Consumer Evaluations of Brand Extensions in An FMCG Sector

Abstract

“Brand Extensions” are a vital element for a business and it has become a very common practice for the companies, especially in the FMCG sector to grow in its sales and profit targets. Although, how much ever advantages brand extension possess, it can still be of major risks in terms of brand dilution and its equity (Loken & John, 1993). Understanding the consumers better is what adds of significant value or if not could lead to major failures. Brand owners or managers need to have a very thorough and holistic approach in this without damaging their brand image and equity built over the years. The purpose of this dissertation is to find how Indian customers evaluate brand extensions within an FMCG context; How significantly different are they in respect of evaluations of their competitors around the world? Most significantly how well does the present literature on the topic of brand evaluations of brand extensions fit within the context of Indian consumers? The significant issues identified within the context of this research are perceived fit between parent brand and extension, perceived quality of the core brand, core brand image quality and most importantly congruency and incongruency of the brand extension product categories with relation to parent product. This research did not support the previous literature findings that more incongruent the extension category, greater will be the dilution of the core brand image. Furthermore, when a negatively evaluated brand extension is being introduced, it was found that there is an element of brand dilution still existing within loyal customers. Lastly, there is a huge market in India mainly due to its demographic size and there is a major competition in all the major FMCG brands. The research finding too indicates that there is a tremendous opportunity of brand extensions within Indian FMCG industry. A major recommendation is that brand owners need to be cautious of their approach when extending the brand into new categories. Most importantly, it is up to the customers to judge if the extension is able to match the reputation to that of the parent brand, build over the years