Brand Portfolio Strategy

Launching brand extensions is seriously considered by companies as aprofitable growth strategy. The basis of this study is the impact ofbrand portfolio strategy and differentiation on consumer evaluation ofincongruent extensions or extensions perceived to have low fit withthe parent brand. The main issue addressed in this thesis is: howchoice of extension brand portfolio strategy and differentiationstrategy from its parent brand can compensate for the problemscaused by lower perceived parent-extension fit?The study was designed as a 2x2x2 experiment to test the interactionbetween three independent variables (perceived fit brand portfoliostrategy and differentiation) and their impact on one dependentvariable (brand extension attitude). The results support the initialproposition that wisely using brand portfolio strategy anddifferentiation strategy might compensate for lack of fit. Thereforebrand managers may overcome problems caused by lower perceivedfit and succeed with business expansion opportunities that might befound in lower fit categories.