Brand Counterextensions: The Impact of Brand Extension Success Versus Failure
Published 5/1/2005
Author: Piyush Kumar
View this content
Executive Summary
Despite the popularity of brand extensions, managers are concerned about the adverse reciprocal effect that undesirable characteristics of an extension can have on the parent brand. In this article, the author suggests that even the success of an extension, a desirable characteristic, can indirectly dilute a brand by improving customer response toward a counterextension. A counterextension is a subsequent brand extension that is launched in a reciprocal direction into the focal brand’s parent category by a brand that belongs to the extension category. Drawing on categorization theory, the author argues that a successful extension reduces the perceptual separation between the parent and extension categories, improves the fit between the two, and facilitates customer acceptance of a counterextension.
The findings from five studies are consistent with the theoretical premise, and they demonstrate that a successful extension helps build bridges between the parent and extension categories and makes it easier for brands in the extension category to launch counterextensions. The evaluation of a counterextension is superior if it is launched by a major rather than a minor brand, especially if the previous successful extension was also launched by a major brand. The author also finds that a successful extension indirectly dilutes a brand and results in a greater loss in choice share to a counterextension than a failed extension does.
The findings provide a caveat to previous research that has focused on the reciprocal effects of undesirable characteristics of an extension, and they raise a note of caution about successful extensions and their impact on a brand’s vulnerability to future counterextensions. The findings suggests that managers should consider the counterextension risk when selecting product categories for launching extensions and that managers should perhaps avoid those that dominated by large brands that are capable of mounting strong counterextensions. In addition, managers of major brands should consider restraining their use of extensions to help maintain category distinctiveness and lower the risk from counterextensions. Finally, as the success of line extensions is assessed after adjusting for the loss due to cannibalization, the success of brand extensions should be assessed after adjusting for the potential loss to counterextensions.
Biography
Piyush Kumar is Assistant Professor of Marketing, Owen Graduate School of Management, Vanderbilt University. He holds a bachelors in technology in mechanical engineering from the Indian Institute of Technology, Kanpur; an MBA from the Indian Institute of Management, Ahmedabad; and a doctoral degree in marketing from Purdue University. His primary areas of research include time management, brand management, and decision making. His research in these areas has been published in or is forthcoming in Marketing Science, Organizational Behavior and Human Decision Processes, Journal of Retailing, and Journal of Service Research.
J Marketing Research, Volume 42, Number 2, May 2005
View Table of Contents.