Marketing strategy decisions for brand extension success

This study looks at the marketing strategies used by fast-moving consumer goods (FMCG) firms in developing brand extensions and determines which of these strategies may lead to extension success. First, a qualitative study was done involving in-depth interviews with brand or marketing managers in 12 FMCG firms regarding the development of 19 extensions both successful and unsuccessful. Qualitative data was combined with past research to design a conceptual framework that was used in the second stage of the study. In the second phase, a survey was carried out involving personal interviews of brand/marketing managers or marketing directors in 15 FMCG firms regarding the development of 112 brand extensions. Data was collected through a structured questionnaire and analysed using the PLS method. Results show that there are five marketing strategy components that affect brand extension success significantly, quality of distribution strategy; quality of positioning; quality of product development strategy; extent of promotional investment and extent of market research. Within the quality of product development strategy the most important components are brand extension development quality and brand product portfolio similarity whereas in the quality of distribution strategy shelf quality is very important. Based on the marketing strategy components that were identified as important, a model is developed for analysing marketing strategy decisions for successful brand extensions. This model responds to the need for more structured methodologies in estimating success or failure of brand extensions.