Brand Portfolio Strategy

Launching brand extensions is seriously considered by companies as a profitable growth strategy. The basis of this study is the impact of brand portfolio strategy and differentiation on consumer evaluation of incongruent extensions, or extensions perceived to have low fit with the parent brand. The main issue addressed in this thesis is: how choice of extension brand portfolio strategy and differentiation strategy from its parent brand can compensate for the problems caused by lower perceived parent-extension fit? The study was designed as a 2x2x2 experiment to test the interaction between three independent variables (perceived fit, brand portfolio strategy and differentiation) and their impact on one dependent variable (brand extension attitude). The results support the initial proposition that wisely using brand portfolio strategy and differentiation strategy might compensate for lack of fit. Therefore, brand managers may overcome problems caused by lower perceived fit, and succeed with business expansion opportunities that might be found in lower fit categories.