Category Extensions : Factors enhancing brand equity

In today’s world, where the consumer is constantly exposed to more and more brands in almost any kind of environment, the importance of exploiting those brands which have managed to reach the consumer’s mind and gained a strong position has increased. A majority of new product launches are extensions of existing brands. Brand extensions can be seen as a less expensive as well as less risky way to satisfy the consumer’s demands and needs within several segments by providing several products under the same brand rather than creating a new name for every new product. Even though the extension of brands has become a popular strategy, it can still be somewhat of a troublesome affaire to extend the brand without loosing its original value. A “very good” brand extension not only creates additional cash-flow but also enhances the brand name. Thus, the purpose of this thesis is to identify factors that enable enhanced brand equity through category brand extension. A category extensions is when an existing brand name is applied to a product category that is new to the firm. The study is conducted based on exclusively written data whereas a presentation of textual analysis will appear. As the focus is on theoretical findings and not empirical, no entire chapter in this thesis will concern empirical findings. Elementary variables of brands are defined, explained and discussed as well as the concept of brand equity, identity and image. Further, we present a discussion concerning definitions and the research that has been conducted on the subject of extensions. A discussion on the potential benefits and difficulties that are involved in brand extension follows and the concept of extension fit as well as aspects of lifestyle are presented. The conclusions reach are seven factors, all benefiting from having a high level of abstraction. The factors enhancing brand equity through category extensions are: Brand Context Distance, Lifestyle, Brand Awareness, Fit, Guarantee Function, Personality and Relationship