Effect of Brand Extension Strategy on Brand Image on FMCG and Services Sectors

Brand-extension strategies enhance success chances of new products, even though they expose brand image to dilution risks. The present work analyzes how brand-extension evaluation can affect the current brand image and test a theoretical model formed by five main factors related to brand associations, extension congruency and extension attitude. The model tested by path analysis using data from 391 surveys developed under market conditions. The results verify that extension attitude influences brand image, whereas initial brand associations and perceived fit between the new product and either the remaining products (category fit) or the brand image (image fit) are able to strengthen consumer attitude. The study also explains the initial image is the significant factor which influences final image.