Brand extension research mainly focuses on the consumer evaluation of extension and attitude of the parent brand. Following the Aaker and Keller’s (1990) model, they provide a sufficient depth and breadth proposition to examine consumer behaviour and conceptual framework. They use three dimensions to measure the fit of extension. First of all, the “Complement” is that consumer takes two product (extension and parent brand product) classes as complement to satisfy their specific needs. Secondly, the “Substitute” indicates two products have same user situation and satisfy their same needs which means the products class is very similar so that can replace each other. At last, the “Transfer” is the relationship between extension product and manufacturer which “reflects the perceived ability of any firm operating in the first product class to make a product in the second class”. The first two measures focus on the consumer’s demand
and the last one focuses on firm’s ability.
From the line extension to brand extension, however, there are many different way of extension such as “brand alliance”, co-branding or “brand franchise extension”. Tauber (1988) suggests seven strategies to identify extension cases such as product with parent brand’s benefit, same product with different price or quality, etc. In his suggestion, it can be classified into two category of extension; extension of product-related association and non-product related association. Another form of brand extension, is a licensed brand extension. Where the brand-owner partners (sometimes with a competitor) who takes on the responsibility of manufacturer and sales of the new products, paying a royalty every time a product is sold.
Literature related to negative effect of brand extension is limited and the findings are revealed as incongruent. The early works of Aaker and Keller (1990) find no significant evidence that brand name can be diluted by unsuccessful brand extensions. Conversely, Loken and Roedder-John (1993) indicate that dilution effect do occur when the extension across inconsistency of product category and brand beliefs. The failure of extension may come from difficulty of connecting with parent brand, a lack of similarity and familiarity and inconsistent IMC messages.
“Equity of an integrated oriented brand can be diluted significantly from both functional and non-functional attributes-base variables”, which means dilution does occur across the brand extension to the parent brand. These failures of extension make consumers create a negative or new association relate to parent brand even brand family or to disturb and confuse the original brand identity and meaning.
In addition, Martinez and de Chernatony (2004) classify the brand image in two types: the general brand image and the product brand image. They suggest that if the brand name is strong enough as Nike or Sony, the negative impact has no specific damage on general brand image and “the dilution effect is greater on product brand image than on general brand image”. Consequently, consumers may maintain their belief about the attributes and feelings about parent brand, however their study does show that “brand extension dilutes the brand image, changing the beliefs and association in consumers’ mind”.
The flagship product is a money-spinner to a firm. Marketer spends budget and time to create maximum exposure and awareness for the product. Theoretically speaking, flagship product is usually had the top sales and highest awareness in its product category.