Vertical brand extensions: current research and managerial implications

Abstract

Relates evidence which suggests that launching a vertical brand extension generally has a negative impact on the core brand because it dilutes the core brand image, advising that a brand extension should be introduced only when its profit potential exceeds the losses that will be sustained as a result of damage to the core brand. Describes two important tools which can reduce the dilution of the core brand image and/or enhance the success of a new brand extension introduction distancing, and information cues: Explains that, to reduce damage to a valuable core brand or to benefit a new step‐up brand extension, the extension should be maximally distanced from the core brand; however, to benefit a new step‐down brand extension (at the expense of the core brand), the extension should be positioned close to the core brand. Highlights how information cues that describe a brand extension can also act like distancing techniques, simply by serving to reinforce the similarities (implied closeness) or differences (implied distance) between the brand extension and the core brand.