Brand extensions use an established brand name, such as Harley Davidson, to launch new products or enter new product categories. In Harley’s case, for example, the well-known brand name has been used to introduce:
- New motorcycle product lines, such as street trikes
- Full lines of aftermarket products, such as seats, windshields, backrests and racks, and lighting
- Full lines of apparel, such as helmets, boots, and riding jackets
- Full lines of décor items, such as limited-edition collectables
While the parent brand gives credibility to the extensions and reduces the costs of brand building for the new products, the extensions often repay the favor by enhancing the parent brand’s image. However, this enhancement only takes place when the consumer sees the following traits in the extension:
- Fit: the extent that the traits associated with the original product can be transferred to the extension
- Quality: the perceived quality of the parent brand
- Fit x Quality: the interaction between the parent brand’s quality and the degree that the extension products complement the original product lines
Recent research has also shown that cultural differences affect how consumers react to the levels of fit and quality.
In countries with high long-term orientation (such as Asian countries), consumers value long-lasting relationships. Brand extensions build on prior experiences with the brand, leveraging the accumulated trust and respect for the parent brand; long-term oriented consumers place a lower priority on fit, accepting a wider range of product types under a parent brand.
Conversely, countries with lower long-term orientation (such as the US and UK), complementary factors become more critical. Harley fans can easily accept aftermarket products and clothing as being complementary to the original bike products, but would likely frown on a food-related product line.
In countries with higher power distance (such as France or Russia), consumers are more loyal to brands, particularly if the brands are viewed positively by people in positions of power over the consumer (parent, boss, etc.). Therefore, brand extensions are more readily accepted because of the strong loyalty to the parent brand.
Conversely, countries with lower power distance (such as the US), consumer are less brand loyal and are likely to challenge a brand’s right to operate in certain product categories. In addition, past research has shown that consumers in low power distance countries have higher quality expectations, which skews the fit x quality equation, affecting how products are seen as complementary.
In individualistic countries (such as the US), the degree of complementary fit is critical. Therefore, these consumers are less willing to accept brand extensions that venture into barely related product categories.
Conversely, in collectivist cultures (such as Asian countries), fit is much less important. Consumers prefer products from companies that have successful images, regardless of the product mixes. For example, it is not uncommon for a successful Asian company to manufacture hard goods such as washing machines, have several food product lines, and include multiple service organizations such as banking and insurance. Therefore, brand extensions with a highly successful parent brand are generally easily accepted.
Brand extensions need to be presented differently based on the culture in the target market. If the extension is somewhat of a stretch, fit-wise, the complementary aspects will have to be carefully marketed to individualistic, short-term oriented, or lower power distance cultures. The level of quality will have to be emphasized to overcome the perceived fit mismatch.
If an extension is being marketed to a collectivist, long-term oriented, or high power distance culture, the brand history and the customer’s past experiences with the parent brand will need to be emphasized. The level of fit becomes less important that leveraging the existing relationship with the customer.
- Have you evaluated the level of fit x quality in the brand extension?
- Does your marketing communications emphasize the correct factors, i.e. brand loyalty or complementary fit, based on the culture of the target market?
References Henseler, J., Horvath, C. Sarstedt, M., Zimmermann, L. (2010). A cross-cultural comparison of brand extension success factors: a meta study. Brand Management. 18:1, pp. 5-20.