To extend or not to extend: Success determinants of brand line extensions

• Main Authors: REDDY, Srinivas K., HOLAK, Susan L., BHAT, Subodh
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 1994
• Subjects: Marketing; Sales and Merchandising
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/2987; https://ink.library.smu.edu.sg/context/lkcsb_research/article/3986/viewcontent/Reddy_ExtendExtendSuccess_1994.pdf
• Institution: Singapore Management University

The authors study the determinants of line extension success using data on 75 line extensions of 34 cigarette brands over a 20-year period to investigate the relative effects of brand, extension, and firm characteristics on the incremental market share of brand line extensions. The econometric model also captures the extent of cannibalization of parent brand sales that may have occurred due to the line extension's introduction. The authors also explore the role of a brand's symbolic value as a factor in line extension success. Results indicate that parent brand strength and its symbolic value, early entry timing, a firm's size, and distinctive marketing competencies, as well as the advertising support allocated to line extensions, contribute positively to the success of line extensions. Their findings suggest that, in this industry, cannibalization effects of line extension activity may have been limited and line extensions into earlier subcategories actually may have helped the parent brand. Even with cannibalization, the incremental sales generated by the extension seem to be reason enough to make a line extension strategy viable.