CUSTOMER PERCEPTION OF BRAND EXTENSION AND ITS IMPACT ON BRAND EQUITY: A STUDY ON INDIAN FMCG SECTOR

Abstract

Brand is an important notion for marketers. It signifies the differentiation of products to the consumers and facilitates the decision making process for the consumers. Brands help in reducing dissonance and decision making conflicts. It is therefore significant to understand the related concepts of brand. Brand equity is an essential element to define the valuation of brand in the market. It dictates the monetary value and the associations related to the brand. The revenue generation for a firm is based on the amount of brand equity enjoyed by its brands. It helps to take advantage of premium pricing for the products. Established brands in the market adopt various strategies to increase sales, visibility and growth in the market, out of which brand extension is the most common. Brand extension helps in capitalizing the existing image of the brand and reduces the marketing and communication costs for the firm. Brand extension of the well known brand in the market promises the risk reduction and ensures less chances of failure. However, the idea of brand extension is difficult to understand since the extension can also dilute the equity of the parent brand. Brand extension may also cause cannibalization for the parent brand. Hence, the concept of brand extension in branding is an area of research for researchers since 1988 (when for the first time the idea was discussed by Edward M. Tauber). The factors which affect brand extension are of utmost importance for the researchers. Brand extension is studied with the help of several factors which determine their impact on the same. Several new variables were added over time for the better understanding of such a complex strategy. This study is an attempt to carry forward the research done in the sphere of branding. It determines the role of several factors in defining brand v extension; also the study proposes a framework which demonstrates the subsequent effect of brand extension on brand equity. The brand which is undertaken for the study is a popular Indian brand called Fortune. Since the studies available in literature are done in western countries therefore the implications of such studies are not applicable in the Indian context. This study focuses on FMCG sector and real brand extension experienced by Indian market. The results of the study show that brand extension does impact brand equity and the study confirms the fitness of the proposed framework. In addition to this the study identifies Parent Brand Reputation to be the most important factor which affects brand extension. Marketers can therefore use this as an input for the better understanding of Indian market and the consumers.