The Impact of Brand Extension on New Product from Customers Perspective

ABSTRACT: Today, most manufacturers distribute their new products under the brands of previous successful products since one of the most valuable properties of each organization is its background and how it is perceived as a reputable organization by its customers. While extending brands to new products, organizations should take into account a variety of factors (e.g. how new products fit into the previous classes of products, consumers’ attitudetoward the original brand, and how difficult it would be to make this extension acceptable to consumers) which may play a significant role in success or failure of a new product in the market. A question faced by sales and marketing managers is, therefore, how this new product (or a group of products) distributed into the market under the previous brand (brand extension) will be received by consumers. In other words, how does brand extension to cover new products affect consumers’ perspectives? The present case study focuses on consumers of detergents and cleaning products produced by Behdad Company under the brand TAJ, to identify impacts of extension of the existing brand into a new product category and markets (brand extension) on consumers’ attitudes using six hypotheses. Regarding its objective, the present study is an applied one; with respect to data collection and analysis, this is a correlation-based survey; and in terms of time period covered by the study, the present study is a cross-sectional study which gathers required data within a limited period from Shahrvand Chain Stores in Tehran. The statistical population is composed of TAJ products and the required data were gathered through random sampling from a sample consisting of 384 individuals using researcher-constructed questionnaire based on a model developed by Aakerand Keller (1990). Formal validity along with expert opinions was used to confirm validity of the measurement tool while reliability of the questionnaire was assessed by computing Cronbach’s alpha (0.911). The study, conducted on 278 women and 106 men, revealed that 48.7 percent of respondents were decision maker, buyer, and consumer of products while 25.3 percent were only consumers. Path analysis was employed to identify the impact of TAJ brand extension strategy on consumers’ attitudes toward the new product(s). The results indicated that the brand extension strategy affects consumers’ attitudestoward the new product(s), and the largest value for beta (0.398), in terms of predicting consumers’ evaluation of brand extension, was obtained for perceived quality of the original product while the smallest value (0.146) was found for perceived ability to transfer skills and manufacturing equipment from the original product into the spin-off.