creating a delightful effect for consumers. (Pitta & Katsanis, 1995) stated that Equity of a brand can play a vital role in attracting prospective customers and new segments of the market. According to (Ambler & Styles 1997) concept of brand equity from around last one decade has coincided with the concept of brand extension and product line extension. Brand extension and brand equity is a two way relation. Both can influence each other positively. Brand extension can be influenced by Brand equity positively and brand equity can also be influenced positively by brand extension. As a result of this relation highly valued brands gain higher success because of their high brand equity. Usually consumer prefer brand with higher brand equity. Positive image of brands also play a vital role for a brand position of a firm. Brand with strong image in the mind of the consumers have higher tendency to create differentiation and extension for a specific product category. (Pitta & Katsanis, 1995) further said that brands with strong image allows firms to make consumers to pay higher prices for their brands and such brands can make it difficult for the consumer to switch to any other brand. (Pitta & Katsanis 1995) added that Investment and brand equity both short period of time. Brand equity cycle is comprised of growth, reinforcement or decay, and is vulnerable to competitors. Organizational actions have a direct bearing on the brand equity. Strong brand equity also helps in reducing the introduction cost of new brands.

(Kapoor 2005) stated that definition of brand equity is based on two perspectives, strategic marketing and financial theory perspective. Aaker’s definition is: "Brand equity is a set of assets / liabilities associated with a brand such as name awareness, loyal customers, perceived quality, and associations that are linked to the brand that add/subtract value to the product or service being offered" (Aaker 1996, p.7). Keller (1993) stated that equity of a brand is about perception of the consumers about brand equity, hence, could be associated as consumer based brand equity. (Keller, 1993) defined brand equity as "The differential effect of brand knowledge on consumer response to the marketing of the brand” (p. 2). Above mentioned definitions of brand equity could be used to craft a long term growth strategy. According to (Aaker, 1990) more influencing variable to influence “trial purchase” are brand name familiarity and promotional level of a brand. These influencing variables can influence trail purchase more strongly than other variables, such as, packaging, distribution, and awareness of brand which is achieved by advertising. (Aaker, 1990)further stated that established brand name is one of the most powerful factor to accelerate trial purchase.

As per (Aaker, 1990), at introduction stage of brands, cost of marketing is mostly higher because at introductory stage awareness of the brand is low. Those companies, who have strong equity of their brands, have two advantages at the introductory stage of brands. Firms with strong “brand equity” have two advantages at the introduction stage of new brand. Cost of marketing will be considerably low, because of leveraging already established brand name, and firms can charge higher prices, which ultimately result in higher profitability. Customer retention is more effective in terms of cost as compare to attract new customers. (Aaker, 1992) added that strong brands have more loyal customers than weak brand, therefore, customer retention for such strong brands is more easier than customer retention for weaker brands.

3.1.5 Reasons for Brand Extension

According to a research of (John T. Gourville, 2006), new products failure rate is around 45 to 85 percent. The failure rate with such percentage is striking. This failure rate depends upon category of the product. From the last couple of years failure rate is consistent. Brand managers are now focusing more on brand extension strategy now a day, due to the fact that new product launches mostly result in a failure. According to (Kapferer, 2001) brand extension strategy has some advantages for the companies due to which companies theses days are preferring brand and product line extension as a part of their branding strategy. Some of the main reasons for brand extension are as follow. Growth for the firms

Through extending brands and into same category or into different categories, firms can grow vigorously. This is one of the core objectives of the firms. (Sharp, 1993) elaborated that by extending range of brands into same or different other categories, firms can grow rapidly while incurring less expenses. Comparatively to launching new brands, brand extension can attract large share of the market quickly and profoundly. Brand extension can also be useful in attracting new customers through penetrating into new segments of the market, fulfilling the needs and wants of new consumers. That’s how firms can improve their coverage to markets, which ultimately results in improved sales and enhanced profits for the firm. Changing consumers’ preferences

(Ambler and Styles, 1997) purposed that research can play an important role in identifying industry trends. Mostly, to know about industry trends, firms conduct researches. Firms always seek to lead these industry trends and needs and wants of the consumers. According to (Weilbacher, 1995) most of the companies find it beneficial to extend their brands into same or different other categories to make their customers satisfied. To be successful in the market, companies must have an idea about their customers’ preferences about their needs and tastes. Reduced Investment

(Aaker, 1992) defined that one of the other main reasons to brand extension is related to advantages related to monetary terms. To launch entirely a new brand, firms have to conduct research, while in case of brand extension; firms don’t have to conduct extensive researches. This saves a lot of cost and time as well. Brand extensions are also attractive in terms of economic benefits associated for companies. Apart of research, firms can also save cost related to the promotional activities. In case of brand extension, companies use the brand name which is already established and well imaged in the mind of the consumers, which save cost of creating awareness. This also save huge amount of investment for promotional activities Economies of Scale

One of a main objective of firms is to achieve higher returns on their investments, which firms can achieve through reducing per unit cost of promotion as a result of brand and product line extension. When firm extend their brands, they can easily be benefited by this advantage. As a result of brand extension or product line extension, per unit cost, associated with the investment in promotional activities decreases. Moreover, (Sjodin, 2007) found that it becomes easier for the companies to make buyers know about the extended brands because customers are already mindful about the parent brand which makes consumer to respond more to the marketing activities of the extended brands. Apparently it seems that reduction in cost and increased profits are more or less same, but they are not. Due to the low cost of production and competition in terms of price, some of the market segments are more attracting for the firms because they are more profitable. In a study (Buday, 1989) found thatout of so many factors for the success of extended brands, most important factor is outward supply chain. Brands which are already established can be benefited in terms of charging higher or premium prices for extension of brands under such established brand names. Product Tryouts

According to (Ambler and Styles, 1997) brand extension can be beneficial in terms of making consumers to tryout extended brands. In case of extension, it becomes easier because consumer already have an image about parent brand in their minds, this leads to put more trust in trying out extended products of established brands. (Amber and styles, 1997) said that quality association of consumer with parent brand leads to the success of extended brands as well, because of higher possibility of channelizing the same quality to the extended brands. (Pitta and Prevel Katsansis, 1995) found that strategies of promotion are useful to create knowingness about the parent brand, which in turn also reflects in its extended products as well. Environmental Change

As per (Kapferer, 2001) to cope with the changing surrounding, companies also use brand and product line extension. Changes of industry environment can be of two types. First one is internal and second one is external. Due to theses changes in the industry environment, firms have to launch couple of new extension to meet the changing consumer preferences and needs. This strategy helps firms to either in maintain their current market share or increase their market share. Intense competition

According to (Randall, 1997) brand extension and product line extension is useful for firms to compete with their competitors in an effective fashion. Through extension strategy firms can cater the needs of certain segments of markets, those segments which are based on consumers’ different needs and preferences. Through extending product line, product range can also be increased which can be helpful in acquiring more space on retailers’ shelves. Transfer of Expertise and Knowledge

According to a study conducted by (Amble and Styles) through research and development, companies develop specialization for technology and knowledge when they engage with parent brand and same specialization can also be channelized in extended product range. But it will depend on the ultimate consumer who is going to decide whether the transferability is favorable or unfavorable and the extent and level of transferability.

On completion of acquiring detail knowledge about reasons for brand extension, we have now developed our bases for conducting our research to answer our research question one. In upcoming section we will discuss the benefits and risks associated with brand extension to develop an understanding about our research question 2.

3.1.6 Benefits of Brand Extension Consumer Knowledge

As per (Taylor, 2004) consumers have considerable information about the parent brand quality and image due to the fact that consumers have used it before. Usage of the brand makes consumer to build a perception about the brand image and quality and reputation. This perception can either be favorable or unfavorable. Favorable perception about parent brand can also reflect in extended brands as well. In such case, firms have to put less effort in creating awareness for extended brands. It also requires less cost to communicate about extended products to the consumers. Consumer Trust

(Taylor, 2004) found in a research that consumers seem to be more loyal to those brands which they put more trust to. Loyalty with the brands leads to the trust over the extended brands as well. This trust is a result of consumers’ familiarity with the parent brands. These trusts of consumers make firms to extend their brand further. Parent brand visibility

(Taylor, 2004) explained that one of the other pros of extension of core brand is to make parent brand more visible in the mind of the consumers. Extension strategy is more feasible in terms of cost as compare to launching new brands, because in extension of core brand or product line extension, previously demonstrated grace is used. Extension of brand and products line extension also plays an important role in improving the profile of parent brand. Revival of parent brands

(Aaker, 2004) found that with a long period of time, core brands become fainted, which requires revitalization of core brand. Brand extension is one of the ways to make fainted brands revitalized again. Brand extension can play an important role for providing medium of vitality to the core brand. Brand extension can also play a vital role in safeguarding firm from its competitors.

3.1.7 Risks in Brand Extension Dilution of Parent Brand

Apart from advantages of brand and product line strategy there are some disadvantages associated with brand extension and product line extension. (Deborah Reodder, 1993) elaborated that brand extension some of the times can lead to dilution or failure of core brands. Some of the factors can be taken into consideration which leads to the dilution of core brands. One of these factors is consumer evaluation of the extended brands which reflect on parent brand as making it diluted or failed. (Henrik Sjodin, 2007) found that if consumers evaluate any of the extension as favorable then it reflects positively on core brands, but if consumers evaluate any of extended brand as unfavorable then it will reflect as negatively on core brand, which can either maculate or destroy core brands. Lowering Brand Credibility

(Aaker, 2004) said that one of the risks associated with brand extension or product line extension is that, sometimes it can make consumers mixed up with extensions, which ultimately makes it difficult for the consumers to evaluate the core brands in favorable fashion. This can lower the trust of consumers over extended and core brands. It must be in brand managers’ consideration while adopting brand extension strategy. Extending core brands into too many products might also be unsuitable for firms. Cannibalization Effect

(Aaker & Keller, 1990) found that cannibalization of brands is one of the other disadvantage associated with brand and product line extension. Cannibalization occurs as a result of introducing a new product to serve a purpose which could also be served by already existed product in the same category. For example as in case of Haleeb food, UHT milk was serving different purposes which also included tea making. But with the launch of tea whitener, which was launched in the same category, resulted as cannibalization of sales of UHT milk. (Sharp 1993; Farquhar, 1990) in a study found that core brands which have established name and equity can also be failed or cannibalized.

3.2 Company Literature

3.2.1 Head & Shoulders

Head & Shoulders is an anti dandruff shampoo range introduced by P&G. After a thorough research a new anti dandruff formula was developed which they used in developing Head & Shoulders and it was first introduced in 1950. Head & Shoulders have got ranges of shampoo which includes classic clean, citrus breeze, refresh, extra volume, dry scalp care.

3.2.2 Pakola

Pakola is a beverage company which came into existence in 1950 by Haji Ali Muhammad. Initially Pakola focused on producing a soft drink which represented the drink of Pakistan. Later on as a part of brand and product line extension, Pakola introduced couple of other products which includes flavored soft drink and milk range, mineral water and juices.

Pakola is one of the most popular brands in Pakistan. The brand was created on 14th August, 1950. As per our slogan, “DIL BOLA Pakola”, we believe that Pakola is the heart beat of the

nation and with its amazing taste holds the potential to ride the taste buds of the consumers at home and abroad. Although the green drink “Pakola Ice Cream Soda” is anonyms with the name Pakola, but that’s not all, Pakola gives sensation by bottling other fruity flavors namely Pakola Orange, Pakola Lychee, Pakola Raspberry, Pakola Fresh Lime and Pakola Vino.

3.2.3 Nestle

Headquarters in Lahore, the company operates five production facilities. Two of its factories in Sheikhupura and Kabirwala are multi product factories. One factory in Islamabad and two in Karachi produce bottled water. Through its effective marketing and a vast sales and distribution

network thought out the country, it ensures that its products are made available to consumers whenever, wherever and however. Nestlé Company is registered in Pakistan under the company ordinance 1984. As it’s a public company but still not registered in any Stock Exchange in PAKISTAN Over all company market share is 67%. Nestlé share as compared to nrpur, Haleeb and other are moves around 20to 30%. Total turnover: – 13.5 Billion Rupee

3.2.4 Haleeb Foods Ltd Pakistan

Haleeb Foods Limited is the largest Dairy Processing Company in Pakistan mainly dealing in Dairy products, Juices, and Ultra Heat Treatment milk (UHT). The company was established in

the year 1986. The first product of the company was Haleeb Milk. Ever since then, the company has continued to come up with several successful brands and line extensions for customers mainly through product and package innovations. Today Haleeb holds market leader position in many food categories with strong brand portfolio composing of national and international brand such as Haleeb, Candia, Dairy Queen, Tea Max, Skimz, Tropico and Good Day.

3.3 Areas of further studies

Since last several years, topic of brand extension was considered for academic and professional purposes. Our research for brand and line extension has more significance because of its uniqueness in Pakistan. Very little attention has been paid to conduct research on brand and line extension activities in Pakistan. Nevertheless, we in our research have focused on brand managers’ perspective about brand and line extension activities in Pakistan. Therefore, in future research regarding brand extension can be conducted for consumers, wholesalers or retailers perspective. In our research we have paid attention to the brand and line extension strategies of only four companies named ‘Pakola’, ‘Nestle’, ‘Haleeb Foods’, and ‘Head & Shoulders’. In future research on brand and line extension strategies for different companies can also be conducted. It would give more facts for this type of research. Future research can also take into consideration the cultural differences in various countries by comparing and contrasting brand extensions activities in different geographical territories.


Our literature review shows that the core objective of companies behind brand extension is achieving growth objectives for the company in terms of increased market share quickly and profoundly. Apart of growth for the company, there are many other related advantages of brand extension which companies can not ignore. According to (Kapferer, 2001)one of the main objective of companies is to maintain and enhanced their current market share. Firms also look for success in those market segments as well which have got good potential for growth.Furthermore, (Kim and Lavack, 1996)stated that firms can leverage their well known brand names to acquire higher sales and profits through entering new market segments which were previously not taken into consideration.

4.1 Presentation of Data

4.1.1 Reasons for Brand Extension Growth for the firms

Answering to a question related to growth of Pakola through brand extension Mr. Mubeen Munnawar, Marketing Manager Pakola said,

Yes our company achieved growth in terms of increased market share and profitability through brand extension and line extension. We seemed growth opportunities in different categories, thus extended our brands into different other brands to capture those market segments and we performed well. Since year 2000, we have extended our brands into categories like flavored Milk and Drinking water because we seemed growth opportunities in these segments. Therefore we decided to enter into these segments which resulted in increased market share as a whole in beverage industry. Eventually as a result of extension our profitability increased which indicated our increased growth in beverage industry.

Same question was asked from Adil Suleman, Brand manager, HFL and he said,

"Definitely, our company benefited through brand and line extension and this is clearly evident as a matter of fact that HFL is growing rapidly as a leading packaged food company. One of the core reasons for this growth is our brand extension and line extension strategy as a part of branding strategy. We extended our brand as brand extension such Juices, UHT Milk, Food and Dairy products. As a part of line extension we extended on the basis of different flavors, sizes and packages".

Nestle brand manager, Adnan Tariq responded to the above question as follow,

“Yes, we definitely achieved growth objectives in multiple industries. Though, growth for the company through brand extension is not our core objective, our main objective for brand extension is satisfaction of consumers. We extended our range of brands in different other brands which resulted in higher growth for the company in terms of increased market share and profitability.

Shaif Shafiq of P&G said,

“For Head & Shoulders, it is definitely the case. We introduced range of Head & Shoulders shampoo in order to capture different segment of the consumers, which in return benefited the company as increased market share in a cost effective manner. The effect of extended brand was observed as enhanced profitability and growth for the company. Changing Consumers’ Preferences

In response to a question related meeting consumers’ needs, wants and demands through brand extension, brand managers of chosen companies responded in the following manner.

"We started our company with a single brand named Pakola, but when we observed that there is still potential for further expansion in the industry because of consumers varying needs, wants, and demands, then we extended our core brand Pakola into different other brands to enter into different other categories based on consumers preferences. One of our objectives for brand extension and line extension is of course meeting consumers’ needs. "(Mubeen Munnawar, Marketing Manager, Pakola).

"By keeping consumers’ needs in mind, we try to penetrate in different market segments. Because feasibility of any segment can be measured through consumer’s preference for that segment that is why we before entering into any segment, first observe consumers’ needs and then enter into that segment by offering different brands through extension strategy. For example we introduced an extension named “Haleeb Extra Energy” and the reason for this extension was to meet the needs of growing kids". (Adil Suleman, Brand Manager, Marketing manager HFL)

"It is one of our main objectives to establish a model of business which caters the needs and wants of the consumers. We always focus on fulfilling consumers’ needs and wants and by keeping consumers’ preferences we launch different new products as a part of our extension strategy. First we try to identify need, wants and demands of our consumers and try to cater their needs by introducing new products. We give valuable consideration to our customers whenever we plan to launch an innovative product. Customers’ preferences are always taken into consideration as a part of our core values and extension strategy. “(Adnan Tariq, Brand Manager, Nestle Group).

"As far as P&G brand extension practices for head & shoulders are concerned, we always tried to leverage our core brand for introducing new product to satisfy and target need, wants and changing preferences of our customers. We try to cater unsatisfied needs, wants and demands of our customers We extended our brand into different other products like ‘Citrus breeze’, ‘extra volume’, ‘clinical strength’, and ‘smooth and silky’, to cater the untapped needs, wants and demands of the customers" (Mr. Shaif Shafiq, P&G) Reduced Investment

On a question related to reduced investment and less cost for awareness due to brand extension, brand managers answered in following manner.

"Yes definitely, as we didn’t need to have new teams for sales, marketing, distribution and in fact we have now more products to contribute to company over heads.”(Mubeen Munnawar, Marketing Manager, Pakola).

"Yes we were benefited in terms of less cost of promotion and awareness. The reason behind incurring less cost for promotion and awareness with our customers is our parent brand name which is already established and has a good image in the mind of our consumers. Due to the well known image of our parent brand, our extensions need fewer amounts to be spent on awareness and promotional activities". (Adil Suleman, Brand Manager, HFL).

"Definitely extension favors you in terms of reduced cost for awareness and promotion with you consumers, but it is dependent on how strong your brand image and equity is. If brand equity of parent brand is strong and it has a valuable image in the mind of the consumers, then it becomes easier for you to make your consumers aware about new extension. You simply have to associate your extension with your parent brand and with some less costly promotion; you can make your extended brand visible in the mind of the consumers" (Adnan Tariq, Brand Manager, Nestle Group).

“Yes due to extension strategy P&G observed reduced investment in promotional and communication cost. We have introduced several products under the name of Head & Shoulder with little modification and innovation. Head & Shoulders is already established brand among consumes, so every new extension which we bring into market

requires low cost for promotion and creating awareness. Already established brand name obviously pay you back in terms of reduced cost for promotion, awareness and communication with you consumers”(Mr. Shaif Shafiq, P&G). Economies of Scale

In response to a question about economies of scale, brand managers said,

"This is not the case always, as we are operating in different categories and it depends on the category in which you serving your customers. If we take a look at the overall supply chain process of our products range, benefiting from economies of scale might not be true. Due to fact that production, and logistics operations are different for different product category so we can take advantage of decrease in per unit cost with the increase of every unit produced" (Mubeen Munnawar, Marketing Manager, Pakola).

"Not really, because of the limited supply of milk we can not be benefited from this advantage. When you are operating in dairy industry, you have a few suppliers for raw milk and in that case your production is dependent on your suppliers. Therefore you can not avail this benefit in extension strategy". (Adil Suleman, Brand Manager HFL).

"As in general, this might be true, but as a whole this is not true. As I said in the beginning that we have a wide range of product resulted via extension of our core brand, and in such case when you have a wide range of products and you are operating in different categories, it is difficult to get benefits from economies of scale”. (Adnan Tariq, Brand Manager, Nestle Group).

“Yes to some extent we have benefited from economies of scale, because in case of Head & Shoulders, we have different varieties of products. This line extension requires low cost for promotion and awareness and consumers respond positively to our promotional activities. This usually results in low per unit cost associated with promotional and awareness activities". (Mr. Shaif Shafiq, P&G) Product Tryouts

When asked a question regarding trials of product to consumers becomes easier in case of brand extension, managers responded as follow.

"Yes this is one of the advantages of brand extension. Already established image of the parent brand leads to the good word for extended product as well, Therefore it becomes easier for us to make consumers to try our extended product, and consumers happily do test our products because they are already familiar with the parent brand and put their trust for the extension of parent brand". (Mubeen Munnawar, Marketing Manager, Pakola).

"If extended products have been brought out from a well known parent brand, thus definitely it will help a lot to make consumer to tryout the extended product. One of the benefits of good extension is that, you don’t have to put a lot of effort for consumers’ tryouts. Due to the parent brand image, consumers already know about your product and they themselves want to try those extended products. In case of Haleeb foods, our strong distribution channel helps us a lot in making consumers to try out products. Our products are well sought among retailers as well, most of the time they make consumers to try out new product which ultimately reduces the need of putting more efforts by the company to make consumers to try our products"(Adil Suleman, Brand Manager HFL).

"Consumers’ trials of the product become easier, because consumers already know about your parent brand which is a good sign for the company. Due to the image of the Nestle, company doesn’t have to really work hard for consumers’ tryout for extended brands, because consumers already have an idea the quality which Nestle maintains. But this can go wrong as well if your parent brand image is not as good as it should be in the mind of the consumers. So it all depends on how good parent brand image is, and how familiar consumers are with the parent brand, and how much trust consumers have over parent brand". (Adnan Tariq, Brand Manager, Nestle Group)

“It’s a matter of consumers’ trust over parent brand. As in case of Head & Shoulders consumer already know that it’s a P&G product and consumers have a good perception about P&G. When it comes to line extension of Head & Shoulders, customers already have an idea about the quality products of Head & Shoulders. Thus customers put more trust toward trial of our product due to a good brand image". (Mr. Shaif Shafiq, P&G)

In response to a complementary question about how success of brand equity effect on brand extension, managers responded as follow

"Strong brand equity of the parent brand means strong extended brands. Through strong brand equity of your parent brand, it can be leveraged to extend your parent brand into further more brands, which is useful to gain higher profit and to fulfill consumers’ needs”. (Mubeen Munnawar, Marketing Manager, Pakola).

"Simply, by extending the strong parent brand even further." (Adil Suleman, Brand Manager HFL).

“This is the strong brand equity which makes us to expand our parent brand Nestle into different other brands, and we do that because it’s beneficial for the company. If any brand is strong enough then it must be extended into further brands to gain the advantage of its strong equity. Like we do in case of Nestle, due to the strong equity of Nestle, we extended it into further brands which are definitely beneficial for the company. Our strong parent brand Nestle helps us to reap the benefits of its equity by further extending it". (Adnan Tariq, Brand Manager, Nestle Group)

“Brand equity can play two roles. It can either benefit you if it is strong or it can make your extended brands a failure. At Head & Shoulders, it is the strong equity of brand which is helping out company to increase its product line as per consumer need and different market segments based on consumers’ preferences". (Mr. Shaif Shafiq, P&G, Pakola) Environmental Change

When asked a question about changing business environment, and how do your company cope with it to maintain its market share, Managers responded as follow

" We try to do extensions well in time to cope with the competition and our range now is more comprehensive than other competitors, so we are far better solution for families where every family member feel like spending their time. "(Mubeen Munnawar, Marketing Manager, Pakola).

“At Haleeb rapid responses are made with the change in the business environments. We cope the changing business environment problems with having an eagle eye over market segment saturation and competitors’ increasing height. With the changes in market segment we try to look for different market segments and with increasing competitors power, we try to come up with some quality product and also increase the quality of our current products". (Adil Suleman, Brand Manager HFL).

"At Nestle we have developed some profound strategies to tackle with the changing business environment. We take the changing preferences of consumers into our consideration and try to cater those needs with changes in our current product portfolio. If to cope with changing environment, extensions are needed, we do that as well. This is our way to go with the change in the business environment". (Adnan Tariq, Brand Manager, Nestle Group)

"We try to find new markets for our products and try to launch new extensions as per the requirements of those new market segments". (Mr. Shaif Shafiq, P&G) Intense Competition

When we asked a question regarding maintain market share against competitors, brand extension is a profound strategy, they responded as follow.

"It is in fact other way; to me we are increasing the number of competitor by doing it. Also some time I personally feel that we are also leaving an example to our competitors that they should also extend their range. So I think things are otherwise. "(Mubeen Munnawar, Marketing Manager, Pakola).

"We have a very extensive cool chain of distribution network. We offer great sales promotion incentives to retailers in the form of refrigerators (POP/POS) free of cost and make sure that only our products are kept in those refrigerators. In return we can bargain for suitable shelf space mostly behind or in front of the counter. We also have a USP for Haleeb “sab sey ghara doodh Haleeb”. Adil Suleman, Brand Manager HFL).

"We compete with our customer through entering into different market segments and categories via extending our brands. Apart from extending our brand portfolio, we also believe in making our current brand portfolio strong through enhancing quality and price". (Adnan Tariq, Brand Manager, Nestle Group)

“By introducing new and unique products to the market and through building partnership with International brands to induce positive country of origin effects. We also try to create emotional, price, and incentivized loyalty" (Mr. Shaif Shafiq, P&G) Transference of Expertise

When managers were asked a question that does your company transfer its expertise to brand extension developed through R&D, their responses were:

"First we have to understand that we diversified at the same time while extended. This diversification was initially in related fields but in recent years we entered into new products range where the expertise was not that much at that time. So we cannot generalize". (Mubeen Munnawar, Marketing Manager, Pakola).

"Since our products are more inclined towards perishability, so through expertise in technology we try to tackle this problem. We intend our products’ longer shelf life and for this purpose we use our technological expertise. We always try to transfer our technological expertise in extended products so that consumers also prefer those extended products". (Adil Suleman, Brand Manager HFL).

“To be successful in extension, we have to transfer the technology of our parent brand into extended brands. One of the reasons is that, consumers also look for the same quality and enhanced features, which they found in our parent brand. Therefore the expertise which we developed in our parent brands is also transferred in our extended products as well". (Adnan Tariq, Brand Manager, Nestle Group)

“We are a learning organization and believe in open innovation as we are involved in manufacturing for our international partners.” (Mr. Shaif Shafiq, P&G)

4.1.2 Advantages of Brand Extension Consumer Knowledge

In a response to a question about whether brand extension is beneficial than launching new products, Managers answers were:

"Yes, from many aspects extension of parent brand is beneficial comparatively to launching entirely a new product. Because in case of brand extension we have to incur less cost which is related to building entirely a new brand. There are some other costs which can be saved in case of brand extension". (Mubeen Munnawar, Marketing Manager, Pakola)

“Our parent brand name ‘Haleeb’ helped us a lot in extension and our company reaped a lot of benefits through this extension. While if we would have gone for launching entirely new products, it would have cost us more than extension. Furthermore, if extension fails, it is bearable to the company and it does not affect company a lot. On the other hand, failure of new brand is costly to the company". (Adil Suleman, Brand Manager HFL)

“At Nestle Group our new brand extensions help us identify reasonable new possible possibilities as well as minimize the risks given the already established awareness and trust."(Adnan Tariq, Brand Manager, Nestle Group)

“According to me, new product launching may lead to failure and it is costly than extension plus you have to put more efforts in creating awareness about your new products or brands. Furthermore, in case of new product launching you have to build an image of the brand from the very beginning. If you fail in achieving this purpose, then your new brand is more inclined towards failure”. (Mr. Shaif Shafiq, P&G) Consumer Trust

On a question, how your company is benefited in terms of consumers trust on parent brand, manager answered as follow:

"Since the launch of our brand, we have created an image of “Dil bola … Pakola”. That’s how we have created an attachment with our consumers. This created an unbreakable trust on our brand Pakola. Since we were successful in creating this trust, we have benefited a lot from this consumer trust in terms of acceptance of our extensions". (Mubeen Munnawar, Marketing Manager, Pakola).

"We give core importance in creating relationship with our customers. We consider our customers as our family members, and we showed the same thing in our slogan ‘Haleeb brings you the best’. That’s how we created a consumer trust with our consumers. We never try to involve any such activity which can derail this trust factor. This is the trust of consumers on our brands, which led to the success of our extended brands". (Adil Suleman, Brand Manager HFL).

“Since from couple of decade Nestle always tried its level best to ensure that the products which consumers are buying are quality products. Moreover, along with quality we always tried our level best to satisfy our consumer by providing product which not only fulfill their needs but also make them delighted. That’s how we have build a trustworthy relationship with our consumers. This trust has led to the acceptance of our extended brand among consumers. Consumer trust is one of the factor for the successful extensions of our parent brand". (Adnan Tariq, Brand Manager, Nestle Group)

“Yes, consumer trust gave us an advantage to further extend our parent brand into different extensions based on consumers’ preferences and prospects of new segments. We have built this trust by providing quality products to our consumers. Consistency of quality is what has led in creating this consumer trust on our brand”. (Mr. Shaif Shafiq, P&G) Brand visibility

On a question related to whether extension is beneficial in terms of maintaining visibility of parent brand or not, managers’ responses were:

"No, this was never the case of launching new extensions at Pakola. I don’t think that to make your parent brand visible in the market, extension is a good strategy because to make you parent brand visible in the mind of the consumers, you follow different other strategies include advertising, seminars, sales promotion and good word of mouth". As far as cost effectiveness is concerned so yes extension is cost effective. (Mubeen Munnawar, Marketing Manager, Pakola).

"Visibility of brands can but at Haleeb food this is not the objective of brand extension. Even a new brand can be made visible through adopting different promotional strategies. Brand extension is cost effective comparatively to launching new brands but visibility of brands is not the main reason for brand extension". (Adil Suleman, Brand Manager, Marketing Manager, HFL).

"We always focus to make our brand visible using promotional activities which do not include extension. Brand extension no doubt can be less costly as compare to new brand launching but visibility is not the objective of Nestle". (Adnan Tariq, Brand Manager, Nestle Group)

“I would say, Not really, but to some extent extension provides visibility to the parent brand but this is not the purpose of extension at Head & Shoulders, and as far as cost effectiveness is concerned, yes extension is definitely less costly than launching new brands. That is what we experienced at Head & Shoulders”. (Mr. Shaif Shafiq, P&G) Revival of Brand

We asked a question that whether brand extension is favorable in terms of revival of parent brand, managers answered as follow:

"Pakola follows the same brand name for its extension strategy and it is successful. So we don’t think that we need and revival or refreshment of our parent brand through extension strategy". (Mubeen Munnawar, Marketing Manager, Pakola).

"Not exactly, again I would say that our objective of brand extension is to cater different segments of consumer not revival of our parent brand". (Adil Suleman, Brand Manager, Marketing Manager, HFL).

"Refreshment of parent brand is not our main objective. Brand extension indirectly can play this role, but at Nestle our aim is not to revive our parent brand, but instead we do brand extension due its cost effectiveness, and enter into new segments and to fulfill consumers’ need and changing preference". (Adnan Tariq, Brand Manager, Nestle Group)

"Yes it helps us in refreshing our extended brands by introducing new packaging, features and benefits and it also helps to make consumers to remember our brands”. (Mr. Shaif Shafiq, P&G)

4.1.3 Disadvantages of Brand Extension Dilution of Parent Brand

As a response to a question related brand dilution as a result of brand extension, managers answered as:

"No in case of Pakola we never experience brand dilution. If it would have happened ever at Pakola, we would have stopped extending our brands. We are still into brand extension. It means that it is favorable for us. It can happen but it depends on how you extend your brands and it also depends on your parent brand image, but at Pakola we never experienced brand dilution". (Mubeen Munnawar, Marketing Manager, Pakola).

"It was never the case at Haleeb foods. You might not believe it but this is the truth". (Adil Suleman, Brand Manager HFL)

“Dilution or failures are the word which is not in Nestle dictionary. We never experienced brand dilution or failure. One of the reasons might be, we focus more on quality and try to satisfy our consumers". (Adnan Tariq, Brand Manager, Nestle Group)

“Brand extension may lead to brand dilution but if done in a poor fashion. There are some key points which must be considered while extending your brands. But at Head & Shoulders we never faced brand dilution". (Mr. Shaif Shafiq, P&G) Lowering brand credibility

When we asked brand managers that whether brand extension lowers the credibility of parent brand, they gave us following responses:

"Parent brand credibility can go down if you do not provide your consumer what you promised to provide them. This can lower the credibility of the extended brand; eventually this would also affect your parent brand. At Pakola we always try to deliver what we promise to our customers, so our parent brand credibility never went down”. (Mubeen Munnawar, Marketing Manager, Pakola).

"We experienced a very good response through extension even in terms of increased credibility of our parent brand. We would like to continue this trend in future too". (Adil Suleman, Brand Manager HFL).

“Nestle has grown vigorously in last couple of years and achieved higher profits. This proves the credibility of our brands even we have been in brand extension since a long time". (Adnan Tariq, Brand Manager, Nestle Group)

“I think instead of lowering credibility, our brand credibility has been increased. This was due to the fact that we have catering consumers’ needs and their changing preferences so consumers are putting more trust in our brands which resulted in higher credibility of our brand. (Mr. Shaif Shafiq, P&G) Cannibalization

On a question related to cannibalization due to brand extension, managers said:

"Yes cannibalization effect is there in case of Pakola. Our different range of Pakola milk experienced that cannibalization effect". Apart of Flavored milk, we never experienced cannibalization in any of our category”. (Mubeen Munnawar, Marketing Manager, Pakola).

"Yes we face cannibalization effect when we launched tea whitener. Initially there was only UHT milk, which consumers used to do for tea making as well. But when we found new market segment of tea whitener, we also introduced a tea whitener, which eventually resulted in cannibalization of our UHT milk”. (Adil Suleman, Brand Manager, Marketing manager, HFL)

"Cannibalization can occur as a result of brand extension, when one of your products takes away the sales of your other products. It happens when you operate with multiple brands in the same category. Cannibalization effect is also there in Nestle. We experienced this in case of Everyday and Nido". (Adnan Tariq, Brand Manager, Nestle Group)

“We do not experience cannibalization as such; rather we experience greater demand levels for our new arrivals." (Mr. Shaif Shafiq, P&G)

4.2 Analysis of data

In this section we compare the interviews conducted for the purpose of finding out similarities and dissimilarities among them. In this analysis we will follow the methodology proposed by Miles and Huberman (1994) which encompasses steps of data reduction through data display process by putting the data in a matrix structure from the various questions.

4.2.1 Reasons for brand extension

In the following table () rationales behind the brand extensions are plotted. In order to represent a response different codes have been used as to which motivations these companies were choosing while stretch their brands. The codes used are as below

Reasons for brand extension










consumers’ preferences





Reduced Investment





Economies of scale





Product tryout





Business Environment










Expertise Transfer





In response to the Growth and development for the company all four companies responded positively and all four companies agree that through brand extension companies find growth opportunities and they have experienced it as a result of extension strategy.

As far as changing consumers’ preferences and needs are concerned, all four companies agreed that brand and line extension strategies are used to cater the changing preferences and needs of their consumers. Extension is a useful strategy when it comes to provide what consumers are demanding and what their preferences are in a cost effective fashion.

All four companies were agreed with the notion that brand or line extension can be less costly as compare to launching a new brand. It requires less investment in establishing an extension and even in promoting and creating awareness for that extension. It also requires less cost when it comes to communicating with your consumer using different channels and mediums.

From benefiting through reduced per unit cost associated with promotion and awareness, Pakola, Haleeb and Nestle were somewhat disagree with this as in the case of their companies. The most obvious reason which they gave for this answer was that since their companies are operating in different categories so they can not be benefited from

reduction in per unit cost. This might be true in case of serving in one category then companies can gain advantage of economies of scale. But Head & Shoulder responded more in Yes and the reason was that they are operating in a single category of shampoo range, so Head & Shoulders can gain advantage of per unit cost reduction in promotion and awareness.

All four companies agreed that brand or line extension is beneficial when it comes to make consumers to try our new extended product because consumer are already familiar with our parent brand and they already have a perception about the quality of our parent brand which they associate with our extended brand too. It leads to the ease of making consumers to try our extended brands.

All four companies also agreed on the notion that brand or line extension helps in coping with the changes in the business environment. They tackle with the changes of environment by launching extended brands with couple of enhancements which are according to the changing need or preferences of the consumers. They are practicing this strategy and it helped all four companies a in a reasonable manner.

Intense competition in different market segments also made all the chosen companies to practice brand and line extension. They do brand and line extension to stay ahead of competitors in a cost effective manner.

In case of transference of expertise is concerned, we observed dissimilarity between companies’ point of view. For Pakola it was more No than Yes and the reason behind this was that Pakola is serving in different categories which require different expertise. So expertise developed from Pakola green drink can not be availed in different other categories like Milk, Mineral Water and Juices. While Nestle and Haleeb agreed that they try to transfer expertise of maintain quality in their extended brands too. Head & Should denied any such possibility because at Head & Shoulder, they try to introduce innovation, and previously developed expertise can create a hurdle in innovating products.

4.2.2 Advantages brand extension

In the following table () advantages of brand extensions are plotted. In order to represent a response different codes have been used as to which motivations these companies were choosing while stretch their brands.

Benefits of brand extension





Consumer Knowledge





Consumer Trust





Visibility of parent brand





Revival of Parent Brand





All four companies agreed that consumer knowledge about parent brand and consumer trust over parent brand helps them in following brand and line extension strategy. According to them extensions can be favorable in the eyes of consumers if they already have trust and positive knowledge about parent brands.

As far as visibility of parent brand is concerned, we found different responses. Two of the companies named Pakola and Haleeb clearly denied the notion that they do brand and line extension for the purpose of making their parent brand visible in the eyes of the consumers. But in case of Nestle and Head & Shoulders, they didn’t completely denied the idea that brand and line extension might help in making you parent brand visible in the mind of the consumer, but they rejected this purpose for Nestle and Head & Should brand and line extension.

All four companies agreed that revival of parent brand can be a factor of brand and line extension and extension can help parent brand in revitalizing itself, but we found for all four companies revitalizing was not the core objective and neither they ever follow extension strategy for the purpose of revitalizing their brands.

4.2.3 Disadvantages brand extension

In the following table () disadvantages of brand extensions are plotted. In order to represent a response different codes have been used as to which motivations these companies were choosing while stretch their brands

Risks of brand extension










Lower credibility










In case of dilution or failure of any extension we found that all four companies never faced any kind of failure or dilution as a result of brand or line extension. As per brand managers, dilution can never be the result of any extension if done in an effective way by keeping all the ingredients for success in the mind. In response to lowering the credibility of parent brand as a result of brand and line extension, all four companies’ brand managers were agreed that it can be the case if extension is done in a poor manner. But as they try to keep no stone unturned while doing brand extension and line extension, therefore they never faced lower credibility of their parent brand. In response to Cannibalization of sales as a result of brand or line extension, Pakola, Nestle and Haleeb faced cannibalization of sales but at Head & Should, this was never the case.


In this chapter we will draw a conclusion on the basis of interviews which we have taken from our respondents. At the end of the chapter we will also present recommendation.

5.1 Findings

5.1.1 Rationale for Brand Extension

  • Brand extension is beneficial in enhancing new and already existing segments. Through brand extension companies can target those segments which antecedently were not explored or inactive.
  • Brand extension can be beneficial in terms of fulfilling consumers’ changing preferences and needs, wants and demands of the consumers. This would ultimately result in increased loyalty for the brand and the cost associated with switching brand is avoided.
  • Brand extension is also useful in terms of creating consumer trials. Comparatively to launching new brands, cost associated with consumer trial in extended brand is less. This can be more beneficial if companies in Pakistan focus on improving their distribution network as well.
  • Brand extension is also useful when recognition, awareness and refreshment come into consideration. It can improve recognition of parent brand as well as awareness cost can also decrease. Moreover, in Pakistani market, it was observed than comparatively to new brands, extended brands avails more awareness and recall.
  • Utility of a brand can also be improved as a result of brand extension.
  • Companies can become more powerful by using brand extension which can give companies more bargaining power with their retailers. Brand extension can strengthen company’s position for bargaining with its retailers.
  • To some extent brand extension is considered as a revitalizing process of any brand. It is considered as a strategy of re launching and refreshing a brand in the mind of the target consumers. It also helps in re positioning a brand in the eyes of consumers.
  • Using brand extension strategy as a part of branding strategy, companies can also gain a competitive advantage over its competitors. It can be achieved by focusing on a market niche.
  • Brand extension can also be beneficial in terms of shifting parent brand technological expertise to extended brand in terms of production, and research and development (R&D).

5.1.2 Advantages & Disadvantages of Brand Extension

  • Consumer knowledge about parent brand reputation and image always gives an advantage to companies. To communicate about extended brand benefits to the consumers, it is always beneficial for the companies if consumers already know about parent brand quality and image. Use of parent brand to extend the brands plays a role of attention getting process for extended brands. Consumer knowledge about parent brand image and quality make companies to communicate precisely the benefits of extended brands.
  • Trustworthiness of consumers about a brand is useful for the companies to brand extension strategy. Trustworthiness of consumers tempts them to try new products originating from a brand which consumers already trust on. Consumers already have an implicit accord with already proven brands, thus consumers feel free to try extended brand even in other market segments too.
  • Revitalization and refreshment of parent brand can definitely be achieved through brand extension strategies. Even in Pakistan brand extension is considered a source of refreshment and repositioning of parent brand. It is also useful to reposition the image of parent brand in the mind of the consumers.
  • Though, In Pakistan brand extension strategy is at its initial stages, but brand managers always focus to overcome the disadvantages associated with brand extension such as dilution of parent brand. There are couple of brands which got diluted as a brand extension strategy but most of the extended brand got success in the eyes of the consumers. The number of diluted brand are far and few.
  • Brand extension caused cannibalization of sales in Pakistani market. Companies in Pakistan like Nestle and Haleeb did face cannibalization of sales as a part of brand extension strategy.

5.1.3 Success of Brand Extension

  • Fit between extended brand and the parent brand in terms of similarity and consistency of quality and image is foremost important for the success of brand extension. Extended brands can be successful in the mind of the consumers, if consumers find the same quality and performance, which they found in the parent brand. Conversely extended brands can be a disaster for the company.
  • Favorable appreciation by the consumers for the extended brand may lead to the success of the extended brand and the parent brand, while unfavorable appreciation may result in tarnishing the parent brand image.
  • Moderating variable such as quality of the parent brand, consumer knowledge about the parent brand play a life-sustaining role for extended brands. In Pakistan, companies delineate quality as meeting the international standards of quality.ound brand equity may result in brand loyalty, reduced cost and improved image. It also helps in improving the positioning of a parent brand in the mind of the consumers.

5.2 Conclusion

5.2.1 Reasons for Brand Extension

As per our research, couple of factor work as a driving force behind successful brand extension. One of the most striking forces for successful brand extension is growth for the companies. Using brand extension, growth can be achieved either by maintaining current market share or by entering into new market segments which are not yet explored by the competitors. This can be achieved through leveraging or improvising favorable core brand into extended brands. Those companies which are operating in multiple categories or industries try to extend their brands not because of gaining growth but as a case of trend of brand extension. Such actions might spoil the core brands and essence of brand extension.

To be successful in brand extension, steadfastness is a prerequisite. Meeting customers need, wants, and demand is one of the other important reason for brand extension. Customer retention is always gained if companies are satisfying customers need, wants and demands. For this purpose companies are using brand extension as a part of their branding strategy. Using this strategy companies can make their customer more loyal to the brands. This research also shows that brand extension is also used to introduce new brands for the purpose of fulfilling changing customers’ preferences, their needs, wants, and demands. By doing so companies on one hand try to capture the all possible market segments which eventually result in higher profit and market share.

One of the other motivational factors for brand extension is to gain economic advantages. Mostly companies use brand extension because they want to gain higher net profit and want to save cost associated with creating awareness and communication with their customers. A part from saving cost related to promotional activities, companies also gain economic advantage through catering different other segments of consumer by extending their brand into different market segments. As in case of Haleeb foods limited, chosen for our research, brand extension is done to employ unused capacity due to the seasonal nature of its business. Apart from utilizing unused capacity, other reasons include, effective promotional activities, (ROI) return on investment, and higher net profits.

Our research also indicates that brand extension strategy is also useful to take advantage of consumer trials in a cost effective manner. Cost associated with consumer trials in case of extended brands is comparatively lower than launching entirely a new brand and creating trials for these brands. It was also found that lower cost for promotion and communication is incurred in case of extended brands comparatively to a newer brand. New brand extension can target new customers segments without incurring higher promotional and advertisement cost.

Our research also discovered that gaining advantage from economies of scale is also considered as a promising factor of brand extension. Economies of scale related to production, research and development and communication is a motivational factor for brand extension. Gaining advantage of economies of scale from brand extension may ultimately lead to higher net profits.Efficiency of supplier in providing goods is also count. It was also found that in food (perishable) processing companies’ economies of scale may be dependent on supplier’s capability to serve demand.

We also found during the course of this research that brand extension can also be beneficial as far as recall and recognition of parent brand is concerned. In such case, comparatively weaker brands can gain profound benefits in terms of recall and recognition, thus their bargain power with the retailers can also be enhanced.Moreover, to grapple the varying business environment, brand extension plays an important role in terms of revitalizing, re-launching the parent brand. Through this process of revitalization and re-launching of parent brand, parent brand becomes more captivating.

Our research concluded that increased competition with the competitors along with the other factors also lead to the brand extension strategy as a part of branding. To compete with competitors, companies have to launch extended product, which can cater the needs of the consumer either in the current market segment or in different other market segments, where competitors are performing well. To stay a head of competition, it has now become vital to launch new brands under the parent brand name. One more important factor which motivates companies to use brand extension is to gain advantage of the technological expertise in parent brand. Using technological expertise gained in parent brand, companies try to enter into new market segment by using the same technology which they used in parent brand. Technological might include superior packaging technology or outclass promotional activities, which companies use in their extended brands as well.

5.2.2 Advantages and disadvantages of brand extension

This research concluded that advantages and disadvantages of extended brands are also recognized by managers. As per brand managers, consumer know-how about the parent brand is vital in the success of extended brands, but it is also important to convey the important characteristics of the extended brands, so that consumer would have an idea about how extended brand differs in terms of specification than the parent brand but not in terms of quality. Brand extension is usually considered more beneficial by brand managers due to the fact the comparatively to launching new brands, extended brands use pull strategy instead of using push strategy. In Pakistan, brand managers use the parent brand name to portray an appealing brand name for the extended brands which might help consumers to realize the parent brand doctrine and eventually accept the extended brands.

Consumer trust can also be beneficial for brand extension.During the course of this study, it was found that consumer trust on parent brand may lead to the acceptance of the extended brands easily and in a cost effective manner. Companies have to incur less cost for promotional activities and to create awareness about the extended brands. Due to consumer trust, companies can penetrate into new market segments easily and quickly due to the acceptance of the parent brand among the consumers. Consumer trust can also be beneficial when it comes to retailers. Retailers accept the extended brands easily due to the acceptance of the extended product among customers.

Consumer trial becomes easy as well due to the image of the parent brand, which results in quick penetration of the extended brand in the market and among the consumers. But it can be opposite if the parent brand name is not much familiar among consumers. It will become difficult to extend the brand under a brand name which is not accepted by the customers. It might lead to failure of that brand.

In Pakistan one of the advantages which we came to know is refreshment and revitalization of brands. Brand extension can also be useful when it comes to repositioning of the brands. Every brand has a life cycle as eventually brands become mature. At such time brand extension is a useful strategy to reposition the parent brand, thus giving it a new life.

Apart from advantages of brand extension, there are couples of disadvantages associated with brand extension. One of these disadvantages includes dilution of parent brand. From our research we came to know that in Pakistan, according to managers, they didn’t face brand dilution as a result of brand extension. They agree that brand extension if done in a wrong manner can actually tarnish or dilute parent brand name, but in Pakistani context, it is not the case.

Another disadvantage of brand extension is cannibalization of sale, which as per manager, companies faced in couple of extended brands. In case of Haleeb food, company faced cannibalization of sales in UHT milk and tea whitener. Changing trend led company to introduce tea whitener, which eventually cannibalized sales of UHT milk. Same case is with Nestle.

5.2.3 Success of brand extension

We found in our research that, a successful brand extension should fulfill the requirement of Fit in terms of consistency and similarity with the parent brand. Similarity and consistency does not mean exactly the same, but extended brand should maintain the quality and image of the parent brand. If extended brand would not follow the same perception which consumers have in their mind about parent brand, then there is a possibility that extended brand might not get the same response which parent brand got from its consumers. As a result extended brand might be a failure. We also found that failure of extended brands as a result of not maintaining the concept of fit does not necessarily harm the parent brand. Brand managers of all four brands which were chosen for this study, always make sure to follow the concept of fit between extended brand and parent brand. They always try their utmost to maintain the same image and quality in extended brands, which they promised with their customer in parent brand.

We also found that concept of fit between parent brand and extended brands make consumers to evaluate extended brand as favorable or unfavorable. Their decision about extended brands for favorability or un-favorability decides the future of the extended brands. If consumers do not find a fit between parent brand and extended brand then extension might become unfavorable, and if consumers find fit between parent brand and extended brand, then extension might become favorable.

5.3 Recommendation

One of the important element through which brand familiarity can be created is age. Therefore companies should also consider different ages of consumers while crafting brand extension strategies. Companies should also pay attention to old aged consumers while launching new extensions.

Both male and female have different choices and taste preferences in most of the cases. This phenomenon also reflects in brand attraction and making choices for products. Very few brands have been introduces on the basis of gender. Companies should introduce more extensions which can cater needs based on gender choices.

Consumers’ consumption pattern is another factor which is integral for companies and retailers too. Companies should take consumers’ consumption pattern into their consideration while making products as retailer also keep products as per consumers’ demand and consumption.

Old consumers are more loyal to the products they use. These segments of consumers are not looking for new modified products every time. These consumers prefer quality and consistency of taste. Companies should consider this segment of consumers while introducing new extensions which are based on different taste and flavors. Companies should be careful while brining change to their old product due to the possibility that old aged consumers might reject it.

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Cite this page

Leverage brand equity. (2017, Jun 26). Retrieved February 5, 2023 , from

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