Competition: The Missing Link in Brand Extension Evaluation Process

New products usually are launched to market after performing a series of preliminary studies and assessing the customer acceptance. Many brand extensions have failed in spite of the extensive testing and estimation of products success. Even world's top brands are not immune from such failure. For years, most studies focused on the role of product features and the customer decision process in brand extension evaluation process and it seems that the role of product category variables have not been fully considered. This study aims to show that in addition to the fit the product category variables like competition and brand dominancy affect the initial supply test results. Ignoring these variables in success estimation of a new product and relying solely on concepts like fit, will cause over-estimation in the brand extension assessment and bring an irreversible failure to the company. The results of the study show that competition variables are active in different brand extension launch methods and competition significantly affects the brand extension assessment.