AUTHOR
Dahlberg, Elina; Kulluvaara, Camilla; Tornberg, Johanna

DATE
2004-01-20

DEPARTMENT
Business Administration and Social Sciences / Industrial marketing and e-commerce

SUMMARY
Brand extension as a growth strategy has increased in popularity the last decades. The use of brand extensions as a branding strategy is considered more effective and related to lower costs compared to a new brand launch. The purpose of this thesis is to gain an increased understanding on how Swedish companies use brand extensions as a part of their branding strategy. The research explores, describes and tries to explain why companies choose brand extensions as a part of their branding strategy, how the brand extension process can be described and finally how a successful brand extension can be described. A multiple case study including three companies: Husqvarna, Salming and SAS and how these companies deal with brand extensions, has been performed.

Our findings show that, the rationales are to: increase customer segments, meet customers’ need and demand, achieve larger trial levels, increase the awareness and the value of the brand, increase bargaining power with retailers and other business partners, revitalize the brand image, provide competitive advantage, and provide transferability of technological expertise. The brand extension process is informal, although idea generation, idea screening, forecasts, brand equity criteria, financial criteria, launch, monitoring and evaluation are steps that are included. A successful brand extension needs to fulfill the criteria of fit, meaning that the extension needs to fit with the core brand, the brand image as well as the product category. A positive evaluation of the brand by consumers will lead to enhancement of the core brand a negative evaluation will lead to dilution. Moreover, moderating factors and brand equity are affecting the outcome of the brand extension.

ISSN 1404-5508 / ISRN LTU-SHU-EX--04/070--SE / NR 2004:070