How to manage successful line & brand extensions in the FMCG industry

(1)

How to Manage Successful Line & Brand Extensions in the

FMCG industry

MASTER THESIS

Amsterdam Business School

Name: Ron Waanders

Student number: 5642272

Track: Strategy & Organization Supervisor: Tom Paffen

Assistant Supervisor: Mark Leenders Data final submission: --

(2)

3.3 Interviews 30 3.4 Data analysis 31 4. Results 32 4.1 Motives 32 4.2 Fit 36 4.3 Brand diluting 40 4.4 Consumer insight 41 4.5 Category management 46 4.6 Retail 47 5. Discussion 51 5.1 Theoretical implications 61 5.2 Managerial implications 61 6. Conclusion 63

6.1 Limitations and future research 64

References 66

APPENDIX A: Interview Pieter Van Dijk 69

APPENDIX B: Interview Merel Kroon 75

APPENDIX C: Interview Robert van Bakkum 80

APPENDIX D: Interview Lennard Tanke 87

APPENDIX E: Interview Gerard Jansen 89

(3)

APPENDIX G: Interview Simon Jacobs 98

(4)

Preface

I had a good time!

I have enjoyed the mental support of close friends and family whilst writing my thesis, thank you all. I also want to thank Tom Paffen for his research insights and his advice to do qualitative research. It gave me a very good experience and helped me to get insights in some very nice organisations.

I also want to thank all the people who were willing to give an interview. Without them I would not have any results. Thanks a lot.

R.G. Waanders

(5)

Abstract

Extensions are popular way of new product introductions. Though, a lot of those introductions fail with all negative consequences. This research tries to explore the motives of extensions, the success factors are and how they can be influenced. This research will be an exploratory inductive research. By 8 open anonym interviews with marketing specialist in the FMCG industry, qualitative data is gathered. The central research question of this research is: What are the critical success factors for extensions in the FMCG industry and how are they influenced by the motives for extensions? The biggest theoretical contribution is that motives play an important role the rational decision process of managers and that they can have a negative influence on the success of extensions and brand equity of brands. Managers should be aware of all the success factors of extensions instead of focussing on one.

KEYWORDS: Line extensions, brand extensions, brand equity, success factors, motives, brand diluting, decision making process, consumer insight, category management, retail.

(6)

1. Introduction

The last three decades brand are getting more and more important for companies and consumers (Keller, 1993; Rangaswamy et a., 1993). Brands help companies to differentiate and to position products. A strong brand with loyal buyers will bring companies guaranteed sales in the future. And besides the guaranteed sales, a strong brand also means that

consumers are willing to pay a premium price for the products (Fischer et al., 2010). As a result of this, brand power will lead to higher firm valuation (Simon and Sullivan, 1993). And for consumers a strong brand means recognition, for example of the quality of products. Consumers need trust in products before they will purchase it, and brands may serve as an important indication to reduce perceived risk (Simon and Sullivan, 1993). Therefore brand-building is on top of the list of priorities for top managers.

Launching line and brand extension have become a popular way to introduce new products for brands in the fast-moving consumer goods (FMCG) categories. There are two main reasons why extensions are popular. First, the extraordinary costs to launch a new brand and second the reduction of the risk to fail. Building a new brand is very costly because you have to build brand awareness, using existing brand names reduce the chance of product failure because consumers and retailers already know the brand (Buil et al., 2007; Lomax and McWilliam, 2001).

Of all new product launches in the FMCG sector eighty-nine percent are line

extensions, 6 percent are brand extensions and only 5 percent are products with a new brand name. According to the Association of National advertisers 27 percent of all line extensions fail and 80 percent of all brand extensions in the FMCG industry fail (Ernst and Young and ACNielsen; Marketing 2003). This wouldn’t be interesting if the failure of line and brand extensions do not have disadvantages.

(7)

development costs of new products are very high, a lot of people are working on these ideas, advertising in the media is expensive and retail marketing is also expensive. Also the trust of a retailer in a brand is very important to get shelf space in the store, a product failure will ensure that the retailer in the future will be more sceptical to new product launches. And especially nowadays with increasing power of retailers it has become more important to exclude product failures. A third example of a negative side effect is the perception of a brand in the mind of the consumer. A disappointed consumer will take the negative experience with him for considerations in the future. Therefore it is very important for brands to know what the success factors of line and brand extensions are to minimize the possibility of failure. This research will be an exploratory inductive research. By 8 open interviews with marketing specialist in the FMCG industry, qualitative data is gathered. This research gives insight in the motives and the decisions marketing managers make regarding extensions. The purpose of this research is to understand how the process before the introduction of line and brand extension evolves. That process will be compared with how it is described in theory. This research must result in recommendations to improve that process, what must result in a higher success rate of extensions and to minimize damage to the brand and the relationship with retailers.

This research distinguishes itself with previous research at two main points. The most recent and relevant research to extensions focused only on success factors of extensions (Sattler and Völckner , 2006, Ringle et al, 2012). They do not take in account what the motives of the extensions are and how they can influence the decisions towards success factors in practice. On the other hand, Ambler and Styles (1996) focused in their qualitative research with FMCG marketers on the whole process from motive to launch but, but does not determines what causes failure or success, their research purpose is to give an overview of the process.

(8)

The goal of this research is thus to research the discrepancy between the literature about successful extensions and how the decisions of marketing managers in the FMCG industry are driven. The central research question of this research is: What are the critical success factors for extensions in the FMCG industry and how are they influenced by the motives for extensions?

In the next chapter all the relevant literature will be outlined. All motives for extensions and success factors will be explained. Then the methodology will be clarified. Thereafter the results of the qualitative interviews will be presented. After that the results and relationships between all the subjects will be discussed and managerial and theoretical

implications will be described. Finally there will be a conclusion with limitations of the research and recommendations for future research will be given.

(9)

2. Literature review

In this chapter we will outline all the relevant literature. First we will define what a brand is, followed up by the definitions of line and brand extensions. Secondly there will be present a process model of extension decisions. To understand the decision that brands makes all the motives and success factors will be outlined. Finally there will be explained what role category management and retail play

2.1 Definitions

In this chapter some definitions will be set out that are important in this research. Firstly brands will be defined and secondly line and brand extensions.

2.1.1 Brands

First it is important to make clear what we mean by a brand in this article, because in the literature there are several definitions and concepts of a brand. Styles and Ambler (1995, p. 10) identified two approaches to define a brand, a product plus definition and a holistic view. The product plus is the more traditional approach of a brand where the brand is seen as a typical identifier of the product. According to this approach a brand can be defined (Kotler & Keller, 2009; Ambler and Styles, 1995) as:

“a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those competitors.”

Especially differentiation is important for brands because that is a way how a brand can distinguish itself from their competitors who also have products that satisfy the same need. These differences don’t have to be only functional but also can be rational or tangible to the

(10)

performance of the product. And looking to the brand, it also could be symbolic, emotional or intangible (Kotler and Keller, 2009, p.276).

In the holistic view it is all about the brand. The brand is a concept where all the elements of the marketing mix comes together in the perception of the consumer. The holistic view defines a brand as (Ambler,1992; Ambler and Styles, 1995):

“The promise of the bundles of attributes that someone buys and that bring satisfaction. The attributes that make up a brand may be real, illusory, rational or emotional, tangible or invisible”

Because this research is about different product categories and product lines that come together under one brand name, the holistic view is the relevant view for the research field where this research is conducted.

Besides the traditional brands, there is an increasing presence of private labels in the FMCG industry. Private labels are products that are sold under the brand of the retailer. The sales of private labels are increasing since the seventies and in Europe it is now approximately 20%. Leader in Europe are the UK and Switzerland, where 45% of all sold products in retail is private label (Interbrand, 2011, p. 9).

Brands are playing an import role in the daily life of a consumer and brands are also important for companies. First, brand makes life easier for consumer. Brands are giving a certain quality to products so that consumers will buy them more easily (Kotler and Keller 2009). Consumers know exactly which brands can satisfy their needs trough past experience, a positive experience can make consumers brand loyal for purchases in the future. Thus for companies, brands can give them a competitive advantage in a way that loyal consumers will buy their products in the future and even are willing to pay a premium price for products of a specific brand (Fischer et al. 2010; Kotler and Keller 2009; Styles and Ambler, 1996). An

(11)

important definition that explains these advantages of brands is brand equity. In paragraph 2.5 this theory s will be outlined.

2.1.2 Line and brand extensions

The purpose of this research is to find out how the process of a new line and brand extension develops from a strategy to the actually introduction of the product. Therefore it is important to define what ‘line extension’ and ‘brand extensions’ are. An accepted theory that is used in the literature is the definition of Tauber (1981). He distinguishes two different types of dimensions, product category (new and existing product category) and brand name (new and existing brand name), that results in a matrix with four possibilities.

New brand: A new product category with a new brand name.

Brand extension: A new product category that use an existing brand name.

Line extension: A product of an existing brand that already has existing products in

that category.

Flanker: A company that uses a new brand but already have products in that

category.

Sometimes extensions will be mentioned; in this case extensions (line and brand extensions) are mentioned in general. In the next chapter there will be given an overview of a process model of extensions decisions.

2.2 A process model of line and brand extensions

Ambler and Styles (1997) did research about extensions and created a process model of extensions decisions. In their research they interviewed 11 marketing managers of FMCG companies who were involved in the development process of extensions. From these 11

(12)

interviews they formed a process model for extensions decisions (figure 1).

In the process model they produced, Ambler and Styles (1997) make distinguish between new product development and the development of line and brand extension. Their model differentiates itself on four main points of the new product development model.

First, the starting point of this process model is not a new idea for a product, but has to do with the strategy of the brand. This can be a strategically intention within the company, for example growth strategy or to defend the position of the brand. But it can also be external driven by a demand of consumers or an idea of competitors (Ambler and Styles, 1997). Secondly, brand equity plays an important role in the decision process. According to Ambler and Styles (1997) brands are focused on the consequences of the new extensions to the overall brand. This also confirms that the holistic view approach of a brand is relevant in this research. In his research he found evidence that brands take into account if extensions makes brands stronger or making brands weaker.

Thirdly, because the process is led by brand considerations, the marketing manger is leading in the process. So it is primarily a concern of category and brand managers instead of product developers and the R&D department (Ambler and Styles, 1997).

A fourth difference is that it is more a informal process that take place outside the formal planning process of companies (Ambler and Styles,1997).

Ambler and Styles (1997) name three main stages in de the process: Antecedents, decision criteria and launch. In the next paragraph the benefits and risks will be outlined to understand why extensions are so popular (antecedents) but also why they are not riskless (decision criteria). After that brand equity will explained, and why brand equity is important for brands and why it plays an important role in the decisions process. Finally there will be set out how brands need to manage their category and the role of the retailer in the process.

(13)

Figure 1: Process model for extensions decisions

2.3 Motives for extensions

In the literature about brand and line extensions there are summed up many reasons why companies come up with line and brand extensions, they can be divided in three main motives: economic motives, customer segmentation and the consumers need to have

variation. These motives are relevant because they influence the decisions managers have to make by introducing new extensions (Buil et al. 2007; Nijssen, 1999; Martinez &

Chernatony, 2004; Tauber, 1981; Aaker and Keller, 1990; Park and Srinivasan, 1994).

2.3.1 Economic motives

The first economic motive is about the low costs to build-up awareness. The costs of

launching new brands, is one of the main reasons why organisations use existing brand names for their grow strategies (Buil et al. 2007; Nijssen, 1999; Martinez & Chernatony, 2004; Aaker and Keller, 1990; Park and Srinivasan, 1994). By using well know brands, the costs of

(14)

trough marketing and distribution efficiencies with the established brand. And these synergies do not stop only at the launch. Also after the launch of the products, communication about the brand will bring synergies with it, because all the products belong to the same brand.

Communication costs in media, magazines can be spread out over all the products in this way in lowers the variable costs of the products (Kotler and Keller, 2009; Ambler and Styles, 1997).

A second benefit is creating a so-called “mega-brand”. A mega-brand will

strengthened the brand in negotiations with retailers and other customers. So the bigger the portfolio of products, the more important you are as a company. In the end this will result in bargain power (Ambler and Styles, 1996, Reddy et al. 1994). A bigger portfolio also means that competitors are being excluded in the shelves, shelf space in the store of the retailer is a very important factor. Because shelf space means visibility and visibility means revenues. So in this context line and brand extensions also can be seen as a defence strategy with regard to competitors (Quelch and Kenny, 1994). Brands want to have control over the shelf space, by introducing extensions they want exclude the number three and four competitor. So what they actually do they is creating a barrier for new entrants and competitors (Quelch and Kenny, 1994).

A third factor is that extensions are a short and effective way to increase sales quickly and inexpensive. By launching extensions there is always attention of the retailer and most of the time also in the media. Hereby, in most of the cases, sales will get a boost. And because the costs and development time is much more predictable than for new brands, line extensions are risk aversive. According research it is even that managers do not want to set their career on risk by starting a new brand, because a new brand means a lot more marketing and production costs. And also the demand for short-term results of shareholders stimulates the behaviour of introducing line extensions (Quelch and Kenny, 1994). Not directly an economic

(15)

motive but extensions are also popular because it increases the possibility of success

compared with new brands. It increases the possibility of acceptance of the product, because consumers are already familiar with the brand name and the attributes the brand normally delivers, an example of attributes is quality (Tauber, 1988; Buday, 1989; Aaker, 1991; Reddy et al, 1994; Stilling Blichfeldt, 2005).

2.3.2 Customer segmentation

Customer segmentation (Quelch and Kenny, 1994, pp. 153) is a motive for line extensions. Managers see line extensions as a low cost and low risk way to fulfil customer needs in different segmentations. And because nowadays marketing research is plenty available it easier for brands to understand the needs of their target group and trough extensions they can be reached in finer segments. This marketing research can also be translated into efficient advertisement for each segment.

This product segmentation can take place at different levels. For example taste, people have different preferences of taste and by having a lot of tastes, brands can reach a big range of audience with different taste preferences. Size is also an important way to differentiate. By having multiple sizes multiple needs can be satisfied. These two, size and taste, can also result in third way to segment you customers, namely by price. For products of a better quality or a more exclusive taste you can ask a premium price. But it also works the other way around. For costumers that can afford your products you can develop a product of less quality, in that way also less fortunate consumers can buy your products. So extensions give marketers the opportunity to capture a broader range of audience by having a broader range of price points (Quelch and Kenny, 1994).

Besides the segmentation of consumers, nowadays brands have to take in account the diversity in the retail landscape with superstores and small convenience store. This ensures

(16)

2.3.3 Variation need

Also consumers expect new products lines, the have the desire of new tastes and new products by time. Consumers are switching from brand to brand, trying new things that they have never tried before. Line extensions can satisfy this desire by offer choices for the consumer, while keeping them loyal to the brand. Brand extensions also can be deployed to create excitement and variation to a mature brand (Sheinin, 2000, p. 53).

2.4 Success factors

There has been conducted a lot of research the last 20 years to success factors of extensions. In a recent study of Sattler and Völckner (2006) they did research about the relative success factors of brand extensions in the German FMCG industry by simultaneously investigating 10 success factors. The result was that they found 5 important drivers of success. In a sequel study of Sattler et al. (2012) they designed a model to estimate and evaluate a measurement model for key brand extension success factors. As a result of that study they found 3 key factors (marketing support, parent brand strength and brand extension success) that have relative more influence on the success than other all other factors that also play an orle. The main massage is that managers should avoid concentrating their resources on a single marketing mix instrument (Sattler at al., 2012, p. 16). Those three key factors will outline in the next paragraphs.

2.4.1 Marketing support

One key success factor is that there are adequate funds allocated to the new extensions (Ringle at al., 2012; Nijssen, 1999; Reddy et al., 1994, Sattler and Völckner , 2006, Sattler et al., 2012). . With these funds brands have to create awareness for these new products. These funds are also necessary to get a change of the retailer. Without budget to support the

(17)

introduction, retailers will not place the products insight and sometimes they won’t cooperate with an introduction.

A research of Ringle et al. (2012) indicates that availability in the market and location in the store have influence on the perceived distribution of a new product, which is a success factor of extension evaluation. The study also demonstrated that besides distribution also advertising (advertising frequency) and sales promotion (sampling) has a positive influence on the product evaluation. Without creating awareness to the new product will fail

Marketing support also can create a fit between existing products and extensions of brands (Völckner and Sattler, 2006, p.30). By telling consumers why there is a fit, consumers will see it as fit. The impact of will be outlined in the next paragraph.

2.4.2 impact of fit

Fit between the parent brand and extensions plays a significant role in the success of

extensions (Sattler et al., 2012; Sattler and Völckner , 2006; Quelch and Kenny, 1994; Kotler and Keller, 2009; Nijssen, 1997; Reddy et al., 1994; Park et al., 1991). In this paragraph we will explain what fit is and what the consequences can be of a lack of fit for new extensions and the parent brand.

Fit

Fit is important because without fit consumers will not accept the new product because from out the existing perception of the brand they have, they don’t understand the new product (Quelch and Kenny, 1994; Kotler and Keller, 2009; Nijssen, 1997; Reddy et al., 1994; Park et al., 1991).

In scientific research there are more definitions of fit. Sattler at al. (2012) are the first that try to give an overall model to declare fit. They divide fit in brand level fit and product level fit. Brand level fit is determined by image fit, fit of the concept and the relevance of the

(18)

complementary of the products and the level of substitutability. These factors together determine fit of extensions and the parent brand.

Aaker and Keller (2009)ocus on physical similarities of the products. They define fit as the level of perceived similarity between the extension and the products of the parent brand, based on substitutability, complementary and manufacturability.

Park et al. (1991) take also into account that the brand concepts must have a fit with the new line or brand extension. they focus more on the whole concept and meaning of the brand, rather than only the physical similarities.

According to Kirmani et al. (1999) perceived fit directly influence the opinion of the extension in the extended category. Consumers believe that extensions to non-related

categories are not very reliable, which results in a negative judgement on the new extension. That is why the review of an extension will be more positive if the consumer perceives more fit between parent brand and the new category of the brand extensions. This suggests that brand extensions are more risky than for example line extensions.

In the next paragraph research will be outlined about the consequences of no fit.

Brand diluting

There is conducted a lot of research about brand dilution in combination with line and brand extension, with different outcomes (Martinez and Charnatony, 2004;Martinez and Perez,

2009; Keller and Aaker,1992; Lokan and John, 1993; Romeo, 1991; Sood and Keller, 2012). Keller and Aaker (1992) found no evidence that a parent brand name can be diluted by unsuccessful brand extensions. In their study consumers were presented negative

information about a new product under an established brand name. Despite the negative information, their perception about the parent brand didn’t changed significantly, compared with the control group in that experiment (Keller and Aaker, 1992). Romeo (1991), who used

(19)

cause brand dilution.

On the other hand Loken and John (1993) did research about how line and brand extensions can have a impact on the parent brand. They use in their study a different perspective

compared with Keller and Aaker (1992) and Romeo (1991). They investigate how unsuccessful line extensions can dilute specific attribute beliefs of a brand. The specific attribute beliefs are the main associations that a consumer has with a particular brand.

According the theory of Lokan and John (1993) existing associations will be transferred to the new line extension and is the basis for positioning the new product in the market. But when these attributes are inconsistent with the new product it can also harm the parent brand, because the new created associations of the new extension will be transferred back to the parent brand, which eventually will have a negative influence on the perception of the parent brand.

Lokan and John use the bookkeeping theory (Weber and Crocker, 1983) and categorization theory (Rothbart and Lewis, 1988) to understand how line extension failures will or will not spill over beliefs to the family brand name. The ‘bookkeeping model’ argues that beliefs change incrementally as new information is received (Weber and Crocker, 1983). Thus the theory actually says that beliefs of a parent brand can change in the mind of the consumer, when the consumer receives information from extensions that are inconsistent with the parent brand believes.

From these theories Lokan and John (1993) set up hypotheses that are tested in an experiment with 196 questionnaires. They also used a control group to compare the results. As a result of this research they found evidence that negative experiences with extensions have negative consequences for the parent brand.

Martinez and Charnatony (2004) also found evidence of brand diluting of the parent brand in case when consumers have negative experience with a brand extension. Their

(20)

research, a market survey in sports wear, found evidence that brand extension has a diluting effect on brand image and will confuse the beliefs and associations the consumer have with the brand. The effect of this is even stronger when there is measured in attributes or feelings associated with the products of the brand

According to Sheinin (2000, p. 53) the variation motive for brand extensions are dangerous because new brand associations will be created by the brand extensions and these will be transferred to the existing brand knowledge.

According to Sood and Keller (2012) the way of branding plays a role in the process of brand diluting. In their experiments they tried to find evidence how branding and sub

branding influence extensions evaluations, and if it can cause diluting of parent brand equity. With sub branding they mean for example “Brisk” by “Lipton Ice Tea”. Their findings suggest that that diluting effects occurs especially when there is a negative experience with a brand extension and when there is a high degree of similarity in product category (Sood and Keller, 2012, p. 380). This result implicate that extensions far enough from the parent brand category will do less harm to the parent brand. In the best way brands use sub branding for the brand extension. By using sub branding the parent brand is more protected and in the

experiments it even resulted in more favourable evaluations. Their results also implicated that a failure because of insufficient distribution or unsuccessful advertising will do less harm than a product failure.

2.4.3 Parent brand strength

Parent brand strength can be characterised best as the brand equity that a brand has (Sattler and Völckner , 2006; Ringle et al., 2012). Brand equity is about the image and the meaning of the brand (Lemon en et al., 2001). According to Kotler and Keller (2009) brand equity is the

(21)

consumers think, feel and act related to the product or service of the brand but also in the prices, market share and profitability of the brand. Brand equity can attracts new customers, serves as a reminder to existing customers and can become the emotional tie between the customers and the firm. The key variables of brand equity are brand knowledge, brand awareness and brand image. Brand equity will be most important for low-involvement purchases with simple decisions processes. Also when the consuming moment is highly visible to others and when evaluating the quality is difficult prior to consumption. For a brand it is important that consumers want to buy your product instead of a substitutes of competitors. Therefore brands are trying to distinguish their products of the product of their competitors. Brand equity is a theory that explains why consumers choose for a specific product instead of a product or service that fulfil the same needs. Brand equity tries to give answer on the question why consumers prefer a brand above all the other brands (Kotler and Keller, 2009).

Regarding this research brand equity is important for two reasons. Firstly to explain how fit between new and existing products can be ensured. Secondly, because successful line and brand extensions can improve brand equity and poor extensions have negative influence on brand equity by extensions (Martinez and Charnatony, 2004, p. 46; Rangaswammy, 1993; Kotler and Keller, 2009; Dacin and Smith, 1994)). .

For a brands future marketing activities it is important that they add brand equity to the brand and strengthen the brand knowledge that is created by previous marketing

investments. There are several perspectives about brand equity. In this research the customer-based brand equity perspective is the most important, because this approach views it from the perspective of the consumer (Kotler and Keller, 2009).

(22)

image and brand awareness. These three ingredients together form brand equity and will be outlined in the next paragraphs.

Brand knowledge

Brand knowledge is the starting point of the customer-based brand equity model (keller 1993). Brand knowledge consists of the conceptualisation of brand image and brand

awareness that is stored as a perception in the mind of the consumer. This means that brand knowledge refers to all the thoughts, feelings, images, experienced that are stored in the mind of the consumers regarding to the brand (Kotler and Keller, 2006; Keller 1993). The way that brand knowledge is stored in the minds of consumers is important to understand because it gives insight how consumers recognise, recall and process existing brand associations and especially how new brand associations are added to the existing associations (Franzen and Bouwman, 1999). The memory of consumers is basically conceptualised as an associative

(23)

network memory model. In this model the memory consist of nodes and between the nodes there are linkages that link the nodes together (Franzen and Bouwman, 1999). Therefore brand knowledge consists of nodes with linkages that are associated with a specific brand (Franzen and Bouwmann , 1999).

Brand awareness

As mentioned in the previous paragraph, brand knowledge consists of two components: brand awareness and brand image (Keller, 1993). Brand awareness is the ability of consumers to recognise the brand in different situations and different conditions. This component is very strong related to the strength of the brand node that is stored in the memory of the consumer. A second component of brand awareness is brand recall. Brand recall is the ability of

consumers to recall a brand when there is given a specific product category, specific cue or probing cue (Keller, 1993). For every brand it is important to be recognized and recalled, to be in top of mind of the consumers. Especially in the FMCG where shelf space is scarce and competition level is high with retail brands.

For consumers it is easier to recognise a brand than to recall a brand, but the relative importance depends on the fact if a brand is present in the shelves where the consumer makes the purchase decision (Keller, 2003). When a brand is present in the shelves, than recognising the brand is most important. But when a brand is not in the shelves it is of course more

important that consumers can recall the brand. With this in mind, brand recognition is

important when consumers making in-store purchase decision, whereas brand recall is usually more important when the decision is made outside the store in for example an online store or by purchasing a service (Keller, 2003).

The stronger the associations consumers have with the brand, the higher the possibility of recall and recognition. So the stronger the associations the more influence they have in the

(24)

decision making process of the consumer. Extensions therefore have to strengthen the associations instead of weekend these.

Brand image

The second component of brand knowledge is brand image. This can be defined as

perceptions about a brand stored as associations in the memory of the consumers, they contain the meaning of the brand for consumers (Keller, 1993). These associations can be divided in three types of associations; namely, attribute associations, benefit associations and attitude associations.

Attribute associations are the most concrete and refer to the features and characterise of a product or service, and can be product or non-product related. Product related attributes are for example the ingredients of the products. Non-related attributes are price, packaging, user imagery and usage imagery (Keller, 1993).

Benefit associations are a little bit more abstract and consist of functional, experiential and symbolic benefits. Functional benefits are intrinsic advantages that correspond with product related attributes. Experiential benefits correspond also with product related attributes but are related with the consequences of usage, such as: sensory pleasure, variety and

cognitive stimulation. Symbolic benefits correspond with non-product related attributes, they are linked with needs such as social approval, personal expression and outer directed self-esteem (Keller, 1993).

The third type of brand associations is attitude associations, these associations are the most abstract of all three and form the basic for consumer behaviour and brand choice (Keller, 1993). These associations are the overall evaluation of a brand and are considered the most important because they are the basic of the brand choice. These associations depend on how consumers select and judge brand attributes and brand benefits that they think are relevant for

(25)

(Keller, 2003).

All these associations can vary according to favourability, strength and uniqueness. The uniqueness of brand associations is the essence of brand positioning. A unique selling proposition gives consumers a reason for buying that particular brand. Shared associations with competitors can help to establish a category membership and can create an enter barrier for new category entrants (Keller, 1993).

The favourability of associations is about how favourably they are valuated, related to the attributes. This favourability is dependent of situation, context, and consumer particular goal at the moment of the moment of decision making moment (Keller, 1993).

The strength of association depends on how the information enters consumers memory and how it is stored in the mind of a part of brand image. Strength is a function of quantity and quality of the message that is received and encoded. It depends on the context the brand is considered.

All these associations are stored in the mind of the consumer and all together they form the brand knowledge that a consumer has. According Martinez and Perez (2009, p. 58) brand extensions, success full or not, can dilute brand image. Especially when the extension has a low fit, there will be a negative effect on the attitude toward the brand, regardless the attitude toward the extension. The existing associations combined with the new associations could thus dilute the established brand equity.

Now the three key success factors are explained, 2 less important success factors will be outlined: Category management and the role of the retailer.

2.5 Category management

(26)

weaker line logic in the portfolio. For this research it is interesting to take these factors into account and look what the effect is on the success of extensions.

The cannibalization effect is defined as the sales of new extensions at expense of existing extensions. This can be a partial effect, what means that there is added sales but that there are also consumers that switch from existing products to the new extensions. In the research of Lomax and McWilliam (2001) they studied thirteen real life FMCG extensions and they looked how consumers react to them. They analysed household panel data to examine purchase patterns of buyers of the new line extensions and draw conclusions on the impact of cannibalisation. In their research they showed that buyers of line extensions are disproportionate purchasers of the parent brand. So they found evidence of cannibalisation but they found also proof of the efficiency of line extensions as an expanding strategy (Lomax and McWilliam, 1991).

Adding extensions also can cause a weaker line logic or over segmentation (Quelch and Kenny, 1994). The more extensions the more space a brand need in the shelves in the retailer. And all the space must be profitable, in the case of too many extensions the retailer will remove himself the less profitable. This also can be an extension that is important for the brand portfolio. Over segmentation can also cause confusion for the costumer, the can not choose between all the different extensions and because of that they choose for a brand that is simple and clear with their product line (Kuksov and Villas-Boas, 2010; Quelch and Kenny, 1994). Beside the over segmentation, new extensions can also causes a lower brand loyalty of brand loyal costumers. Because these costumers are disrupted from their pattern and have difficulties to understand the new extensions with the consequence that their brand loyalty decreases and in the worst case they switch to another brand.

(27)

2.6 The Role of the retailer

Retailers also play a role in the success of extensions Sattler and Völckner (2006, p. 30). Acceptance of the retailer towards the new extensions can influence the success heavily Marketing exposure of new products can help to achieve acceptance. By mean of marketing exposure consumer demand can be build whereby retailers are stimulated to sell the product. And because of the marketing activities retailers do not have to make advertisement for the products.

The development that retailers are selling more and more retail brands has ensured that retailers are less dependent of brands. As a result of this, positions of power between brands and retailers are changed the last years. For brands this means that promises sales of new extensions must be realised in practice. If new extensions fail, it will result in a poorer trade relation with retailers. And in the end retailers won’t cooperate the next time if brands come up with new products (Quelch and Kenny, 1994).

(28)

3. Methodology

In this chapter the methodology will be explained. First will be explained which approach there is used for this research and why that approach is relevant for the research question. Secondly, it will set out how respondents were approached, selected and how data was gathered. Thereafter it will be outlined how the data is processed and analysed.

3.1 Research approach

This qualitative research will mainly have an inductive approach where from out the data a theory will follow. An inductive approach is able to generate a cause-effect link between particular variables without an understanding of the social context. To develop such an understanding is the strength of an inductive approach (Saunders et al., 2007)

This exploratory study has to find out what is happening and why specific choices are made and by which motives they are driven in the decision process and which factors influence the success of extensions. The central research question is: The central research question of this research is: What are the critical success factors for extensions in the FMCG industry and how are they influenced by the motives for extensions? By using this method there is looked for new insight and to get a better understanding of the problem of extensions failures. The great advantage of exploratory research is the flexibility, the research direction can be adapted within the research process (Saunders et al., 2007).

The grounded theory is used as the research strategy. This choice is supported by the fact that it perfects fit with the inductive approach (Saunders et al., 2007, p. 142). The grounded theory is helpful to explain choices and building a theory from there on. The data collection was started without having an initial framework, but in the process of gathering data relationships were found and thereafter tested.

(29)

3.2 Selecting and gathering the sample

To select the sample the interviewed had to met 2 conditions, namely:

- Involved in the decision process of FMCG extensions in the last 2 years

- More than 10 years experience in the FMCG industry, preferably management team experience in the FMCG industry

More than 10 years experience is asked to improve the reliability of the data and management experience is preferably to get more and better insight in strategic choices that are made in the development process.

The marketing specialists were in general approached by telephone and in 9 cases by e-mail and anonymity was promised. Anonymity improves the quality of the information because participants are inclined to be more outspoken. In total there were 72 marketing specialist contacted, 8 were willing to participate and met the predetermined conditions. This gives a response rate of 8,60 percent. Before calling or e-mailing LinkedIn was used to check the background of the marketing specialists, to ensure they met the conditions. This was again checked by e-mail of telephone. The marketing specialists were asked if they were willing to give an interview of one hour about brand and line extensions. In case they were obliging, an appointment was made at a location they preferred, in most cases their offices and in 2 cases at a location (roadhouse) were travel time was minimized for them.

The sample consists of 7 male, 1 female. In total 4 of them are working for a brand, 3 as a marketing director, 1 as a new product developer (female). The other 4 were marketing consultants. 3 are chief executive officer of a business between the 10 and 15 consulting employees, 1 has more than thirty consultants employees. There is chosen for consultants too, because they have a more independent vision because they do not have to defend the strategy

(30)

of the brand. All the marketing consultants had a broad knowledge about extensions but were also specialised at one specific part of the process for example, achieve fit by qualitative research, category management or retail. This choice is made to get a better insight in those specific subjects.

3.3 Interviews

For exploratory research qualitative interviews are very helpful to find out what is happening and to find new insights (Saunders et al., 2007). In this research the first three conducted interviews were open-ended interviews. After these three interviews some subjects were mentioned each time and there seem to be some patterns. The 5 subsequent interviews were used to test these patterns by in-depth interviews.

For 7 interviews there was permission to record them, 1 marketing specialist did not wanted to cooperate because of the sensitivity of the information. The interviews were recorded by an Iphone and thereafter transferred to the computer. The advantages of audio recording the interview was that it allowed the interviewer to concentrate on the questions, re-listen the interview, allows direct quotes to be used and others could re-listen the interviews (Saunders, 2007, p. 334)

In the first three interviews there were 5 main subjects to ask about, namely: brand background, motives for extensions, the research process, success factors, pitfalls and ways to increase the success rate of extensions. After the first three interviews propositions were set up and tested in the 5 subsequent interviews. After 8 interviews a theoretical saturation was reached. The data collection did not reveal new information on the predominated subjects and the relationships between the categories were well understood and verified (Saunders, 2007)

(31)

3.4 Data analysing

To form a grounded theory is a systemic and procedure of analysis needed (Saunders et al., 2007). After every interview the interview was transcribed. After transcribing the interview there is used an open coding system where labels are used to label similar units of data (Saunders, 2007, p. 499). This resulted in a multitude of labels that had to be placed into broader categories. These broader categories were motives, fit, brand diluting, qualitative research, category management and retail. These significant themes helped to focus in the subsequent interviews, without loosing the exploratory nature of the research. After the open coding, the research came in a research stage where there was looked to relationships between the categories to explore en explain what happen in practice. Finally by selective coding there was found the core of the phenomenon, in this research fit between existing products and new line and brand extensions.

(32)

4. Results

In this section the results of the interviews will be described. The citations of the interviews are divided among the main subjects.

4.1 Motives

Proposition 1a: A main motive for extensions, are economic motives. Proposition 1b: A main motive for extensions, are variation motives. Proposition 1c: A main motive for extensions, are segmentation motives.

Robert van Bakkum is working for Zijerfeld. Zijerfeld is an organization specialised in cheese with multiple brands in their portfolio. The motives for extensions at Zijerfeld are divergent. Main reason according to Robert is: “Building a new brand is very expensive.” Especially marketing communication to give your brand attention costs a lot of money. Robert: “if you

want a page in the Allerhande, it will cost you forty thousand Euros. [….] If you want to have promotion, just a note on the shelves, it will cost you twelve thousand Euros a week. During the Hamsterweken of Albert Heijn on television, it will cost you hundred twenty thousand Euros. [….] So you need budget as a new brand.”

According to Robert companies try to grow with their existing brand portfolio: “Business

models are based on growth, growth is what top management wants.”. Robert gives an

example when he was working for Philadelphia: “Philadelphia is now 15 years on the

market. Because they want to grow in volume, they are now communicating that consumers can use their product also in pasta meals. So their strategy is trying to stretch to meals.”

Robert was involved with stretching with brand extensions but he also managed processes for line extensions. “I was still involved with the differentiation process of small packages. The

(33)

use. And also the 1,5L package for sandwich retailers.” These extensions are deployed to

grow by trying to fulfil needs of different segments and to be relevant at different moments of use.

Robert also talks about the desire of consumers to vary: “We as a consumer are very spoiled,

we are very quick bored if it is about taste” and “For that kind of products variation is very important, because consumers want to have variation. [….] You always have some basic tastes but you always have to keep vary.” Besides the variation also the visibility in the

shelves of the retailer, Robert: “One product is not a brand. Because you do not impress in de

shelf’s of the retailer”

According to Pieter Van Dijk, CEO of Green Seed, the motives for extensions are: “To sell

your new products to retailers it is easier when you approach them with an existing brand, because a new brand has no brand awareness.”, “To develop and build a brand, you need time and a huge budget” and “Economic reasons, it is much cheaper to use an existing brand because there is already brand awareness. And you can bring products very quick to the market. So it has to do with risk, time and investments. There is less risk because if products fail, there will be less loss on investments.”

Lennard Tanke, marketing director of Arla in the Netherlands is clear about the motives for extensions: “The most important motive of extensions is growing. You want to keep your

company viable, and by doing nothing as a company you do the opposite. You need to keep moving and have to constantly renew and innovate. Extensions are a easy way to innovate, because you already have a brand and can use existing communication for that brand“ and “Innovation is a absolutely condition. You cannot sit still and do nothing, you have to keep moving, because else you will be catched up by competitors. By keep moving I don’t only

(34)

mean you have to adjust your product, it can also be your package design or marketing communication.”

Lennard Tanke mentions an illustrative case he experienced when he worked for Riedel, a producer of juices. In that time Riedel had 13 brands of juices. Lennard: “Managing and

communicating 13 brands took a lot of time and money, it was a big spaghetti. [….] It was more efficient to integrate all the brands. We concluded that we had to go from 13 brands to 1 power brand.” According Lennard Tanke it is illustrative because, Riedel destroyed brand

equity by integrating all the brands. But in Riedel’s opinion, the loss of brand equity of the 13 different brands compensated the cost efficient savings of managing and communicating all the different brands.

Lex van Buurse, a top Dutch marketer, is also clear about the motive: “Most of the time it is

driven by a negative or positive reason. In both cases the main motive is grow. If we talk about a negative reason is that a brand is decreasing in sales. They try by mean of innovation to increase sales. Sometime with new line extensions, some times by brand extensions. Driven by decreasing sales and than come up with brand extensions is in 9 of the 10 cases a failure. If you are not successful in you own category and than to try differentiating to new categories is not the right motive. First try to get things done in your own category. If a brand is successful, they also want to grow. Sometimes by finding new sales channels. But also extensions are very popular. By new extensions they can create efficiency benefits and create more brand awareness.”

Simon Jacobs, marketer and package designer, says that extensions are necessary for variation for consumers and that it helps by activating the brand: “Line extensions are not very

interesting, because they are not that difficult. They provide now and than for extra blood. They provide variation, attention and activation. Consumers notice that the brand is alive,

(35)

that they try to improve. [….] New tastes are very important. [….] They widen your brand and sometimes they are very successful, sometimes they are not. But with line extensions it does not care, because if you do nothing you can be sure your sales will decline. Consumers need variation.” To illustrate this motive, Simon mentions an example of Lays Chips: “During the marketing activity with Lays Sensation the whole category of Lays increased in volume. [….] We created a top of mind, we had news and that caused activity in the whole category of Lays.” Besides variation he also mention that competitors in the shelves play a

role: “One extension is no assortment. Consumers want to have options and besides that, you

keep your competitors out of the shelf’s.” Simon cites that retailers play an important role,

because if extensions do not rotate the retailer will remove them. Introduce new extensions is a strategy to defend your position in the shelves: “Line extensions are also important to keep

your spot in shelf’s. Extensions have to rotate (read; sell), otherwise retailers will remove it from the shelves. [….] Thus you can introduce two new extensions or you loose your space in the shelves. [….] Extensions can guarantee your space, they are very important. [….] Extensions are the plaything of the shelves.”

Merel Kroon is working for Peijneneburg. She is involved in the new product development team. She notices that innovations are necessary to survive as a company: “The most

important reason of new introductions and innovations is to survive as a company. If you don’t innovate you will loose your position and in the end the right to exist.” and “And of course as a brand you have to renew your products and marketing to stay lively.” Besides it

is a strategy to stay relevant in the business, Peijenenburg innovate also because of economic reasons: “We innovate to grow and to improve the profitability.” Especially to add value to the their product and thereby they became relevant at several times during the day: “We

(36)

[….] We have grown enormously in revenues but also in kilogram’s.” and “We grow by innovations with a factor 2. The most important innovation is that we started to sell apiece. [….] We created a new moment of use because it is now easier to take our product to work, school etc.”

Gerard Jansen, CEO of Trendbox, is not a producer in the FMCG industry but he is specialised in analyzing brands. From that analysis Trendbox consults FMCG companies in set out their strategy. From out his experience he sees that brands are always trying to find new segments: “Brand want to capture new consumers. They are always in search for new

segments.”

Paul de Jonge, partner at NORM, is specialised in doing research to optimize product categories, analysing cannibalisation effects and price elasticity. They do quantitative research in a 2 dimensional and 3 dimensional environments. According to Paul motives for extensions are: “The motives for extensions are, in general, added revenues, but also fulfilling needs of

new segments and trying to generate new moments of use for the product.” And ” Shelve-space can be a motive, you than you need a good story for the retailer. The stories I hear at this moment is that retailers give producers less and less time for new products. Is the products do not rotate. They will remove them from the shelves. But most of the time you cannot claim additional space, producers has to make choices for the retailer.”

4.2 Fit

Proposition 2a: The key success factor for successful extensions is fit.

According to Robert van Bakkum, a marketing manager in the FMCG industry it is important that there is fit: “As a manager you have to be aware of that a new extensions has a fit with

(37)

expectations of the consumer. [….] A brand needs to be significant, an own identity, it must be recognizable.”

Merel Kroon, a product developer, cites that: “The products have to fit in the existing

concept.” And “If you try to differentiate and there is not fit with existing products, it becomes doubtful.” To illustrate this she mentions a case of a couple of years ago: “With our brand CaptainCook we had very unsuccessful extensions in the pancake category. CaptiainCook is of course seedcake. It had to do with brand fit. If you sell seedcake and also try to sell pancake mix under the same brand name, namely CaptainCook. Consumers do not understand it.”

Simon Jacobs always tries to approach it from the consumer perspective and questionnaires itself what the effects are for the parent brand “My first question is: is this what the

consumers wants? [….] What are the benefits of this extension for the brand?” He makes

distinguish between line and brand extensions: “Line extensions are not that interesting, they

are not that difficult. Consumers need variation and line extensions give them variation in the category.” However, according to Simon brand extensions are more difficult, he mentions an

example of the brand HERO: “ Brand extensions are more difficult. HERO introduced fruit

ice, ninety percent of the ice-cream is fruit. Trough research they find evidence that fruit is one of the core values of the brand, and thus there was a possible fit with fruit ice. [….] Sometimes they are totally different products, but because the basis element of fruit is the same. It is possible to develop a brand extension from jam to ice cream. It feels different, but in the perception of consumers it is logical.” Simon starts to brain-storm: “Struik (producer of soups and sauces) could they produce ice-creams? I do not think so, there is no fit. [….] Red Bull for example is a different case. Red Bull is more a mental activity. [….] Red Bull gives you possibilities. They are more focused on image than on product ingredients. Could

(38)

invest in research: “It is based on research. You have to analyze and decompose your brand.

What perception do consumers have of your brand? [….] This research is always qualitative, you want to find emotions and feelings.”

Pieter also makes distinction between line and brand extensions: “Sometimes the products are

almost identical. And probably has extensive research showed them that there is a new target group or segment that has the need for Light or Zero. It is a line extension that has apparently no danger for the parent brand, because they are almost the same product.” But brand

extensions are quite different: “Brand extensions are unlike line extensions, because you

move to another category. Do this category also have a fit with your core proposition? [….] What is the meaning of the brand. Viewed from the core of the brand”

Gerard Jansen indicates that a lack of fit with the parent brand is a main reason for extension failures: “There are to much extensions that have nothing to do with the parent brand, that is

why you see so much product failures [….] Products especially fail because products promise things that brands can not live up to. [….] If a brand is characterised as careful, parental and harmonious. It is impossible to convert it to an adventurous and cool brand.” and “In my language, the classical marketing language, you have to stick to your brand. Once you try to stretch, you bring doubt in the market.”

Arla, a Danish dairy producer, has taken over Friesland Foods Fresh in 2009. After the take over Arla had 2 brands in their milk portfolio, Arla and Friesche Vlag. Arla as a private label and they could use Friesche Vlag for the next ten years. After the ten years they had to remove Friesche Vlag of the market, because they had the licensed the brand name Friesche Vlag for 10 years. Because Arla did not wanted to wait till 10 years had passed they started to do research in Milk market. Lennard about the process: “We started to build the brand Arla

(39)

enough for 2 brands, positioned separately. We found by qualitative research that there is a niche market for biological light products, which means that there are no artificial additives in the products. And because we have Melkunie in our brand portfolio, and Melkunie still has a top of mind of 5 percent, even now it is of the market for a while. So because it had still has brand equity, we used Melkunie. [….] Thus 2 brand, Arla and Melkunie. Both positioned separately. Melkunie as a pure and traditionally Dutch brand and Arla with core values as pure, nature and biological light. Because these two brand are positioned separately they do not compete with each other and thus do not cannibalise. Of course it would have been less expensive to be active with one brand and with line extensions target both segments. But as a brand you must make choices for the long-term with vision. Both brands have now an own strong identity.” What Lennard actually says, in case of no fit, brands have to launch a second

brand to retain a clear brand image. According to Lennard such a strategy is not without risks:

“You do not have to underestimate these risks. First financial, building the two brands Arla and Melkunie is very costly. And secondly you have the relation with the retailer. If you cannot deliver your promises, next time they will not cooperate again.”

Lex van Buurse tells that extensions have to meet an important condition and questions its what the consequences could be if they do not: “Line and brand extensions have to gratify

some conditions. It must be in a logical line of the brand and the core competences of the brand. Consumers need to understand it, there must be a fit.” To explain his answer Lex

gives an example: “Take H&M and Zara for example. They sell, clothes for men and women.

And started also with clothes for children, baby’s and recently they started with home interior. Consumers understand the steps they take. Oger (a Dutch luxury high end clothing retailer) is also a good example. They started with a new line, “red suits”. Normally you can buy a suit for eight hundred Euros, a Red suite is only three hundred Euros. Is it wise to

(40)

stretch so far? But every company is looking for sales. But what are the consequences for the brand experience?”

4.3 Brand diluting

Proposition 2b: No fit is harmful for as well the parent brand as the extension.

According to Robert van Bakkum no fit between the parent brand and extensions can have consequences for the parent brand “The most important is not to overstretch your brand,

because the brand can become vague.” Merel Kroon agrees on that obeservation: “The biggest pitfall is that there is no fit with existing products. If it is not understandable for them.” Robert gives an example: “A good example is Maaslander. They had one extension, with green en yellow stripes. The message was clear: good taste, less salt. After they added all kind of new line extensions until they became unclear for the consumer. The consumer did not know anymore what the identity of the brand was, because of that they lost a lot market share. I think they lost thirty percent of market share because they became unclear for consumers” and “Milner is now doing exactly the same. Milner is synonym for less fat cheese. But they have at the moment so much extension that consumers start to forget where Milner cheese stands for. En besides that, all the extensions do not bring extra volume but it cannibalise.”

According to Gerard: “If you are unclear as a brand, consumers get doubts. [….] And it will

make your brand weaker.” If there is not fit with the parent brand is does not only have

consequences for the parent brand: “In my opinion new products have to be close to the core

values of the brand. Once you bring unexpected things and consumers start to doubt, your product will fail hundred percent. The damage the brand incurred is much more bigger than the revenues the line extension has yielded. You always have to think what the product will

(41)

important to know what the restrictions of the brand is. Don’t only think in opportunities but also take the risks into account.” He explains what his company does to prevent failures: “What we do with Trendbox is compare new concepts of brands and we compare it with the core products they already have. We investigate if the underlying attributes, variables of the new products have a connection with the existing products. We call it a footprint comparison.”

Simon tells about extension failures: “I have seen come and go a lot of extensions. And you

now what they say: bad publicity is also publicity. Let them talk about your brand, it is always better than nobody talks about your brand. [….] Consumers have learned that extensions come and go. They know it is not infinite. The will accept it.” On the question what a failure

is: “In my opinion it is a failure when it hurts. So when it is diluting the brand or when it

accelerates a negative trend.” Simon again makes distinction between line and brand

extensions: “A classical mistake is that brands produce extensions that have no fit with the

perception of the brand that consumers have, that is the most important. That is the main point, do not enter the wrong segment. You have to find out which segments have the same motives your parents brand have.” Simon talks about consequences of a failure. “An introduction could have a negative impact when the product is a disappointment. If consumers do not like the taste or the design. It causes diluting of the parent brand. And of course you can loose consumers. If they like your new extension and after a while you remove the extension of the market.”

4.4 Consumer insight

Proposition 3: Research is essential to create a fit.

(42)

the brand? You could call it the image of the brand. What would consumers find credible of a brand. To investigate it, you need to do qualitative research first. To find out which associations consumers have with your brand”

According to Lennard Tanke they make important decisions based on research: “We take

strategic decisions because research tells us that. And of course not quantitative research, quantitative research will only give you a yes or no. But qualitative research will tell you why. [….] Getting consumer insight is getting more and more important. That type of information gives you an advantage compared to competitors.” They use qualitative research

to get consumer insight: “You have to know what consumers want and what their needs are.” To illustrate what he means Lennard gives an example: “We did research in the market for

milk. We found that the milk market was big enough for 2 brands, positioned separately. [….] Melkunie positioned as a pure Dutch milk brand and Arla as a biological brand without artificial additives. So they are not each others competitors, both products fulfil different needs.” Doing consumer research Arla found a new segment with unfulfilled needs. These

two markets needed two brands instead of one brand because both brands have other core values and will target different consumers.

According Gerard Jansen is their way of marketing strategy a science. By intensive studying brands, they determine which associations consumers have of a brand. “We do research for

brands within a fixed frame. Within the fixed frame we determine the associations consumers have with the brand.” And “The need of consumers combined with the perception of a brand, that is the basis.” Their goal is to advise companies in their strategy and to prevent product

failures or unwanted strategic consequences: “We try to find fixed product associations. That

structure of brand associations is very solid. It is psychoanalysis what we do. It takes a time but If you do good, you can make well-founded decisions. In practice we see that brands make

How to manage successful line & brand extensions in the FMCG industry