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Someone writing a dollar sign on a chalk board.

Brand extensions, like Jeep's strollers or Apple's iTunes, are lucrative ways for a brand to increase its revenue.

Brand stretching can depend on the consumer

From eNews, May 29, 2008

Brand extensions, like Jeep's strollers, Maxim's hair color, or Apple's iTunes, are lucrative ways for a brand to increase its revenue and customer base. However, many attempts at "brand stretching" or brand extensions fail in the marketplace. Rohini Ahluwalia, a professor of marketing at the University of Minnesota's Carlson School of Management, addresses how firms and their brands can avoid pitfalls and best manage brand extensions globally in a forthcoming article in the Journal of Marketing Research.

More than 80 percent of new products are categorized as brand extensions, emphasizing the importance of their success. Ahluwalia's findings identify an important segmentation variable for marketers to consider when launching brand extensions.

"Stretching a brand makes it important to target an audience that will be able to process and understand the relationship of the brand to the new product," says Ahluwalia. "Getting it right the first time is crucial, because early success with a target audience can help with future extensions. And the broader a brand gets, the easier it is to stretch next time."

Individuals can be categorized as having one of two types of self-views: relational or independent. Her findings reveal that buyers with a more relational or connected-to-others self-view (e.g., females, Asian Americans, Hispanics, and those hailing from Eastern nations) are more open to accepting brand stretches than those with an independent self-view (e.g., males, Caucasians, and Westerners). Knowing a target customer's self-view type could be key to managing a new product launch.

"Consumers whose self-view stresses connectedness can are predisposed to finding more relationships between objects--such as a parent brand and its extension--than people with a more independent self-view," explains Ahluwalia. "They [can] uncover more similarities. For instance, easily [seeing] how Jeep's reputation for durability and a smooth ride would also make sense for a stroller."

These ties might not be as obvious for shoppers with an independent self-view because they tend to be more analytical.

Ahluwalia also explains the extent to which a brand can stretch. While the self-view effect is observed for moderate levels of brand stretch (e.g., Jeep strollers or Godiva ice cream), it is less likely to emerge when the extension stretches the brand further (e.g., Hooter's Airlines or a Johnson & Johnson noodle product). In these cases, even those with a relational self-view find it difficult to uncover clear connections.

Ahluwalia has, however, found ways that a company can increase the chances of success with relational consumers, even for far-reaching brand stretches.

"There are some specific techniques that might help remove these road blocks," she says. "For instance, advertising copy strategies like using a question headline, pun, or metaphors will engage and motivate those with a relational self-view to focus and elaborate on the connection. When this audience is challenged to think about the relationship of the product to the brand, they are even more likely to understand and accept the brand stretch."

So, what does this mean for marketers?

"Know your target audience," Ahluwalia advises. "Your customers who relate to an interdependent or relational self-view--like Asian, Hispanic, or female markets--are more likely to accept brand extensions than other people, especially if you capture their attention and get them to think about the brand-product connection."

"How Far Can a Brand Stretch? Understanding the Role of Self-Construal," by Rohini Ahluwalia, will appear in the June 2008 issue of the Journal of Marketing Research.