How Common are Brand Extensions in Consumer Goods Markets? A Multi-Country Study

Abstract

Many studies discuss the proliferation of brand extensions (eg. Romeo, 1991; Han, 1998; Milberg, Whan Park and McCarthy, 1997), but there is a lack of academic research to show how common they really are. The present study documents the incidence of brand extensions in three geographic consumer goods markets: US and UK and Australia. The study conducts a detailed analysis of the products and brands offered in major supermarket chains in each of these three countries. Safeway’s online store is utilized for the US Market, Sainsbury’s for the UK and Coles & Woolworths’ online stores for the Australian market. In each case the retailer’s website was examined and all available brands in all available categories were catalogued to determine the extent to which common brands appear in multiple categories. The research finds approximately 3/4 of all brands available in the online stores, appear in just a single product category. Of the remaining 25% of brands classified as brand extensions, around half are available in only two product categories. Surprisingly, extending a brand name across categories, in packaged goods markets at least, appears to be the exception rather than the rule. Given the intense interest in brand extensions from academia and industry publications, a brand manager could be forgiven for thinking they must seek avenues to extent their brand, given its apparent popularity as a strategy. However, the present study could reassure brand managers that brand extension is not as popular as might be thought. The study also suggests that cross-category transferability of a potential brand name is not necessarily a key factor in choosing a name. This is because most brand names are not transferred across categories, and when they are, the extension category tends to be closely related to the original category.

Keywords: Brand extensions

JEL Classification: M31