Tensions of extensions : adverse effects of brand extension within consumer relationships

University dissertation from Stockholm : Economic Research Institute, Stockholm School of Economics (EFI)

Abstract: Imagine how you would react if you learned that your favorite singer was recording new music in a style far from that which you have come to love. Perhaps you would disapprove. Then you might react like many Porsche consumers did when they learned that “their” brand would start producing sports utility vehicles. They are not without peers. In fact, how would you respond if a favored brand would launch, say, a chain of coffee shops? Some people would resist such an idea. These scenarios illustrate how strong consumer-brand bonds may complicate attempts to extend brands into new businesses. The research presented in the thesis explores this connection, towards a better understanding of the stakes facing both companies and consumers. It is an inquiry into tensions of extensions.The thesis comprises four published studies. Three explore how consumers with close ties to a brand react to brand extension. They acknowledge that consumers who come close to a brand potentially become stakeholders with opinions on efforts to change the products and marketing of that brand. They suggest that the implications of combining brand extension and strong consumer bonds can be substantial. The fourth study considers how the financial implications in particular can be analyzed and communicated within organizations.The findings show how brand extension can be an important event in a longer relationship with core consumers. This perspective is easily obscured when concentrating only on the perceptions of “the average consumer”. The thesis highlights symbolic and experiential aspects. It offers a closer look at such things as consumer identity, emotional reactions, and expression of criticism, and the findings should inform communication strategies and decision-making related to brand extensions.