1. Does brand extension impact
parent brand : a case of Johnson
Submitted to:
Sir Tariq Jalees

2. Group members:
• Irfan
• M.ali shah
• Sumaiya
• Laiqa ahmed

3. Introduction
This case study discusses the numerous reasons
why companies switch to brand extensions and
why not a new brand category ?
Also it shows the impacts a brand extension can
have on the parent brand which can be both
positive and negative in nature and later affect it.

4. Why companies adopt brand
extension?
• According to aaker et.al.,
a lot of companies adopt the strategy of brand
extension to have benefits from the existing
brand knowledge in the current markets.
• Like wise according to Keller ;
When companies launch new products and
market them under the umbrella of a well known
brand name then in return the failure as well as
the marketing costs are reduced .

5. 1 ) Financial benefits
While developing a brand ,firms invest heavily to
make it. Though it is a very costly process but
one can have successful returns If the success is
achieved.(Keller)
But firms always do not have the financial power
to create new brand names for each product they
develop from time to time, so they use a more
Economical strategy to introduce a product
under the name of a existing product.

6. • Here James ,recommends that companies
should use their name of a known ,successful
and well established brand when developing a
product rather then creating a new product
name.
• Amble suggested that introducing a product
under brand extension has more chances of
survival then products introduced with a new
brand name.
Therefore firms are usually in favor of brand
extensions as it helps them minimize their new
product introduction cost as well as less risk as
compared to the launch of new products in the
market.

7. 2) Parent brand image
• According to Keller
More then 80 % of firms resort to brand
extensions as a way of marketing goods and
services.
When firms develop brands under the name of the
parent brand ,the marketers believe that the
consumers evaluate brand extensions as
favorable because the then the consumers
transfer their positive attitudes or effects to the
extension made.

8. • Though the this transfer of attitude may not
always be automatically positive and may
depend on the perception the consumers holds
about the parent brand and its extension.
• Companies consider to use their successful
parent brand when making a brand extension to
gain possible positive attitudes from the
consumers thus lowering the risk of brand
awareness and recognition for the consumers
and the consumers easily refer to the new brand
extension as being familiar with the parent
brand.

9. Literature review
Companies are thinking of new strategies day by
day of how to reduce costs involved and adopt
new successful methods . Currently brand
extension is a new way of saving cost and
making the launch of the new product successful
in the market.
Therefore companies launch new products or have
product line extensions in order to avoid the
risks involved in introducing the new brand.

10. Attainment of economics scale factor
• Many companies use the image of the existing
brands in new markets and launch new products
such as Virgin group.
Though Virgin group is mainly regarded as a popular
music retailer and publisher but by using its
previous successful repute ,it is also found launching
their existing brands in the new markets.
They were historically referred to the music business
but now they have successfully entered into their
own airlines, financial advisory and Cola
production.(Randall).

11. Rational for brand extension ?
According to Buday,
The companies rational behind extending brands
is to attain economies of scale .
The companies main consideration while
launching a new product is to capture the
market share and improve their net profit
margin by using the parent brand name.

12. The question arises how do companies do that ?
• Usually companies use the one brand name and
introduce the product in different categories
,this in return will help them to reduce their
communication (promotion) expenses as the
new brand uses the name of the known parent
brand.
• The customer in respect of the known parent
brand , easily gains familiarity with the product
due the customers awareness and attachment
with the parent brand.

13. While making a brand extension…
• According to Ambler and Styles ,
It is important for companies to have knowledge of
brand ,its mechanism ,the extension techniques and
their implementation in the market which makes a
brand successful and easy positioning.
When launching new brand ,the risk of failure is
maximized so there is no need to change the product
development process and thus increasing the
chances for all new initiated products to be
successful in market. (brassington and pettitt )

14. Eight stages of new product
development
Brassington and pettitt have suggested eight stage of
new product development framework which
describe the product development process.
• Idea generation
• Idea screening
• Concept development and testing
• Business analysis
• Product development
• Test marketing
• Commercialization and monitoring
• Evaluation

15. Studies on customer brand evaluation
1. The first study was made by Aaker and Keller
in 1990.
 They started with two Research Designs to
evaluate the customer brand evaluation .
 1st study result was that the customer
associations with any specific brand can either
harm or improve the evaluation about brand
extensions. if the parent brand is recognized
and well positioned, the brand extension
acceptability in the market will increase.

16. Conclusion of research
• Parent Brand becomes the basis for successful
acceptance of its extensions. (Aaker and Keller).
2. The second study was conducted by Sundae
and Brodie (1993).
• Adopted the same methodology and hypothesis
tested by both Aaker and Keller.
• Some of their results were relevant with
previous researchers studies while some
results were different.

17. Conclusion of research 2
• The relationship between how difficult it is to make
the product class of the extension was not significant
• If the parent brand perceived quality is high then the
customer attitude towards acceptance of product
extension is higher.
• They also supported the Aaker and Keller conclusion
that the fit between the parents brand product class
and the extensions product class has a positive
association with the attitudes one has towards the
extension.

18. 3. Third study was conducted by Bottomley and
Doyle in 1996.
• Both the authors were interested to test the
results of both studies conducted previously
conducted on customer brand evaluation.

19. Conclusion of research 3
• Perceived quality and perceived fit of the
parent brands are the two factors which make
brand extension association in customer mind.
• Study results did not support the Aaker and
Keller notion that an easy to make extension is
viewed as more favorable by the customer.