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KHADIM ALI SHAH BUKHARI INSTITUTE OF TECHNOLOGY, KARACHI

“Effect of Brand Extension on Sales of “Bakeri Biscuits”:


(A product of LU Continental Biscuits Private Limited)

A THESIS SUBMITTED TOTHE DEPARTMENT OF MARKETING


FACULTY OF MANAGEMENT SCIENCES, KASBIT

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE


DEGREE OF MASTER OF BUSINESS ADMINISTRATION (MBA)
WITH DISTINCTION

SUBMITTED BY:
MAJID BASHIR
ID: 4750

COPYRIGHT 2011 MAJID BASHIR


ALL RIGHTS RESERVED

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CERTIFICATE

Department of Marketing, Faculty of Management Science

Khadim Ali Shah Bukhari Institute of Technology (KASBIT)

I am pleased to certify that Mr. Majid Bashir S/O Bashir Ahmad Khan has

satisfactorily carrier out a research work, under my supervision on that topic of

“Effect of Brand Extension on Sales of Bakeri Biscuits: (A product of LU Continental

Biscuits Private Limited)".

I further certify that his distinctive original research and his thesis is worthy of

presentation to the Department of Marketing, Faculty of Management Science,

Khadim Ali Shah Bukhari Institute of Technology (KASBIT) for the degree of MBA.

Dr. Gobind Herani

Research Analyst

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PREFACE

I would like to express my gratitude to all those who gave me the possibility to complete this

research. I am deeply indebted to my supervisor Mr. Shaikh Asim Athar Quarishy, who’s

help, stimulating suggestions and encouragement helped me in all the time of research for

and writing of this report.

My former colleagues from the class who supported me in my research work. I want to

thank them for all their help, support interest and valuable hints

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ACKNOWLEDGEMENT

I want to show my sincere gratitude to all those who made this study possible. First of all, I

am very thankful to the helpful staff and all the faculty of KASBIT management. One of the

most important tasks in every good study is its critical evaluation and feedback which was

performed by my supervisor Mr. Shaikh Asim Athar Quraishy. I am very thankful to my

supervisor for investing his precious time to discuss and criticize this study in depth, and

explained the meaning of different concepts and how to think when it comes to problem

discussions and theoretical discussions.

All this, made my tasks very interesting and challenging for me, it also provided me an

opportunity to remove any flaws and weaknesses. So openly and warmly welcomed me to

use previous observations and take in-depth interviews and discussions about the work.

My sincere thanks go to my family members, who indirectly participated in this study by

encouraging and supporting me.

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ABSTRACT
The study was conducted to analyze the effects of brand extension on the sale of “Bakeri
Biscuits: A product of LU continental Biscuits Private Limited”. The study determined brand
extension’s affects on the sales of new brands itself as well as on the mother brand too. The
purpose of this study was to review current literature and analyze previous studies to
evaluate whether or not brand extension has any impact on overall sales of other brands
and mother brand of an organization. Literature review determines that brand extension
increases the opportunities for the brands to gain more market share and it would also
increases sales volume of the same organization. The studies performed are (i) To determine
the impact of brand name itself on FMCG Product (Biscuit); (ii) To study the effect of brand
extension on FMCG product sales especially biscuits; (iii) To study the effect of brand
extension on increasing consumer buying behavior of FMCG Products; (iv) To find how the
consumption pattern of the consumers after brand extension on a FMCG Product; (v) To
determine the effect of new advertisement of brand extension and consumer attention
towards specific variety of biscuit; (vi) To study the effect of brand extension on the mother
brand; (vii) To identify the effects on Brand Extension on its variety; (viii) At last to study the
brand extension on brand name of the same FMCG itself. To analyze the significant impact
on the relationship between brand extension and mother brand sales. For getting responses
for the study, a closed ended questionnaire was administered to on brand extension impact
on its own sales. The research shows that there is direct relationship between brand
extension and mother brand sales. It is recommended that brand extension make consumer
life easy to choose without any hesitation, as he/she was familiar with the brands. It has
been observed that consumers are happy with available range of products as it fulfills their
need and demand. LU decision of extended Bakeri brands was very successful and its line
extension with respect to different taste like coconut, date, classic etc are further steps to
satisfied their loyal customers. LU can increase its sales by bring the ticky packaging of Bakeri
all flavors to target the school going children and increase its sales.

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Table of Contents

CERTIFICATE ............................................................................................................................... 2
PREFACE ..................................................................................................................................... 3
ACKNOWLEDGEMENT ................................................................................................................ 4
ABSTRACT................................................................................................................................... 5
CHAPTER -1 ................................................................................................................................ 9
1.1 PROJECT TITLE: ........................................................................................................... 9
1.1 STATEMENT OF PURPOSE: ......................................................................................... 9
1.2 ORGANIZATION: ......................................................................................................... 9
1.2.1 Corporate Overview ........................................................................................... 9
1.2.2 Company History ................................................................................................ 9
1.3 SIGNIFICANCE:.......................................................................................................... 10
1.3.1 Benefits to the Organization ............................................................................ 10
1.3.2 Benefits to the Customers ............................................................................... 10
1.4.3 Benefits to the Retailer/Wholesalers............................................................... 11
1.5 OBJECTIVES: ............................................................................................................. 11
1.6 HYPOTHESES: ........................................................................................................... 11
1.7 LIMITATIONS: ........................................................................................................... 16
CHAPTER - 2 ............................................................................................................................. 16
LITERATURE REVIEW: ........................................................................................................... 16
2.1 WHAT IS A BRAND? .................................................................................................. 17
2.1.1 Components of a Brand ................................................................................... 18
2.2 BRAND NAME:.......................................................................................................... 19
2.2.1 Memorable: ..................................................................................................... 19
2.2.2 Meaningful: ...................................................................................................... 19
2.2.3 Likeable: ........................................................................................................... 19
2.2.4 Transferable: .................................................................................................... 19
2.2.5 Adaptable ......................................................................................................... 19
2.2.6 Protectable:...................................................................................................... 20
2.3 BRAND LOGO: .......................................................................................................... 20
2.3.1 Company reflection:......................................................................................... 21
2.3.2 Simplicity: ......................................................................................................... 21
2.3.3 Black and white: ............................................................................................... 21
2.3.4 Resizing: ........................................................................................................... 21
2.3.5 Balance: ............................................................................................................ 21
2.4 BRAND SLOGAN: ...................................................................................................... 22
2.5 BRAND LAYOUT AND PRODUCT PACKAGING: ......................................................... 22

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2.6 BRAND IDENTITY: ..................................................................................................... 23
2.7 BRAND EQUITY: ........................................................................................................ 26
2.8 BRAND EQUITY AND BRAND LOYALTY: .................................................................... 30
2.9 BRAND EQUITY’S LIFE AND BRAND DILUTION: ........................................................ 32
2.10 BRAND DUE DILIGENCE: ........................................................................................... 33
2.11 CUSTOMER BASED BRAND EQUITY:......................................................................... 36
2.12 CORPORATE BRANDS: .............................................................................................. 37
2.13 BRAND PERSONALITY: .............................................................................................. 39
2.14 BRAND AWARENESS: ............................................................................................... 40
2.14.1 Brand recognition: ........................................................................................... 40
2.14.2 Brand recall: ..................................................................................................... 40
2.14.3 Top of mind: ..................................................................................................... 40
2.15 BRAND-SPECIFIC ASSOCIATIONS:............................................................................. 43
2.16 BRAND EXTENSION: ................................................................................................. 44
2.16.1 Brand Extension Process ................................................................................. 52
2.16.2 Key Reasons of Brand Extension: .................................................................... 52
2.16.3 Rationales behind Brand Extensions ............................................................... 54
2.16.4 Successful Brand Extension ............................................................................. 60
2.16.5 Pros and Cons regarding Brand Extension: ..................................................... 62
2.17 RELEVANCE OF BRAND EXTENSION SUCCESS FACTORS: ......................................... 68
2.18 RESEARCH RESULTS BEYOND THE LAB INTO CONDITIONS WITH REAL EXTENSIONS:
70
2.19 SCOPE OR GENERALIZABILITY OF BRAND EXTENSION: ............................................ 71
2.20 GENERALIZABILITY ACROSS SUCCESS MEASURES:................................................... 72
2.21 CONSUMER EVALUATIONS OF BRAND EXTENSIONS: .............................................. 73
2.22 FMCG INDUSTRY AND BRAND EXTENSION: ............................................................. 77
2.23 BRAND LOYALTY AND CONSUMER DECISION MAKING: .......................................... 80
2.24 BRAND EXTENSION EFFECTS ON CONSUMER DECISION MAKING: ......................... 81
2.25 BRAND ACCESSIBILITY AND DIAGNOSTICITY: .......................................................... 84
2.26 BRAND ASSOCIATION AND VARIETY SEEKING BEHAVIOR: ...................................... 87
2.27 BRAND SWITCHERS: ................................................................................................. 90
2.27.1 Free taster: ....................................................................................................... 90
2.27.2 Money-off vouchers:........................................................................................ 90
2.27.3 Two-for-one price: ........................................................................................... 91
2.27.4 Piggy-backing: .................................................................................................. 91
2.27.5 Lottery: ............................................................................................................. 91
2.27.6 Gift: .................................................................................................................. 91
Cause: ....................................................................................................................... 92

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Consequence:........................................................................................................... 92
2.28 DIFFERENT INFLUENCES OF PRODUCT KNOWLEDGE AND BRAND KNOWLEDGE: .. 92
2.29 DIFFERENCES IN FIT PERCEPTION IN BRAND EXTENSION EVALUATIONS: ............... 94
3.2 METHODOLOGY: ............................................................................................................ 96
3.3 METHODOLOGY: ............................................................................................................ 96
Simple Random Sampling is used to get responses from the LU Continental Biscuits
especially consumers of Bekri Biscuits..................................................................................... 96
CHAPTER – 4............................................................................................................................. 96
Statistical Analysis and Evaluation ....................................................................................... 96
4.1 HYPOTHESIS OF BRAND FAMILIARITY: ..................................................................... 96
4.2 HYPOTHESIS OF BRAND TASTE: ............................................................................... 99
4.3 HYPOTHESIS OF COMPETITOR’S KNOWHOW: ....................................................... 101
4.4 HYPOTHESIS OF BRAND ATTRACTION: .................................................................. 106
4.5 HYPOTHESIS OF PRODUCT AVAILABILITY:.............................................................. 110
4.6 HYPOTHESIS OF CONSUMER BUYING BEHAVIOR WITH RESPECT TO FLAVOR: ..... 114
4.7 HYPOTHESIS OF CONSUMER BUYING BEHAVIOR WITH RESPECT TO TASTE: ........ 118
4.9 HYPOTHESIS OF CONSUMPTION PATTERN (BUYING DECISION): .......................... 121
4.10 HYPOTHESIS OF CONSUMPTION PATTERN (TASTE): ............................................. 126
4.11 HYPOTHESIS OF BRAND EXTENSION’S EFFECTS: .................................................... 131
CHAPTER – 5........................................................................................................................... 136
CONCLUSION AND RECOMMENDATION ........................................................................... 136
5.1 CONCLUSION:......................................................................................................... 136
5.2 RECOMMENDATIONS: ........................................................................................... 142
QUESTIONNAIRE .................................................................................................................... 149
BIBLIOGRAPHY: ...................................................................................................................... 150

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CHAPTER -1

1.1 PROJECT TITLE:

Effect of Brand Extension on Sales of “Bakeri Biscuits”:

(A product of LU Continental Biscuits Private Limited)

1.1 STATEMENT OF PURPOSE:

The main purpose of this research is to analyze the impact of brand extension of LU

(Bakeri) Biscuits on the sale of main brand LU.

1.2 ORGANIZATION:

1.2.1 Corporate Overview

Continental Biscuits Limited (CBL) was founded in 1984 following a Joint Venture

between the family of Hasan Ali Khan and the Group Danone, the French food

giants. In the year 2007 Danone sold their biscuits category to Kraft Foods of USA.

Today the company has a joint venture with Kraft Foods with a shareholding of

50.5% and 49.5% respectively for more than two decades CBL is engaged in the

manufacturing and marketing of the brand LU. We have an array of products which

are pre-eminent in the branded biscuit business both in Pakistan and abroad. Our

unrivalled portfolio of brands has been meeting consumer needs for well over two

decades and includes such favorites as TUC, Candi, Prince and Tiger.

1.2.2 Company History

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Incorporated in 1984, the success story of LU in Pakistan began with the initiative of

Hasan Ali Khan (the founder of Continental Biscuits), who signed a joint venture

agreement with Generale Biscuits, the global manufacturers of the LU range, which

was subsequently acquired by the Danone Group. Expansive investments were made

including the import of technology and professional expertise from abroad. The first

undertaking was to set up a factory and establish distribution centers in the country

with the ultimate objective of commencing operations and marketing our products

in Pakistan. CBL thus started its' operations in the country since September 1986

with an initial strength of 200 employees.

The company first introduced its' innovative brands - TUC, Prince and Candi which

proved to be an instant success. With global merger of Generale Biscuit and the

Danone-Group, more comprehensive range of products and technical know-how

became available to CBL. The company at present has an outstanding portfolio,

under its power brands of TUC, Prince, Tiger and Candi. These brands have an array

of products that falls into the category of plain biscuits, cream variants, crackers and

ingredients based.

1.3 SIGNIFICANCE:

1.3.1 Benefits to the Organization

By the analysis of this research we will recommend to organization LU that how they

can promote their product after their extension. What is the behavior and or liking

and disliking of their target.

1.3.2 Benefits to the Customers

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This is research is good way for the customer to express their views and opinion

about the LU (Bakeri) Biscuits and its different tastes and flavors. Customer can see

recommend the main organize (LU) to give attention to their favorite brand.

1.4.3 Benefits to the Retailer/Wholesalers

This research will also be beneficial for the retailer/ wholesaler in the research

conducted area where they can order as per their demand and liking of the gender.

Their shelves will not be occupied by the unnecessary items.

1.5 OBJECTIVES:

1. To Determine the impact of Brand Name on FMCG Product (Biscuit);

2. To study the effect of Brand Extension on FMCG product Sales especially

biscuit;

3. To study the effect of Brand Extension on consumer buying behavior of FMCG

Products;

4. To find the consumption pattern of the consumer after Brand Extension on a

FMCG Product;

5. To determine the effect of advertisement on Brand Extension and consumer

attention towards specific variety;

6. To study the effect of brand extension on the mother brand;

7. To identify the effects on Brand Extension on it Variety;

8. To study the Brand Extension on Brand Name of the same FMCG Product;

1.6 HYPOTHESES:

Ho: There is No Association between Age and Brand Familiarity

HA: There is An Association between Age and Brand Familiarity

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Ho: There is No Association between Qualification and Brand Familiarity

HA: There is An Association between Qualification and Brand Familiarity

Ho: There is No Association between Age and Brand Taste.

HA: There is An Association between Age and Brand Taste.

Ho: There is No Association between Gender and Brand Taste.

HA: There is An Association between Gender and Brand Taste.

Ho: There is No Association between Income and Competitors’ knowhow.

HA: There is An Association between Income and Competitors’ knowhow.

Ho: There is No Association between Qualification and Competitors’ knowhow.

HA: There is An Association between Qualification and Competitors’ knowhow.

Ho: There is No Association between Area of residence and Competitors’ knowhow.

HA: There is An Association between Area of residence and Competitors’ knowhow.

Ho: There is No Association between Age and Brand Attraction.

HA: There is An Association between Age and Brand Attraction.

Ho: There is No Association between Gender and Brand Attraction.

HA: There is An Association between Gender and Brand Attraction.

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Ho: There is No Association between Profession and Brand Attraction.

HA: There is An Association between Profession and Brand Attraction.

Ho: There is No Association between Area and Product Availability.

HA: There is An Association between Area and Product Availability.

Ho: There is No Association between Profession and Product Availability.

HA: There is An Association between Profession and Product Availability.

Ho: There is No Association between Age and Product Availability.

HA: There is An Association between Age and Product Availability.

Ho: There is No Association between Age and consumer buying behavior with

respect to flavor.

HA: There is An Association between Age and consumer buying behavior with

respect to flavor.

Ho: There is No Association between Gender and Consumer Buying Behavior with

respect to Flavor.

HA: There is An Association between Gender and consumer buying behavior with

respect to flavor.

Ho: There is No Association between Area and Consumer Buying Behavior with

respect to Flavor.

HA: There is An Association between Area and consumer buying behavior with

respect to flavor.

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Ho: There is No Association between Age and Consumer Buying Behavior with

respect to Taste.

HA: There is An Association between Age and consumer buying behavior with

respect to Taste.

Ho: There is No Association between Gender and Consumer Buying Behavior with

respect to Taste.

HA: There is An Association between Gender and consumer buying behavior with

respect to Taste.

Ho: There is No Association between Age and consumption pattern (Buying

Decision).

HA: There is An Association between Age and consumption pattern (Buying

Decision).

Ho: There is No Association between Income and consumption pattern (Buying

Decision).

HA: There is An Association between Income and consumption pattern (Buying

Decision).

Ho: There is No Association between Area and consumption pattern (Buying

Decision).

HA: There is An Association between Area and consumption pattern (Buying

Decision).

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Ho: There is No Association between Gender and consumption pattern (Buying

Decision).

HA: There is An Association between Gender and consumption pattern (Buying

Decision).

Ho: There is No Association between Age and consumption pattern (Taste).

HA: There is An Association between Age and consumption pattern (Taste).

Ho: There is No Association between Income and consumption pattern (Taste).

HA: There is An Association between Income and consumption pattern (Taste).

Ho: There is No Association between Income and consumption pattern (Taste).

HA: There is An Association between Income and consumption pattern (Taste).

Ho: There is No Association between Gender and consumption pattern (Taste).

HA: There is An Association between Gender and consumption pattern (Taste).

Ho: Respondent don not agree that Brand extension of LU (Bakeri) have no

difference from the existing brands of LU

HA: Respondent agrees that Brand extension of LU (Bakeri) have difference from the

existing brands of LU

Ho: Respondent don not agree that Brand extension of LU (Bakeri) sabotage the

mother brand LU.

HA: Respondent agrees that Brand extension of LU (Bakeri) sabotage the mother

brand LU.

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Ho: Respondent don not agree that Brand extension of LU (Bakeri) increase the

customer’s options to choose the best product.

HA: Respondent agrees agree that Brand extension of LU (Bakeri) increase the

customer’s options to choose the best product.

1.7 LIMITATIONS:

1. Due to allocated time of a thesis researcher have to work within two months

time.

2. Specific Area (Defence view, Near Iqra University)

3. Research will conduct interview to 100 customers (50 boys and 50 girls)

4. Research outcomes will only indicate the effect of brand extensions in Rural

Area of Pakistan.

CHAPTER - 2

LITERATURE REVIEW:

BRAND AND BRAND EXTENSION

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2.1 WHAT IS A BRAND?

Kotler and Armstrong, 2007; Jalees, 2008) has defined brand as a name, term, sign,

symbol, design or a combination of these attributes used by the firms for identifying

their products and to differentiate the competitor’s brands. Another important

aspect of brand is that it helps consumers in identifying the manufacturers.

According to (American Marketing Association, 2007; Jalees, 2008) a brand is: "A

name, term, sign, symbol, or design, or a combination of them, intended to identify

the goods and services of one seller or group of sellers and to differentiate them from

those of competition."

(Kotler and Keller, 2006; Jalees, 2008) define a brand as “a product or service that

adds dimensions that differentiate it in some way from other products and services

designed to satisfy the same need”. The brand is seen in this context as an identifier.

(Ambler and Styles, 1996; Sayama, 2006) argue that a brand is more than just a

product, and that it is a combination of all elements of the marketing mix. In line

with (Ambler’s, 1992; Sayama, 2006) holistic view that defines a brand as “the

promise of the bundles of attributes that someone buys and that provides

satisfaction; all elements of the brand are taken into consideration; and these

include the marketing mix and all the brand’s product lines.

(Kotler and Keller, 2006; Sayama, 2006) define a brand as “a product or service that

adds dimensions that differentiate it in some way from other products and services

designed to satisfy the same need”. The brand is seen in this context as an identifier.

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“A name, term, sign, symbol or design, or a combination of these, that is intended to

identify the goods and services of one business or group of businesses and to

differentiate them from those of competitors” (Bennett, 1995; Rubini, 2010).

2.1.1 Components of a Brand

Essentially a brand can convey up to six levels of meaning as per the study of “The

Indian Institute of Planning and Management, New Delhi (Leverage of Mother Brand

and Brand Extension, 1995)

2.1.1.1 Attributes: A brand first brings to mind certain attributes. Kellogg’s

suggest high quality, nutritional value, value for money etc.

2.1.1.2 Benefits: A brand is more than a set of attributes since customers

are not buying attributes. They are buying benefits. Attributes need to be

translated into functional and / or emotional attributes. The attributes of

nutritional value for Kellogg’s translate into the functional benefit of a

healthy meal.

2.1.1.3 Values: The brand also says something about the producer’s values.

Kellogg’s stands for best quality concern for customers.

2.1.1.4 Culture: The brand may represent a certain culture. Kellogg’s stand

for American culture, which is synonymous with organized, efficient and high

quality.

2.1.1.5 Personality: The brand can also project a certain culture Kellogg’s

Chocos brand relates to kids and suggests a fun loving personality.

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2.1.1.6 User: The brand suggests the kind of consumer who uses the

product Kellogg’s is targeted towards growing children and young adults and

essentially towards woman who buy the product.

2.2 BRAND NAME:

The very first important feature for a brand is the brand name. (Kotler, 2009; Rubini,

2010) detected that there are six main criteria to follow for choosing a brand name;

a brand name has to be:

2.2.1 Memorable: the name has to be short, easy to pronounce and spell.

Think Lotto, for example, that is much more memorable an easy to

pronounce than Booji, or Feiyue. The name of the brand has to be easy

to recognized and recall in any situation and language.

2.2.2 Meaningful: Nike in Greek means “victory”, a very strong and

meaningful name for a leader company in sport industry (Parker Jones,

2006; Rubini, 2010).

2.2.3 Likeable: it relates to the aesthetics of the name, how it looks and

how it sounds.

2.2.4 Transferable: it refers to the peculiarity of the name to well

represent new products or to introduce them to new markets. Puma,

for example, is a name so universal and catchy that can serve for

multipurpose branding.

2.2.5 Adaptable: whereas Nike has created a “brand-in-brand” by

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introducing the line AJ (Air Jordan), Adidas subdivided its brand in three

product-lines, leaving the same brand name for all of them, but adding

the product-line name as a suffix. The original logo was then used only

for the product-line Adidas Originals, but for the other two, Adidas

Performance and Adidas Style, they have created new logos exploiting

the concept of the three stripes, Adidas characteristic feature.

Moreover, products from diverse product-lines are wrapped in different

layout colors packaging.

2.2.6 Protectable: it does not refer to the legal aspects of trademarks, but

the actual possibility that a brand becomes synonymous of a product (or

service). Try to think how often hankies are replaced by the word

Kleenex, or the introduction in common jargon of the verb “to google”

instead of “to browse”.

2.3 BRAND LOGO:

It was 1971 when for $35 Carolyn Davidson designed one of the most successful

logos of all time for the once-so-called Blue Ribbon Sports Inc. (Logo Blog 2010). The

logo was inspired by the wings of the statue of the Nike, the Greek Goddess of

Victory. Then in 1995 the logo was registered as trademark and it has contributed to

worldwide success of the company.

As the brand name, the brand logo plays a crucial role in a company success as it is

the visual representation of the corporate identity (De Pelsmacker et al.. 2001;

Rubini, 2010). A logo must be distinctive and unique. (Williams, 2005; Rubini, 2010)

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tells us that there are several rules to follow during the design of a logo; five are

the most important:

2.3.1 Company reflection: a logo should reflect the company

business, not be inspired or even similar to the one of its

competitors.

2.3.2 Simplicity: an efficient logo is simple; it is important to avoid

logos with many details.

2.3.3 Black and white: a company logo should work also in black and

white and it has to be recognizable because the shape and not the

colors. A logo that cannot be distinguished whereas painted with

different tones is a failure.

2.3.4 Resizing: a logo is efficient when it is understandable when

resized or inverted. A company should be able to resize its logo, for

example in order to print it on business cards, and still the logo must

be clear. Also, a logo must be recognizable if its shape is mirrored.

2.3.5 Balance: with balance is meant the process to design a logo

where everything works in harmony and there is not a single aspect

of the logo (i.e. border line, font size, colors, and so on) that

suffocates the others

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Nike logo history (Logo Blog 2010); Rubini, 2010, 15

2.4 BRAND SLOGAN:

If the “swoosh” has become one of the most recognized symbols in the world and it

can be described as “simple, fluid and fast”, through its “Just Do It!” slogan, Nike is

complimented by its mission of “bringing inspiration and innovation to every athlete

in the world” (Logo Blog 2010). A slogan also has the function of a brief explanation,

or definition, of “what the brand is and what makes it special” (Kotler et. Al, 2009;

Rubini, 2010). To do that, it has to be conceived as part of long-term strategy or, in

other words, timeless. The slogan has to be easy to catch, to remember but also to

distinguish among the others. Therefore, company must avoid slogans too common

or familiar too already existing ones. Moreover, slogans should be important for the

customer. Briefly, the slogan should summarize the company‟s identity (De

Pelsmackeret al. 2001; Rubini, 2010).

2.5 BRAND LAYOUT AND PRODUCT PACKAGING:

In addition to names, logos and slogans, there are other integrated components

that arouse emotions and evoke the uniqueness of a brand. Particular layouts,

shapes and colors, or the combinations of those, for example, call immediately to

our mind a particular brand. Let‟s picture the particular and unique shape of the

bottle of Coca Cola, for example, or basically any bottle containing famous liquors or

perfumes. There is no need to read the brand name to recognize the product.

According to (Blynthe, 2006; Rubini, 2010), packaging can be considered as part of

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the product. Successful brands have understood that packaging is not only meant for

contain and protect the product, but it can also market it, starting from the selection

of the colors used.

2.6 BRAND IDENTITY:

Brand identity is a unique set of brand associations that the brand strategist aspires

to create or maintain. These associations represent what the brand stands for and

imply a promise to customers from the organization members (Aaker, 1999; Rubini,

2010).

To resume what was already mentioned before, we can assert that brands are

meant fundamentally to differentiate goods (or services) produced by a firm from

the ones of the competitors. For that reason, brands must be extremely

distinguishable.

From the consumer point of view, strong and reliable brand means tranquility. In

fact, if a customer is fully satisfied with a certain product, he/she will easily choose

the same brand for further purchases. The brand in his/her head transmits quality,

trustworthiness, satisfaction to expectation. The consumer will once more trust the

brand that has respected all his/her expectation (or even more) and he/she will not

take the risk to purchase a different product.

(McClendon, 2003; Järlhem, Mihailescu, 2003) considers that brand identity is

something that exists in the minds and hearts of the consumers when they hear the

name of the brand. He further adds that it is the identity of the brand which

provides the real strength to the business.

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After studying the related literature, we can say that brand identity represents the

public image of a product, line or service. It is the visual link between the company

and the consumer. Brand identity includes brand names, logos, positioning, brand

associations and brand personality.

Brand identity is identified as a brand’s DNA configuration. He supposes that the

particular set of brand elements is blended in a unique way to establish how the

brand will be perceived in the market place. In contrast, we believe, the marketers

who might tailor some elements to match it with the core brand personality propose

the strategic brand personality in reality.

According to (Kapferer, 2001; Järlhem, Mihailescu, 2003), it is critical for each

business to understand that the attributes of a brand represent the indispensable

elements. Not all brand managers are aware of this. We believe that one way of

finding out what the elements the extended brand would need in order to mediate

with the market, would be the pilot test interview with the consumer is the best

possible method to avoid a trial and error way of branding.

“A richer brand identity is a more accurate reflection of the brand. Just as aperson

cannot be described in one or two words, neither can a brand. Three- word taglines

or an identity limited to attributes will simply not be accurate” (Aaker, 2000;

Järlhem, Mihailescu, 2003).

(Aaker, 2000; Järlhem, Mihailescu, 2003) considers that the identity of a brand

represents what the brand stands for. Taking into consideration that the brand

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identity is inspirational, it must comprise and reflect the values and cultures of the

entire organization. Moreover, customer concern should dominate the strategy of

the business. And lastly, he emphasizes in his picture that “the extended identity

provides a home for constructs that help the brand move beyond attributes. In

particular, brand personality and symbols normally fail to make the cut when a terse

brand position is developed, yet both are often extremely helpful strategically as

well as tactically (Aaker, 2000; Järlhem, Mihailescu, 2003).

Company which owns the brand “enjoys” the benefits not available to companies

which do not own it. One of them is that a company, through brand, acquires a good

communication tool. This communication is not one-way. This means that

enterprises are good “communicators” only if they are good listeners of what

customers have to say. In addition, successful brands are the outcome of good

communication. The direct result of good communication between a company and a

customer is the brand loyalty. It is a consequence of trust, on which the relationship

between the company and the customer is based on. Trust building requires long-

term concentration. It takes money, patience, knowledge and the most important: it

takes time. Losing the trust costs a lot more, net present value of all future net

earnings from the brand (Yates, 1999; Jokanovid, 2005).Therefore, a smart player in

the market cannot afford to lose the trust of a customer. That is why many

companies are investing significant amounts of money into both products and brand

management.

Consequently, a brand becomes a company's most important asset. All other assets

within the company have some value for the company as well. The market for these

assets exists, and therefore their value can be easily assessed. But what is the value

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of the brand, and how can it be determined? This question is becoming more

important when we come to a due-diligence process during the mergers and

acquisitions, since due diligence is a critical step towards reaching a correct

investment decision.

2.7 BRAND EQUITY:

(Ambler and Styles, 1997; Dahlberg, Kulluvaara, Tornberg, 2004 ), suggest two

approaches to the definition and measurement of brand equity, a financial

evaluation and the consumer-based approach. The financial evaluation focus on the

monetary value of the brand the consumer-based approach focus on the brand itself

meaning how the consumer values the brand. Brand equity is essentially described

as the store of profits to be realized at a later date. The brand equity concept can

cause confusion, as the distinction is not always clear. When brand equity is tested it

is usually performed by consumer tests such as concept and/or product tests to

investigate brand equity related criteria. These tests are normally performed early in

the development process. Firstly, brand equity tests provide managers with an

indication of consumer acceptance and a quantitative trial potential. Furthermore,

the brand manager’s task in the process is to maximize profits and brand equity, not

just sales, market share and short-term profits.

(According to Keller, 1998; Dahlberg, Kulluvaara, Tornberg, 2004), creating a brand

with high equity by building awareness, image, and linking associations, can provide

a firm with a strong competitive advantage. In addition, strong brands will also rise

above other brands, having a better understanding of needs, wants, and preferences

of consumers to create marketing programs that complete and even go beyond

consumer expectations.

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Brand equity is a relationship between customers and brands, resulting in a profit to

be realized at a future date (Wood 2000; Jalees, 2008). (Kotler and Armstrong, 1996;

Jalees, 2008) were of the opinion that measuring brand equity is a tedious job.

Nevertheless, a powerful brand means high brand equity that helps in achieving

‘higher brand loyalty, name awareness, perceived quality, and strong brand

associations’. Some of the major benefits of brand equity are brand awareness and

consumer loyalty which helps in reducing marketing costs. Brand is an important

equity; therefore, it should be carefully preserved by adopting strategies that would

help in maintaining or improving brand awareness, perceived brand quality and

positive associations.

(Ambler and Styles, 1997; Jalees, 2008) are of the opinion that brand equity could be

measured from two perspectives. One is “financial evaluation approach” and the

other is “consumer-based approach”. The financial evaluation approach is related to

the monetary value of the brand, and the consumer-based approach focuses on the

brand itself that is how much value the consumers give to the brand. Brand equity is

also considered as an accumulated profit that could be realized at a future date. The

brand equity concept can also cause confusion, because of the difficulty in

measuring it.

Importance of brand equity, demands a need for a more practical experience and

comparative research to judge and validate the usefulness of brand evaluation

methods (Farquhar, 1990; Jalees, 2008). The recent merger and acquisition trend

has also increased the importance of measuring brand equity (Tauber, 1988; Jalees,

2008). The role of brands is now far beyond product differentiation or competing for

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market share. They are accumulated annuities which the firm can acquire from its

balance sheet.

Firms could have a strong competitive edge over competitors, if they could create

brand equity ‘through building awareness, image, and linking associations’ (Keller,

1998; Jalees, 2008). A stronger brand would always have a better understanding of

needs, wants, and preferences of consumers than the brands that are not

competitive. Thus stronger brands would help in creating effective marketing

programs that could go beyond consumer expectations.

Brand equity, since last one decade, has remained popular for attracting new market

segments (Pitta & Katsanis, 1995; Jalees, 2008). This phenomenon of brand equity

has coincided with the newly emerged but equally popular phenomenon of brand

extension (Ambler & Styles 1997; Jalees, 2008). Research shows a two way

relationship between brand equity and extension. A brand's equity could influence

the success of extensions, and extensions could positively influence brand's equity.

The result is that highly valued brand extensions are more successful. Consumers

tend to choose those brands that have strong brand equity. Brand position of a firm

is strongly dependent on the positive image of brands. Strong brands are a major

source of differentiation and extending the same towards a specific product

category is easier. Successful brand allows firms to demand high prices and are a

source of barrier which makes it difficult for consumers to switch to other brands.

Investment and brand equity both have a limited life. Brand equity cycle is

comprised of growth, reinforcement or decay, and is vulnerable to competitors.

Organizational actions have a direct bearing on the brand equity.

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Strong brand equity also helps in reducing the introduction cost of new brands.

(Pitta & Katsanis ,1995; Jalees, 2008), Some of the brand equity definitions are based

on strategic marketing perspective and others on financial theory perspective

(Kapoor, 2005; Jalees, 2008). Aaker's definition is: "Brand equity is a set of assets /

liabilities associated with a brand such as name awareness, loyal customers,

perceived quality, and associations that are linked to the brand that add/subtract

value to the product or service being offered" (Aaker, 1996; Jalees, 2008). Keller,

1993; Jalees, 2008) definition of brand equity is based on customers' perceptions of

the brand, therefore, could be attributed as customer-based brand equity: "The

differential effect of brand knowledge on consumer response to the marketing of

the brand”. (Keller, 1993; Jalees, 2008).

The firm could use above definitions of brand equity for developing long term

growth-strategy. For example, predictors’ variables such as “familiarity with the

brand name”, and “level of promotion” may influence “trial purchase” more strongly

as compared to determinants such as distribution, packaging, and brand awareness

achieved by advertising (Aaker, 1990; Jalees, 2008). It has been found that one of

the strongest motivating factors for inducing trial purchase is established brand

name. The marketing cost at introduction stage is generally higher as the awareness

is low. Firms with strong “brand equity” have two advantages at the introduction

stage of new brand.

Marketing costs at this stage will decline considerably, and it would also support a

higher price, resulting in increased profitability (Aaker, 1990; Jalees, 2008). Retaining

customers is more cost efficient than attracting new customers. The studies have

suggested that the customers are more loyal to stronger brands than weaker

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brands. Thus, retention of loyal customer is easier than non-loyal customer (Aaker,

1992; Jalees, 2008).

2.8 BRAND EQUITY AND BRAND LOYALTY:

“Brand equity is a set of assets linked to a brand´s name and symbol the adds to the

value provided by a product to a firm and/or that firm´s customer” (Aaker 1996;

Rubini, 2010)

Nike in 2009 occupied the 26th place in the global brand ranking chart and its brand

value was worth $13.179 million (Inter brand, 2009; Rubini, 2010). When we talk

about brand value, we talk about its equity. But what is brand equity and how to

determinate it? Whereas it is possible to quantify the total value of Nike as a

corporation, as it is determinate by the sum of the market values of its assets

(liabilities plus owner‟s equity), it is quite impossible to determinate logically the

assessment of Nike as a brand, as the brand equity is fundamentally related to

intangible values.

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Brand Equity Model According to Brandt and Johnson (Nworah, 2010); Rubini, 2010,

28

Brand loyalty is probably the most significant element in indicating the worth of

brand equity. If we think about market leaders as Nike and Adidas, they spot out by

having the highest and strongest loyalties. But also if we utilize as example a niche

brand, as Walsh; in this case, brand loyalty is absolutely crucial for the survival of

the brand itself. In terms of mere profit, brand loyalty can be translated as the

willingness of customers to pay higher prices for the same type of product. (Davis,

1995; Rubini, 2010) has noted that loyal customers can even pay around 20 – 25 per

cent higher prices compared to competing brands product, and that are more

favorable to price increases.

This aspect is called Price Premium. However, brand loyalty is a more sophisticated

and emotional process than a simple payment; when a customer has been engaged

purely emotionally, the connection within him/her and the brand become so

intimate that transcends material satisfaction.

Brand loyalty is a measurement of how often a customer is disposed to purchase

a product (or to utilize a service) from the same brand when buying from the same

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product (or service) class. This process can come from either a conscious or

unconscious decision.

Brand loyalty can be seen as a behavior or as an attitude. We all agree that loyalty

consists in the repeated purchase of a product of the same brand. A behavioral

loyalty occurs when the purchase is unconscious and mechanical. The decision of

buying continuously a determinate brand is pure causality, dictated by habits,

availability, price, and so on.

The brand loyalty stops in case one element changes and the customer buys a

different product. The attitudinal loyalty is when the customer keeps buying the

same brand despite increasing price, for example, and especially, he/she refuses to

purchase different brands where the favorite is not available. The attitudinal loyal

customer renounces the purchase rather than “betray” his/her favorite brand.

2.9 BRAND EQUITY’S LIFE AND BRAND DILUTION:

Companies, products and their brands have their life cycles which can more or less

overlap. This means that brand will have both its high point and its “top form” and

will enter the process of decay, eventually. Therefore, the assignment of the brand

manager is to recognize the brand’s “top form” and to undertake all the necessary

actions to keep it there as long as possible. The same refers to the brand associated

equity. According to (Pitta and Katsanis, 1995; Jokanovid, 2005) brand equity is a

subject of growth and reinforcement, or decay, and assault by competitors, or it can

be harmed by intentioned actions of a management. One of the intentioned actions

of a manager which can cause the brand to decay is both successful and

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unsuccessful brand extensions. Decay occurs since extensions are causing the

dilution of the parent brand (Loken and John, 1993; Jokanovid, 2005 p. 74).

The term “dilution” refers to the lessening of the capacity of a famous mark to

identify and distinguish goods or services, regardless of the presence or absence of:

(1) competition between the owner of the famous mark and other parties, and (2)

likelihood of confusion, mistake or deception” - Federal Dilution Trade Act, 1995,

sec. 1127 (Mermin, 2000,; Jokanovid, 2005 p. 217). Findings provide the first

indication that brand extensions can dilute brand names, through decreasing the

positive perception consumers have about the family brand (Loken and John, 1993;

Jokanovid, 2005). Moreover, data suggest that dilution is a complex phenomenon,

emerging for certain types of brand extensions in just a few situations. First, the risk

of brand name dilution appears to be greater for brand extensions that are

perceived to be moderately different from the parent brand. In contrast, brand

extensions perceived to be clearly different from originator carry a moderate degree

of risk (Loken and John, 1993; Jokanovid, 2005).

The second reason for decay of brands and the associated brand equity can be

repeated cycles of successful brand extensions. Combination of the two above

mentioned factors (i.e. repeated number of brand extensions and unsuccessful

brand extensions) can cause total “extinction” of the brand equity, regardless of its

success at one point in time (Gibson, 1990; Jokanovid, 2005 p. B1).

2.10 BRAND DUE DILIGENCE:

Companies’ value depends largely on the brand value. Many private equity deals and

merger and acquisition transactions account for brand equity. The main reason is

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that investors must make sure that their investment is adequate, and it will provide

a high rate of return. Dealer, on the other end, needs to be sure that the price is

close to the real value of the brand. Many equity deals, which were completed,

show that wrong valuation of a brand can be harmful and expensive for both parties

in the transaction. That is why consulting firms, which had been developing tools for

brand valuation, face an extremely demanding assignment. One of the tools, which

are becoming the prerequisite for good valuation, as well as investment decision, is

Brand Due Diligence (TM Haigh, 2002; Jokanovid, 2005).

The demand for this tool is very high since the number of private equity and merger

and acquisition deals is increasing. By using this tool companies are able to identify

what the brand's operating environment, to determine the platform for brand's

success in the future, and to determine factors, which need to be enhanced in order

to assure the success of a brand in the future. In this way, brand managers also set a

monitoring tool.

Brand Due Diligence process is a five-step approach (Haigh, 2002; Jokanovid, 2005).

Phases of the process are as follows:

I. Undertaking of comprehensive legal and risk analysis aimed to determine

whether all brands are registered and properly protected. In addition, any

brand extension, licensing, selling or sharing impacts the brand analysis.

II. Market review and the risk analysis of a business in order to examine the

business environment of the company. In this way, industry profile is

created in order to see how it is affected by natural, political, social,

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economical and other factors. An analyst has to take into account all

relevant factors. It is also extremely important to identify the business cycle

of both the business and the market, and to determine the stage of the

market development.

III. Competitor review and risk analysis. If the brand is the leader in the market,

analysis is used to identify whether other companies and the market believe

that a company is a leader, and whether its strategy is understood.

Furthermore, the analyst needs to map a market scene and to identify the

followers and challengers. Then the market strategy of the competitors

needs to be examined. Porter’s five forces model can be a useful tool.

IV. Brand image and risk analysis includes: customer target profile, pricing

strategy, the response to environmental changes, the contingency plans for

product or service malfunctioning and environmental problems. After

qualifying and quantifying all these factors, one is able to evaluate the

success of the current brand management. Unless brand management is

strong and comprehensive, the brand equity will be devalued.

V. Branded business review and risk analysis. The purpose of this stage is to

identify the areas of competitive advantage and disadvantages of the brand.

There are several different areas to be examined: product distribution

channels, innovations, brand strength. The final report should encompass

the drives of brand loyalty and alternative scenarios for growth.

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2.11 CUSTOMER BASED BRAND EQUITY:

According to (Keller, 2001; Jokanovid, 2005) companies can develop strong brands

only if the brand development process includes the following steps:

(1) Establishment of proper brand identity,

(2) Creation of the appropriate brand meaning,

(3) Extraction of the right brand responses, and

(4) Building of appropriate brand relationships with customers.

Keller introduces six building blocks which are part of the Customer Based Brand

Equity pyramid, those building blocks are: salience, performance, imagery,

judgment, feelings and resonance.

Establishment of brand identity is based on the brand salience which refers to brand

awareness. Consumer is aware of the brand existence if he/she is able to recall and

to recognize the brand. The main criteria for brand identity, according to Keller, are

depth and breadth of brand awareness (Keller, 2001; Jokanovid, 2005).

The next step is the brand meaning which is divided into brand's performance and

brand imagery. Brand performance as one of the building blocks refers to the basic

purpose of the product itself, functionality, or the ability to satisfy customers’ needs.

This characteristic of a product is its intrinsic facet. The other building element,

brand imagery, is developed from the extrinsic property of a product itself and it is

connected to the possibility that the product will satisfy customer's psychological

and social needs. Brand meaning needs favorable, strong and unique associations

(Keller, 2001; Jokanovid, 2005).

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The third step, i.e. brand responses step is defined as the way customers respond to

a brand. Responses are divided into brand feelings and brand judgments. Brand

judgment is the combination of brand imagery and brand performance in the minds

of the consumers. Brand feelings are customers’ emotional reactions to the social

currency brand evokes (Keller, 2001; Jokanovid, 2005).

Brand responses lead to the positive and accessible reactions of consumers. Lastly,

brand relationship is defined as the relationship between the customer and brand,

and it is related to personal identification of the customer with the brand. Brand

resonance as a building block of brand relationship is defined as the depth of the

psychological bond between the customer and the brand which results in loyalty.

Criteria are the intense and active loyalty (Keller, 2001; Jokanovid, 2005).

2.12 CORPORATE BRANDS:

Brand literature separates the following types of brands: a corporate brand, a

portfolio of product brands and a product brand. Corporate brand is defined at the

level of the company. The positive image of a strong company usually extends to

credibility of the products sold under the company’s brand, both existing ones and

those that are new to the market (Siburian, 2004; Jokanovid, 2005).

According to (Aaker, 1996; Jokanovid, 2005) when brands are managed separately

and independently, or at an ad hoc basis, overall resources allocation among brands

may be less than optimal. Therefore, having the corporate brand, or in other words

cohesive brand portfolio, instead of number of individual product brands, is more

rational from the company’s point of view.

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Corporate brand is defined primarily by organizational associations (Aaker, 2004;

Jokanovid, 2005). It is extremely important to notice that organizational associations

are equally important for both product and corporate brands. Nevertheless, the

power, number and credibility of the organizational associations are larger in case of

corporate associations. The main distinction between the product brand and its

“umbrella” (corporate) brand(s) is that once the product brand is established, it

begins its life in the eyes of customers independent of the organization which

created it. Corporate brand is permanently tied to both organizations and other

brands of the company: product brands.

The main prerequisite for successful corporate branding strategies is that corporate

brand has to provide the sincerity which will assure potential buyer that the product

will satisfy her/his needs on physical, emotional and all other levels. That is why the

corporate brands can be identified as “endorsers” before the product brand in

question “begin to have a life on their own”. At the same time, corporate brand has

to provide the valued relationship with the respected company (Aaker, 2004;

Jokanovid, 2005).

The main differences between the corporate brand and the product brand will be

summarized in the following section. The first difference is in the longevity. In this

sense, product brands along with products might appear and disappear, and the

products along with their brands have regular life cycle. The corporate brands, on

the other hand, have roots, which are much “deeper” than the roots of the product

brand. “Heritage” of the corporate brand is the basis for its success and “everlasting

life”. Heritage helps the brand reappear even after the crises. Corporate brand can

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provide a message, which can be different than the one of the product brand.

Corporate brands with a long successful history can be perceived as reliable, high

quality but at the same time as deja vu: boring and outdated. In these cases, a

combination of successful organizational heritage and injection of the energy of the

new brand is the right solution to the problem (Aaker, 2004; Jokanovid, 2005).

2.13 BRAND PERSONALITY:

Looking at the day-to-day life and the reasons that lie behind our choices, we can

see that each product has different personalities from the car we drive to the beer

we drink. This means that everything has its distinct personalities that appear to us

differently in different situations. And, as (Hawkins et al, 2001; Järlhem, Mihailescu,

2003) said, each consumer will purchase the respective product with the

personalities that match the most of his/her personalities.

As a formal definition of brand personality, (Aaker, 1997; Järlhem, Mihailescu, 2003)

considers that brand personality is "the set of human characteristics associated with

a brand, "while (Larson, 2002; Järlhem, Mihailescu, 2003) believes that brand

personality is the first reaction people have to a brand when they hear, see, taste or

touch a certain product belonging to a specific brand name.

In detail how brand personality can create differentiation on the market. “First, a

personality can make the brand interesting and memorable.” He adds that “a brand

without personality has trouble gaining awareness and developing a relationship

with customers. Second, brand personality stimulates consideration of constructs

such as energy and youthfulness, which can be useful to many brands. Third, a brand

personality can help suggest brand-customer relationships such as friend, party

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companion or advisor.” He concludes that “with the personality metaphor in place,

relationship development becomes clearer and more motivating.” (Aaker, 1997;

Järlhem, Mihailescu, 2003).

2.14 BRAND AWARENESS:

Brand awareness is defined as a rudimentary level of brand knowledge involving, at

the least, recognition of the brand name. Awareness represents the lowest end of a

continuum of brand knowledge that ranges from simple recognition of the brand

name to a highly developed cognitive structure based on detailed information.

Recognition is taken here to be the process of perceiving a brand. The distinction

between awareness and recognition is a subtle one; the former denoting a

state of knowledge possessed by the consumer and the latter a cognitive process

resulting from awareness (Hoyer & Brown, 1990; Khalid, Ahmad, 2002). Brand

awareness has a direct impact on the purchase decision of the consumer. According

to (Aaker, 1991; Khalid, Ahmad, 2002), there are three levels of brand awareness:

2.14.1 Brand recognition: It is the ability of consumers to

identify a certain brand amongst other i.e.―aided recall. Aided recall is a

situation whereby a person is asked to identify a recognized brand name

from a list of brands from the same product class.

2.14.2 Brand recall: This is a situation whereby a consumer is

expected to name a brand in a product class. It is also referred to as

―unaided recall as they are not given any clue from the product class.

2.14.3Top of mind: This is referred to as the first brand that a

consumer can recall amongst a given class of product or service.

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The brand awareness is not the simple acknowledgment of a brand. More the brand

is well known, than more consumers are inclined to buy its products. In this sense,

the awareness is not just concerning the fact that a brand exists; it includes knowing

and recognizing its image and product range. And as we saw brand awareness is the

fundamental first step to achieve any brand loyalty.

The first stage of brand awareness is its recognition. The recognition does not

involve necessarily the place and the reason a person remembers a brand; it also

does not concern the brand merchandise or product range. The recognition of a

brand happens especially thanks to the logo. Other efficient tools are layouts and

packaging. The concept of brand recognition is strictly linked to brand associations.

The opposite process of brand recognition is called brand recall (or top-of-mind

awareness). This situation recurs spontaneously when people think about a certain

product, or situation. For example, soft drink equals Coca Cola, or fast food chain

equals McDonalds, and so on. However, brand recognition is more efficient as

brand recall process does not assurance that people who can recall a brand can at

the same time distinguish the very same brand during shopping (De Pelsmacker et

al. 2001; Rubini, 2010).

When a brand is the combination of a name and an image, a successful brand is

what the consumer believes the closest match to own needs (or desires) through

uniqueness (De Chernatony & McDonald, 1998; Rubini, 2010).

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The purchase of a product is both mental and physical activity (Sheth & Mittal, 2004;

Rubini, 2010). These activities are called behaviors, and their result is a combination

of variety determinate by the relation within the type of customer and his/her role.

Concerning the type distinction, a customer is household or business one, and the

difference stands in purely money-spending capacity. On the contrary, a customer ‟s

role can be buyer, payer and user. The buyer is who mentally decide which product

to buy and physically purchase it. The payer is merely who support the purchase, or

in other words, the source of the money. At last, the user is the final receiver and

who benefits from the product (or the service). All the three roles might coincide, or

even just two, and match in the same person. However, in purchasing

circumstances, quite often buyer, payer and user are three different people. There

are four combinations of roles:

I. User is neither a payer nor buyer: A child (user) wears sneakers bought by

his/her mother (buyer) who paid them with the husband‟s (payer) credit

card.

II. User is a payer, but not a buyer: A husband (user and payer) gives his credit

card to the wife (buyer) so she can buy him a pair of sneakers.

III. User is a buyer, but not a payer: A child (user and buyer) goes to a store and

buy his/her favorite pair of sneakers with the father‟s (payer) credit card.

IV. User is both buyer and payer: A person (user, buyer and payer) buys himself

a pair of sneakers with his/her own credit card.

(Kotler, 2007; Rubini, 2010) has also introduced in the process two other characters:

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the initiator and the influencer. The initiator is basically the one who first suggested

the idea of a purchase. This could be a mother that sees that her child needs new

shoes. The influencer, on the other hand, is who affects the buying decision, or just

persuade the purchase; in this case, the influencer can be a friend who has recently

bought a brand new pair of sneakers.

2.15 BRAND-SPECIFIC ASSOCIATIONS:

A brand-specific association is defined as an attribute or benefit that differentiates a

brand from competing brands (MacInnis & Nakamoto, 1990; Phang, 2004). This

means that a brand can be associated with a salient attribute, but this association is

per se not strongly associated with competing brands or the product class as a

whole (Broniarczyk & Alba, 1994; Phang, 2004).

Since the brand association varies depending on the benefits that are sought within

a particular product category, a consumer’ evaluation of a brand extension needs

not correspond to evaluation of that brand in its original category.

Three conclusions can be drawn from (Broniarczyk and Alba’, 1994; Phang, 2004)

research:

(1)A perceived lack of fit between the product category of the parent brand

and the proposed extension category can be overcome if key parent brand

associations are salient and relevant in the extension category;

(2) Brand-specific associations allow for brand extensions to unrelated

product categories. Brand-specific associations moderate the role of product

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category similarity in brand extension judgments; a brand extension is more

preferred in an unrelated category that valued its association than in a

similar category that does not value its associations; and

(3) The boundaries for the appropriateness of a certain brand extension

were determined by knowledge about the incumbent brand.

2.16 BRAND EXTENSION:

Some of the commonly used definitions of brand extensions are as follows:

Using an established name of one product class for entering into another product

class. (Aaker, 1991; Jalees, 2008).

Using a successful brand name for launching a new or modified product or line is

known as brand extension strategy (Kotler, 1991; Jalees, 2008).

An expansion strategy in which firms use already established and successful brand

name for introducing a new or modified product (Kotler & Armstrong, 1990; Jalees,

2008).

Using an established brand name for introducing a new product into product

category which is new to the company is known as franchise strategy (Hartman &

Price & Duncan, 1990; Jalees, 2008).

Brand extensions allow consumers to draw conclusions and form expectations about

the potential performance of a new product (i.e. the brand extension) based on their

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existing knowledge about the brand (Keller, 2003; Phang, 2004). Provided that a

strong brand name is present, the perceived risk by consumers is substantially

reduced when familiarity and knowledge about the parent brand is present (Keller,

2003; Aaker & Keller, 1990; Phang, 2004). Benefits of introducing new products also

include different ways of achieving operational efficiencies. A favorable parent

brand reduces costs associated with gaining distribution since retailers are more

positive to stock and promote a brand extension. Another benefit relates to

marketing communications: since brand awareness already exists, promotional

activities (including introductory and follow-up advertising and other marketing

programs) of a brand extension can be less intensive and thus less costly than those

of a totally new brand and product (Keller, 2003; Kapferer, 1997; Phang, 2004).

Other efficiencies includes avoiding costly development of brand names, logos,

symbols, packages, characters, slogans, etc. (Keller, 2003; Phang, 2004).

(An AC Nielsen’s, 2006; Seyama, 2006) tracking study of new listings in the South

African Retail sector indicated that 10 500 new FMCG items were launched in 2005.

More than 90% of the launches were extensions, and the balance was made up of

new brands. A chronological analysis of the US FMCG market shows that popularity

of extensions has been growing with the increasing number of new launches. For the

period 1977 to 1984, new launches in the USA numbered 120 to 175 annually; and

60% of these were extensions (Aaker, 1990; Seyama, 2006). In 1991, 16 000 new

launches were recorded; and 90% of these were extensions (Rangaswamy, Burke

and Oliva, 1993; Seyama, 2006). In 2005, 30000 new launches were listed in the

retail sector; and over 90% of them were extensions (ACNielsen’s, 2005; Seyama,

2006).

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There are many well-documented cases of extensions based on the academic

writings of the last 20 years mainly (Aaker, 2004 and Taylor, 2004; Seyama, 2006).

The cases include Disney (arguably the first recorded case of most successful brand

extensions), Virgin (notably through extensions into unrelated categories across a

wide spectrum from music to beverages and gyms), Dove (classic case of a well-

understood and single-minded brand, with well-structured extensions) and

Mercedez Benz (with extension of the brand into semi-luxury market through C-,

and A-Class models).

There are several ways for “accomplishing” brand extensions, including horizontal

extension, distance extension, and vertical extension (Pitta and Katsanis, 1995;

Jalees, 2008). When a firm uses the existing brand name for extending into a new

product in the “same product class or to a product category new to the company” it

is considered as horizontal extension. Horizontal extension again could be extended

into two categories. One is line extension and other is franchise extension.

(Aaker and Keller, 1990; Jalees, 2008) states that horizontal brand could be further

divided into two categories which are line extension and franchise extensions, and

according to them the focus of these brand categories is different. Using an existing

brand name and same product class for entering a new market segment comes in

the category of line extension. Examples of line extensions are Pepsi and Diet Pepsi.

Other examples of line extensions are shampoos for different segments such as dry

hair, oily hair, and dandruff hairs, etc. This strategy is generally more successful for

extensions in the same category as the core product.

Franchise extension on the other hand is a strategy of using current brand name for

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entering a product category that is new to the company (Tauber, 1981; Jalees,

2008). If the core brand is extended into related or similar category it is considered

as “close extension”. Extending to unrelated product category is known as “Distance

extension”. In this case overall quality association of core brand is necessary for

success (Pita & Katsanism, 1995; Jalees, 2008).

Distancing is a deliberate effort to increase the perception distance of the core

brand and extension product (Kamal, 2003; Jalees, 2008). While using umbrella

branding that is using the same brand name for several products the firm must

ensure that the quality perception of the core products has also been transferred to

all the extensions (Erdem, 1998; Jalees, 2008).

Firms when launches “related brands” in the same product category with significant

difference in price and quality levels they are considered as vertical extension. (Pita

& Katsanism, 1995; Jalees, 2008) The vertical extension has two directions. If the

new product is of higher quality level with higher pricing it will be called up-scaling.

On the other hand if the extended brand quality is low and is also of lower pricing it

will be known as down scaling (Kamal, 2003; Jalees, 2008) If a newly launched

product has a strong association with a strong brand then customers would have the

comfort of believing that the firm will support its offering. (Aaker, 1990; Jalees,

2008). Extensions are significant in creating awareness of the strong brands

especially to the segment that are not purchasing the product.

The cost of “new launch” is increasing, the market is becoming more competitive

and therefore more firms are deriving benefits from strong brand equity by brand

extension strategies. In view of the high costs associated at introduction stage, firms

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leverage the equity of established brand name to introduce products in a totally

different product category (brand extension). The rationale for this strategy is that

consumer perception of the positive image (equity) tends to carry over to the

extension and hence would be beneficial to new launch (Nkwocha, 2000; Jalees,

2008).

(Ambler and Styles, 1997; Jalees, 2008), observed that although brand extension and

line extensions are used interchangeably by some of the authors, but there is a

conceptual difference in the definitions of the two. When a company launches an

existing product and brand name in the same product category with the same name

by adding new flavor, changing form or color of the product, or changing ingredients

or package sizes. However, launching a new or modified product in a new category

but using successful brand name would be brand-extension (Kotler & Armstrong,

1996; Jalees, 2008).

A brand that has strong awareness can easily be launched in new product category,

as the level of recognition and acceptance for such product is higher it comes in the

category of line extension. These line-extensions are commonly used in dairy

products, and shampoo (Kotler & Armstrong, 1996; Jalees, 2008). Virgin, basically a

tobacco company has successfully ventured into businesses such as record company,

airline, financial services, vodka, jeans and cola by using brand extension strategy

(Hart & Murphy, 1998; Jalees, 2008).

If the brand is of high quality, and if there is resemblance (fit) between the new

product category and brand, and if a company has relevant expertise then the

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chances of successful brand extension would be bright (Ambler & Styles, 1997;

Jalees, 2008). One of the problems in brand extensions is that customers might think

that the company already offers this product and is not new in the new product

form. Despite this problem, the acceptance of the new brand will be higher for those

brands that have strong associations with the brand as compared to reasonably

familiar or weak brand (Nijssen, 1999; Jalees, 2008).

Consumers while evaluating the brand extensions tend to assess its suitability in the

relevant product category and the brand’s original category. If the customers’

perception is positive toward the suitability, then the degree of acceptance would

be higher (Nijssen, 1999; Jalees, 2008). If the customers do not find any suitability

between original brand category and brand extension category then the brand

extension would adversely affect the brand equity of the company (Kim & Lavack,

1996; Jalees, 2008). Since last one decade, brand extension is getting extensive

coverage in the academic and trade journals and is extensively used as growth

strategy; therefore, it could be attributed as a branding strategy (Sharp, 1993;

Jalees, 2008).

The firms do not deliberate on whether to adopt brand extension strategy or not.

What they deliberate on is timing (when) and place of brand extension (where)

(Keller, 1998; Jalees, 2008). Early 1990’s recession forced the firms to follow cost

saving strategies so that they could be more competitive. This resulted in extensive

usage of this extension strategy (Pitta & Katsanis, 1995; Jalees, 2008). Whether a

brand could be extended or not is very difficult, therefore, such decisions must be

made on “combination of market research, experience and common sense.” (Nilson,

1998; Jalees, 2008). The firm must understand the managerial process involved in

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brand extensions and study the factors that contribute to the success of brand

extensions (Ambler & Styles, 1997; Jalees, 2008).

When Adidas started to produce deodorants and after-shaves, marketers were

well aware of the success of those products, as it is recognized that strong brand

names work on other product in terms of sales (Kotler 2009; Rubini, 2010). In this

case Adidas extended its production outside the strictly sport sphere.

To describe it theoretically, it is basically the utilization of the existing brand

name(but more precisely, of the brand image) to launch new, or modified, product

in the same market (brand extension) or new, or modified, product in a new market

(brand stretching). For a more specific and practical example of the

“extension/stretching concept”, we take the case sneakers launched by Oakley,

better known as a sunglasses company.

Oakley introduced their sneakers in the global market in the middle of the 90‟s, and

they have been a huge and profitable success. In 2000 Oakley‟s net sales was $363.5

million and increasing by 41 per cent (Tufts University, 2006; Rubini, 2010). What

made everything possible was not the hybrid shape of the sneakers (a sort of mix

between casual and hiking shoes), but was the well reputation of the brand, its

image

The success of Oakley‟s brand extension by introducing sneakers as new product of

their merchandise range is yet well linked with the concepts of awareness and

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positioning explained before. Positioning does not concern the market share, or a

place intended as a physical location. Positioning concerns customers‟ mind. Oakley

was a famous, recognized and well-reputed brand already by selling sunglasses, and

the fact that they started to sell other products than glasses did not matter for

existing customers as they were before well-aware of Oakley and they trusted the

company in the launch of new products as those were sunglasses.

Brand extension has become a popular new product strategy, because of its

attractive advantages. It provides a cheap way to enter a new market with the

decreased costs of gaining distribution and the increased efficiencies of promotional

expenditures (Grimeet al., 2002; Muroma & Saari, 1996; Ma, 2005), and enhances

the success probability of newproduct introductions with immediate brand name

recognition and transferences of positive attitudes toward the familiar brands to the

extensions (Farquhar, Herr, & Fazio, 1990; Ma, 2005). In addition, the strategy of

brand extensions is a way to capitalize the equity of brands by providing a new

source of revenue (Hem & Iversen, 2003; Ma, 2005). However, it can also be a risky

strategy. An unsuccessful extension, or even a successful extension, could cause

damage to the original brand (Keller & Sood, 2003; Loken & John, 1993; Ma, 2005).

In order to help marketing practitioners make more successful brand extension

decisions and judgments, more research has already focused on brand extensions

from different aspects. This thesis study investigates the relationship between

consumer knowledge and fit perceptions in brand extension evaluations, and is

expected to contribute to the brand extension literature by studying this single

aspect of the brand extension evaluation process.

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2.16.1 Brand Extension Process

According to (Ambler and Styles, 1997; Dahlberg, Kulluvaara, Tornberg, 2004), the

understanding of what makes a brand extension successful and how the extensions

come to market is important, as brand extensions has become a popular growth

strategy. Therefore it is significant to understand the managerial process involved in

the extension.

Developing brand extensions is seen as a type of new product development. Since

the failure rate is high when launching a new brand, finding ways to improve the

development process and thus increase the chance of success is important. (Ambler

& Styles, 1997; Dahlberg, Kulluvaara, Tornberg, 2004) An eight-stage framework

shown below can be a guide in the new product development process: (Brassington

& Pettitt, 2000; Dahlberg, Kulluvaara, Tornberg, 2004)

1. Idea generation

2. Idea screening

3. Concept development and testing

4. Business analysis (financial)

5. Product development (includes branding decisions)

6. Test marketing

7. Commercialization

8. Monitoring and evaluating

2.16.2 Key Reasons of Brand Extension:

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The following are the key reasons why managers prefer extensions (Aaker & Keller,

1990; Ambler & Styles, 1996; Dacin & Smith, 1994; Hem, Chernatony & Iversen,

2001; Nijssen, 1997; Seyama, 2006):

Extensions are perceived by managers as a low-cost, low-risk way to meet

the needs of various consumer segments;

This is because they (extensions) can leverage off an already existing brand

franchise’s high levels of awareness and goodwill;

Extensions can satisfy consumers’ desires by providing a wide variety of

goods under a single brand;

There is growing competition and associated shorter product life cycles; and

extensions are often used as a short-term competitive weapon to increase a

brand’s control over limited shelf space.

Research International (2004) MicroTest found three key reasons for preference by

companies to launch extensions.

The innovations are not distinctive enough to be able to stand on their own.

Thus it makes sense to launch them as extensions.

The products themselves are not good enough, and it is hoped that the

strength of the mother brand will aide in overcoming the shortfall.

There is not enough marketing budget for effective launch and continued

support of stand-alone new brand.

(Quelch and Kenny, 1994; Seyama, 2006) argue that costs of wanton line extensions

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are dangerously high, that line extensions rarely expand category demand, and that

retailers are running out of shelf space. (Taylor, 2004; Seyama, 2006) also points out

that extension failure rate may increase due to companies that are overextending

their brands, and this is supported by (ACNielsen’s, 2006; Seyama, 2006) prediction

of 70% failure rate in the next 2-3 years.

2.16.3 Rationales behind Brand Extensions

Brand extensions are, according to (Kapferer, 2001; Dahlberg, Kulluvaara, Tornberg,

2004), one of the most discussed topics of brand management as it is the most

radical of the innovations offered by new-style brand management when it comes to

the planning of capitalizing on the value around one single name and create a mega-

brand. Extending a brand is now an indispensable part of a brand’s life as it

represents growth, expansion of scope and market adaptability.

According to (Kapferer, 2001; Dahlberg, Kulluvaara, Tornberg, 2004), growth is the

first reason for extending a brand after all other options involving the core product

have been explored. Brand extension is a way to achieve growth in a cost controlled

world. A new product with the same brand name can penetrate a much larger and

spreadable market than a new brand. The rationale behind this lies in the

opportunity to capture a growing segment by promoting the positive values

associated with the core brand, which appear distinctively compelling in that

segment. (Kapferer, 2001; Dahlberg, Kulluvaara, Tornberg, 2004). (Kim and Lavack,

1996; Dahlberg, Kulluvaara, Tornberg, 2004) add that extensions are attractive as

the strength of an established brand name may also bring new customers to the

brand and create a previously non-existing segment, thus increasing market

coverage.

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Brand extensions also have positive spillover effects on the parent brand.

Firstly, extensions can clarify the brand meaning to consumers and define the

boundaries of the domain in which it competes (Keller, 2003; Phang, 2004).

Second, by improving the favorability of an existing brand association, adding a new

brand association, or a combination of these, a brand extension can enhance the

parent brand image (ibid.). Consistent with this view are the findings of (Morrin,

1999; Phang, 2004), which propose that consumer exposure to brand extensions will

increase parent brand awareness in terms of recognition and recall. Similarly,

(Balachander and Ghose, 2003; Phang, 2004) find evidence of beneficial spillover

effects of advertising of a child brand, for example a brand extension, on choice of a

parent brand.

A third benefit involves brand revitalization—a new or rejuvenated product can be a

mean to renew interest and improve attitude towards the parent brand (Keller,

2003; Kapferer, 1997; Phang, 2004).

Virgin is one company that has used the reputation of their existing brand in new

markets. The company started out as one product, a publisher and retailer of

popular music. The brand was built up by the music products and was extended to

include airline services, cola production and a financial service. The personality of

the brand is described as the brand of the people or the small firms that challenges

the larger firms who are ripping of people. (Randall, 2000; Dahlberg, Kulluvaara,

Tornberg, 2004)

(Ambler and Styles, 1997; Dahlberg, Kulluvaara, Tornberg, 2004) propose that a

brand extension can be launched as a result of a consumer trend or need that may

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be discovered by conducting a market research. (Weilbacher, 1995; Dahlberg,

Kulluvaara, Tornberg, 2004) further argues that, by finding out consumers’ wishes,

needs, desires, attitudes, daydreams and thereby try to fulfill these by extending the

brand with a new product or product category is a way to keep customers satisfied

and loyal to the brand.

Other factors, such as economical advantages might also be rationales behind

extensions. Introduction of a new product with an established brand name can

dramatically reduce the investment required and improve the likelihood of its

success compared to a new bran launch. Brand extensions provide a minimal cost of

branding, since name research will not be needed, nor will extensive advertising

costs for new brand name awareness and preference be necessary. (Aaker, 1992;

Dahlberg, Kulluvaara, Tornberg, 2004) According to (Randall, 2000; Dahlberg,

Kulluvaara, Tornberg, 2004), the introduction of a new brand is estimated to cost up

to US $1 billion, whereas the launch of a new product under the name of an

established brand will cost a fraction of that. New products draw immediate

advantage by entering from a strong positioning that the established brand name

provides, thus reducing the risk of failure (Aaker, 1992; Dahlberg, Kulluvaara,

Tornberg, 2004).

One of the major advantages of brand extension is that the reputation and image

may silently transmit from parent’s brand to the extended brand. One such example

is that of Heinz. The firm after acquiring “Weight Watcher” launched low calories

food and got instant recognition and positive brand association. The parent brand

and the brand extension advertisements not only complement each other but the

quality of the core brand leads to higher level of acceptance and increase the

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awareness of the brand extension (Pitta& Katsanis 1995; Jalees, 2008).

According to (Randall, 2000; Jalees, 2008) Brands with strong reputation can

capitalize its name and success by extending it in other categories. (Pitta and

Katsanis, 1995; Jalees, 2008) were of the opinion that a core brand's associations

with the extended brands are complex and well defined, as most of the core brands

also possess well-defined brand image. (Ambler and Styles, 1997; Jalees, 2008) also

observed that the degree of acceptance between core and extended brand would be

higher if there is a strong association between the two in terms of quality.

The sales potential for the new product is, argued by (Buday, 1989; Dahlberg,

Kulluvaara, Tornberg, 2004), one of the major guidelines whether to extend a brand

or not. The absolute sales potential can be expressed as dollar sales or marginal

contribution, which sets limits on the amount of money available for advertising and

other fixed marketing expenses. Thus, brand extension is more efficient in making

more use of the marketing dollars by allowing marketers to reduce budgets and earn

a reasonable return on even small-volume products. In addition, (Ambler and Styles,

1997; Dahlberg, Kulluvaara, Tornberg, 2004) conclude that brand extensions

decrease the cost to build up awareness by capitalizing on the core brand’s already

known reputation, thus one product will promote the other with the same brand.

In agreement with (Buday, 1989, Nilson, 1998; Dahlberg, Kulluvaara, Tornberg,

2004) states that the major appeal in extending a brand lies in the economies of

scale. The rationale behind this is that the usage of a brand across more products

lowers the communication investments per sales unit. The responsiveness of

awareness to media spending is higher for brand extensions due to the consumers’

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familiarity with the already existing name. Furthermore, it is undeniable that a well-

managed brand extension generates revenues by selling more products or services,

henceis a great motivator for companies to increase net profit.

When it comes to the economical rationales behind brand extension, (Kapferer,

2001; Dahlberg, Kulluvaara, Tornberg, 2004) further argues that the reason to

increase profitability should not be confused with reducing costs. Some markets are

more profitable than others, either because of the cost of production, distribution or

communication or differences in levels of price competition through the existence of

distributor own-brands. The money to be made varies with the market, and all

products are not equally profitable. It is desirable to extend a brand if the

advantages, to allow it to penetrate other markets with a more advantageous profit

and cost structure are recognized. The reverse is naturally true.

Companies with strong brands can also seize the advantage to charge a premium

price of about 17 per cent on products, which can be applicable on new products

derived from brand extensions (Buday, 1989; Dahlberg, Kulluvaara, Tornberg, 2004).

Furthermore, according to (Ambler and Styles, 1997; Dahlberg, Kulluvaara, Tornberg,

2004), another rationale for extending the brand is to lower the costs to achieve

larger trial levels. The trial rate of a new product with a familiar brand name is

higher than for a new brand to the extent that the parent name provides consumer

reassurance over and above the merits of the product itself.

This is in agreement with the reasoning of (Pitta and Prevel Katsanis, 1995 and Aaker

and Keller, 1990; Dahlberg, Kulluvaara, Tornberg, 2004), that the familiarity of an

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established brand name reduces the risk and costs with a new product and enhances

initial consumer reaction, and trial.

According to (Pitta and Prevel Katsanis, 1995; Dahlberg, Kulluvaara, Tornberg, 2004),

a great benefit of brand extensions is the instant communication of salient image.

One example is when Heinz acquired Weight Watchers and introduced the Weight

Watcher’s line of low calorie food and contributed to instant recognition and

positive brand associations to the brand. Moreover, advantages to the extension can

be provided when it comes to the cross fertilization which advertising of the core

brand can bring. There is a higher acceptance of extensions from established brand

associations such as quality, which increases the awareness of the brand extension.

The parent brand also gains synergy through the heightened awareness that is

generated in brand extension launches.

A brand with a high awareness and a good reputation has an advantage to capitalize

on its success that is to maximize the value of a strong brand name by extending it

(Randall, 2000; Dahlberg, Kulluvaara, Tornberg, 2004).

(Pitta and Prevel Katsanis, 1995; Dahlberg, Kulluvaara, Tornberg, 2004) state that the

ideal is that a core brand’s associations can contribute a complex, yet well-defined

image to an extension as a well established brand usually has a well-defined brand

image. (Ambler and Styles,1997; Dahlberg, Kulluvaara, Tornberg, 2004) add that

there is a higher acceptance of extensions from established brands associations such

as quality.

In addition, brand extensions can provide positive customer based equity for the

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core brand and its original products, in terms of enhanced brand image. The

increased value and image of a brand result in making the whole brand stronger.

(Pitta & Prevel Katsanis, 1995; Dahlberg, Kulluvaara, Tornberg, 2004) The creation of

a mega-brand also increases the bargaining power with distributors and generates

greater interest from investors. Furthermore, the brand positioning can be

strengthened with an increased value of the brand. (Ambler & Styles, 1997;

Dahlberg, Kulluvaara, Tornberg, 2004) Also advertising battles based on product

specifications can be avoided by competing on the basis of perceived quality and

value of the brand, as the profile of the whole brand is lifted (Pitta Prevel & Katsanis,

1995; Dahlberg, Kulluvaara, Tornberg, 2004).

Another rationale for companies to pursue a brand extension is, according to

(Kapferer , 2001; Dahlberg, Kulluvaara, Tornberg, 2004), to maintain or increase the

value of the brand in a constantly changing environment both within the company as

well as outside the company. Extension is particularly necessary for revitalizing long-

standing brands or aging local brands to keep up with the market. A brand

recaptures its market relevance, interest, up-to-date image and widens its appeal by

launching new products with the same brand name. In cases, changes in the

company’s top management may be a reason for implementing an extension policy.

A new team can be the source of a different vision that contradicts the old view of

the brand marked by the history and origin of the brand that are ever-present in the

collective imagination.

2.16.4 Successful Brand Extension

According to (Randall, 2000; Dahlberg, Kulluvaara, Tornberg, 2004), the introduction

of a new brand is estimated to cost up to US $1 billion. A new product is a

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considerable investment and does not come with a guarantee of success. If the new

product is viewed as an investment, it is tempting for the management to collect the

rewards of their investment by extending the brand into another product category.

(Aaker & Keller, 1990; Dahlberg, Kulluvaara, Tornberg, 2004) It is possible to

measure extension success in a number of ways, for example by market share,

profitability, or number of years the extension has survived on the market (Grime,

Diamantopoulos & Smith, 2002; Dahlberg, Kulluvaara, Tornberg, 2004).

According to (Randall, 2000; Dahlberg, Kulluvaara, Tornberg, 2004), there is no

single factor that by itself guarantees success, although there do seem to be certain

common characteristics. Several factors of success for brand extensions such as the

fit between the brand name and the extension category as well as brand equity

associations have been identified (Sattler & Zatloukal, 1998; Dahlberg, Kulluvaara,

Tornberg, 2004).

It has been proven to be important that brands need to satisfy consumers’

functional (quality and reliability) and representational (emotional and symbolic)

needs (Grime et al, 2002; Dahlberg, Kulluvaara, Tornberg, 2004). Consumer

evaluation of a brand extension is often described as a process by which the core

brand associations transfer to the extension.

A key aspect contributing to the success of such strategies is to understand how

consumer perceptions towards the brand in the current and new product category

are changed by the extension. (Glynn & Brodie, 1998; Dahlberg, Kulluvaara,

Tornberg, 2004) According to (Grime et al, 2002; Dahlberg, Kulluvaara, Tornberg,

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2004), consumer evaluations are considered to be important, as they are believed

to be a key element in indicating extension and core brand success. When

consumers are evaluating an extension they rely on if there is a fit between the core

brand and the extension and a fit with the product category and the brand image.

Further, there are moderating variables affecting the relationship between fit and

the evaluation of the extension and the core brand.

Research (ACNielsen’s, 2006; Seyama, 2006) indicates that 7 out of 10 shoppers plan

their purchases before going to a groceries store, and that 8 out of 10 shoppers will

usually buy their favourite brand in the store. This amplifies the preference by

companies for brand extensions as opposed to new brands, and this is driven by the

time (and cost) it takes to establish each of the two options in the minds of

consumers (Aaker, 1990; Seyama, 2006).

The key benefits of brand extensions are well documented in the Marketing

literature by authorities such as (Quelch and Kenny, 1994; Seyama, 2006), (Aaker,

2004; Seyama, 2006), (Aaker and Keller, 1990; Seyama, 2006), and (Kotler and Keller,

2006; Seyama, 2006) as being leverage of consumer knowledge and trust of

existing brands, enhancement of parent brand’s visibility and image, low marketing

costs and low risk. (Aaker, 2004; Seyama, 2006) identified one key measure of a

good brand extension as its ability to “bring something to the party”.

2.16.5 Pros and Cons regarding Brand Extension:

However, according to many authors, brand extension seems to be a risky thing to

rely on. Thus, (Chen & Chen, 2000; Järlhem, Mihailescu, 2003) consider, in a study

performed in Taiwan, that the following criticizing ideas regarding brand extensions

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can be found in the appropriate literature. The extended brand is perceived as

cannibalizing the parent brand by eating into the total sales of the main brand.

Moreover, an extension can create consumer confusion regarding the quality of the

new created products. Last but not least, brand extension is seen as a lazy version of

a new brand.

After viewing the pros and cons regarding brand extension, the first question that

comes into our minds is, if brand extension is such a bad thing, why do so many

businesses use it as part of their core business strategy?

We believe that being aware of the side effects of extensions and by taking into

consideration the main factors that lead to a healthy, successful extension can

benefit an organization. To make this happen these factors will be discussed.

The key factor in brand extension, according to (Murphy, 1990; Järlhem, Mihailescu,

2003), is to understand the main values that the brand stands for and to develop a

well-structured plan of action for the brand’s equity. Moreover, the author believes

that only by understanding the personalities of the brand can it be decided which

are the areas where such attributes can be used. Nevertheless, line extension is time

consuming and for that reason it should be implemented gradually, remembering

that in the end it will allow extension in areas which otherwise would be impossible

to penetrate through creating a new brand (Murphy, 1990; Järlhem, Mihailescu,

2003).

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(Keller, 2003; Phang, 2004) mentioned several drawbacks of brand extensions; First,

the image of the parent brand can be hurt irrespective of the success or failure of

the extension. This happens when the attributes of the extension are seen as

inconsistent or conflicting with the corresponding attributes of the parent brand.

Second, brand extensions may obscure the identification of the brand with its

original categories, reducing brand awareness (Morrin, 1999) and/or diluting the

brand meaning. Third, brand extensions can lead to problems of practical nature, for

example a large number of extensions might confuse or frustrate customers, and

there might be problems with retailers being unwilling to shelf/store all the different

extensions. Similarly, (Loken and John, 1993, p. 79; Phang, 2004) suggest that

“unsuccessful brand extensions can dilute brand names by diminishing the favorable

attitudes that consumers have learned to associate with the family brand name”.

According to (Murphy, 1990; Järlhem, Mihailescu, 2003), “to develop new brands is

extremely expensive, highly risky and takes a long time.” When he speaks about

expenses, (Murphy, 1990; Järlhem, Mihailescu, 2003) does not only mean the cost

with creating a new brand concept but also the costs with advertising in order to

launch the new brand on the market as well as to support it during its whole life

cycle. (Murphy, 1990; Järlhem, Mihailescu, 2003) considers that “the process of

branding is one whereby a bond is created between the brand and the consumer

and, generally the consumer has little interest, at least initially, in the brand

proposition. Sustained advertising and promotional investment is therefore required

to create this bond and reassure the consumer that the brand proposition will

endure; such on-going support is expensive.”

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The maintenance of the brand’s visual identity is another important factor for the

line extension that managers have to take into consideration. By neglecting, this

standpoint can have as consequence the disintegration of brand identity and

personality, which can in turn seriously harm the value and power of the core brand

(Murphy, 1990; Järlhem, Mihailescu, 2003).

Using equity of a brand to leverage into different product category may be

profitable but it has its share of risk as well. Some of the very common risks

associated with brand extensions are (1) a high number of brand extensions tend to

adversely affect value associated with the brand, and (2) brand extension that fails

to make an impact may dilute the equity of a reputable brand name (Mcarthy, 1996;

Jalees, 2008).

(Ries and Trout, 1986; Jalees, 2008) endorsing the preceding opinions, stated that

even if the brand is used “congruously”, the success to extended brand would be at

the expense of parent brand. (Aaker and Keller, 1990; Jalees, 2008) in this context

found that the brand extension may carry typical attributes of the parent that may

be dangerous to the extended brand. Thus Aaker and Keller were surprised that the

respondents’ thought that Crest Chewing Gum, a brand extension of Crest tooth

paste would taste typically like toothpaste or may not be appealing.

(Loken and John, 1993; Jalees, 2008) in similar research found that the possibility of

dilution in brand extension cases increases when there are higher degrees of

inconsistency between parent brand and extension brand. They found that when

consumers’ perception towards brand extension is weak, this perception will also be

transformed to the parent brands and hence they would believe that the attributes

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of the parent’s brand are weak as well. (Shocker, Srivastava & Rueker, 1994; Jalees,

2008)

Another risk associated with brand extension is the cannibalization effect. The

gravity of cannibalization would be higher for (1) those brand extensions that are

more successful in new brand category, and (2) for those extensions that have

higher degree of “closeness” between parent brands from the consumers’

perspective (Sharp, 1993; Farquhar, 1990; Jalees, 2008).

If brand extension is not executed properly, it would not only damage corporate

associations but would have several other adverse impacts (Ries & Trout, 1986;

Loken & Roedder, 1993; Jalees, 2008). Reputed brand extensions at times fail. This

failure could generate the following adverse feelings for the parent brands: (1)

customers may feel that the brand extension is not adding value to the product, and

(2) it is an exploitation strategy, in general and specially for increasing the prices

(Aaker & Keller, 1990; Jalees, 2008).

Failure of extended brand hurts the core brand, especially, if there is inconsistency

between the parent and extended brand. In this context, the customer did not find

any association between Levi tailored Classic, a line of men suiting that was sold

separately, and the old and strong perception that Levi’s products are casual living

and are of rugged material (Aaker, 1990; Jalees, 2008).

(Matt Haig, 2003; Seyama, 2006) analyzed the 100 biggest branding mistakes of all

time in his book “Brand Failures”. The author of this report noted that almost a fifth

of the failures captured in the book were extensions, making this category the

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largest of the 8 that were analyzed. The extension failures of well-known brands

include Harley Davidson perfume, Heinz All Natural Cleaning Vinegar, Miller Regular

beer, Virgin Cola, Bic underwear, Cosmopolitan yoghurt, and Pond’s toothpaste.

Haig’s conclusion was that extension failures were caused by

Companies’ lack of understanding of what their brands stand for, with the

disastrous result that brands are extended into irrelevant categories or over-

stretched; and

Some extensions are too similar to core brands, and these results in

cannibalization. He asserts that big advertising budgets will not make up for

the two mistakes mentioned above, and he cites Miller Regular’s $50 million

marketing budget as an example.

The main disadvantages of brand extensions are confusion in the market place

resulting from overextension of a brand (Quelch and Kenny, 1994; Seyama, 2006),

and possible failure that can hurt parent brand image (Keller, 2003; Seyama, 2006).

(Taylor, 2004; Seyama, 2006) argues that 1 in every 2 brand extensions fail because

of overextensions that result from what he calls “ego-tripping”, and that is

fulfillment of management need to leverage strength of a mother brand, but

without brand extension’s compelling offering to consumers or sometimes

misaligned value proposition that bears no resemblance to the mother brand.

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(Ries and Ries, 1999; Seyama, 2006) firmly believed that the power of a brand is

inversely proportional to its scope. Two of the many examples were given in their

book “The 22 Immutable Laws of Branding” to make their point:

Crest, a Procter & Gamble brand, was at one stage leading American

toothpaste with 36% share of the market. The brand was subsequently

extended to 50 SKU’s, but market share declined to 25%. It also lost the top

spot to Colgate and has never regained it since.

American Express had 27% market share of America’s financial services in

the late 80’s. It was then decided to broaden the brand’s services with an

objective to become the financial supermarket. At least 10 financial

products were developed and they targeted a wide range of consumers

from students to senior citizens on one hand, and from private individuals to

business individuals on the other hand. 10 years later American Express’s

market share was sitting at 18%.

There is also compelling evidence that extensions add little incremental growth to

their categories (ACNielsen’s, 2005, Nijssen, 1997; Seyama, 2006). This has been

attributed to cannibalization that occurs mainly when extensions are not clearly

differentiated from mother brands.

2.17 RELEVANCE OF BRAND EXTENSION SUCCESS FACTORS:

Prior research provides valuable insights into the factors that influence brand

extension success. The positive effects of perceived fit and quality of the parent

brand on consumers’ extension evaluations especially constitute one of the findings

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most frequently cited and supported by various empirical studies. However, most of

these studies investigate the main and interaction effects of a handful of success

factors (including fit and parent brand quality). For example, (Aaker and Keller, 1990;

Völckner, Sattler, 2005) and various replications of their study (see Bottomley and

Holden, 2001; Völckner, Sattler, 2005) limit their research to three factors, i.e., fit

between parent and extension categories, the quality of the parent brand, and the

degree of difficulty in designing and making a product in the extension category

(plus the interaction of quality with the fit variable). It is therefore unclear whether

the results of these studies generalize to conditions that involve a broad variety of

success factors.

Empirical studies that focus on other success factors, such as the number of previous

brand extensions (Dacin and Smith, 1994; Völckner, Sattler, 2005) or positioning of

previous brand extensions (Dawar and Anderson, 1994; Völckner, Sattler, 2005), also

reveal the need to qualify the empirical generalizability of research results. First,

prior studies provide mixed support for the significance of these factors. Dacin and

Smith (1994; Völckner, Sattler, 2005), for example, found a significant effect for the

number of previous extensions of the parent brand, whereas Smith and Park (1992;

Völckner, Sattler, 2005) established a non significant influence for this variable. It is

therefore ambiguous whether these variables play an important role in determining

how consumers evaluate brand extensions relative to the strong effects of fit and

parent brand quality. Second, as with the studies that investigate the effects of fit

and parent brand quality, these studies only analyze a small fraction of success

factors at one time (usually two to four).

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2.18 RESEARCH RESULTS BEYOND THE LAB INTO CONDITIONS WITH

REAL EXTENSIONS:

The majority of previous studies basically used consumer surveys to investigate

consumer evaluations of hypothetical brand extensions (i.e., extensions not

introduced in the market, such as Heineken popcorn or Timex bicycles).

Respondents in prior surveys rated the independent (i.e., success factors) and

dependent variables (i.e., success of the extension, for example measured as the

perceived quality of the extension) on simple rating scales (see Aaker and Keller

1990; Barone, Miniard, and Rome 2000; Bottomley and Doyle 1996; Bottomley and

Holden 2001; Boush and Loken 1991; Broniarczyk and Alba 1994; Dacin and Smith

1994; Keller and Aaker 1992; Klink and Smith 2001; Lane 2000; Park, Milberg, and

Lawson 1991; Völckner, Sattler, 2005). Compared with consumers’ evaluations of

real brand extensions, i.e., extensions already introduced on the market, only

limited extension attribute information is available to subjects when evaluating

hypothetical extensions (Klink and Smith 2001; Völckner, Sattler, 2005). Prior studies

typically provided the single cue of a brand name and extension product category as

the stimulus to be evaluated. If extension attribute information is lacking, then

consumers will evaluate a proposed extension based on available diagnostic cues

such as perceived quality of the parent brand or perceived fit between parent brand

and extension product. However, the impact of a single cue (e.g., perceived fit)

diminishes as other diagnostic cues become available (Klink and Smith 2001;

Völckner, Sattler, 2005).

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2.19 SCOPE OR GENERALIZABILITY OF BRAND EXTENSION:

Differences among consumer segments, extension product categories or parent

brands may also reduce the scope or generalizability of results. Yet researchers have

thus far not focused much attention to generalizations across consumer segments,

parent brands, and product categories. For example, it is uncertain whether the

effects of fit and quality of the parent brand found in prior work (e.g., Bottomley and

Doyle 1996; Bottomley and Holden 2001; Sheinin and Schmitt 1994; Sunde and

Brodie 1993; Völckner, Sattler, 2005) can be generalized across different kinds of

product categories, brands and consumers. The important issue of consumer

heterogeneity has not been analyzed in brand extension research. Neglecting

consumer heterogeneity can cause misrepresentation of the real effects of certain

success factors on consumers’ evaluations of brand extensions (e.g., DeSarbo et al.

1997; Völckner, Sattler, 2005). We therefore conduct a latent class analysis to

investigate the extent that main and interaction effects of identified success factors

differ among consumer segments.

Most previous research likewise used students as subjects (e.g., Aaker and Keller

1990; Barone, Miniard, and Rome 2000; Bottomley and Doyle 1996; Boush and

Loken 1991; Broniarczyk and Alba 1994 (study 1 and 2); Dacin and Smith 1994 (study

1); Klink and Smith 2001; Lane 2000; Park, Milberg, and Lawson 1991; Völckner,

Sattler, 2005). Using a meta-analysis in the general context of social science

research, Peterson (2001; Völckner, Sattler, 2005) found, for instance, that

responses of college students tend to be more homogeneous than those of non-

student subjects and that the effect sizes derived from students frequently differ

from those of non-students. Peterson (2001; Völckner, Sattler, 2005) emphasized

that replications of student based research must be done with non-student subjects

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before attempting any generalizations. We therefore derive our results from

students and from non-students and analyze if there are differences in significance

or effect sizes. Finally, it is unclear if the effects of success factors can be generalized

across different kinds of products and parent brands (at least within FMCG) or if

there are substantial differences.

2.20 GENERALIZABILITY ACROSS SUCCESS MEASURES:

Previous studies have focused primarily on understanding how consumers evaluate

brand extensions. Most of them investigated the effects of certain success factors

(e.g., quality of the parent brand) on consumers’ evaluations of brand extensions

such as perceived quality of the extension. The financial implications of using brand

extensions constitute a complementary research issue that has received relatively

little attention. Only very few studies investigate the influence of success factors on

the economic extension success, e.g., on market share or market value (Kim and

Sullivan, 1998; Lane and Jacobson, 1995; Reddy, Holak, and Bhat, 1994; Smith and

Park 1992; Swaminathan, Fox, and Reddy 2001; Völckner, Sattler, 2005). To the best

of our knowledge, no academic studies have systematically investigated the direct

link between consumers’ evaluations of brand extension and the economic success

of the extension (such as market share or trial and repeat purchase). It is therefore

ambiguous whether findings based on consumers’ evaluations of brand extensions

(i.e., non-economic success) generalize to the economic success of these brand

extensions as measured, for example, by market share, trial or repeat purchase rate.

Given this condition, we seek to analyze the relationship between consumers’

evaluations of brand extensions (as measured by the perceived quality of the

extension product) and the economic success of extension products.

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2.21 CONSUMER EVALUATIONS OF BRAND EXTENSIONS:

These researches throw some excellent insights on the different factors affecting

consumer evaluations of brand extensions.

If the company launches a high-quality product by exploiting existing weak brand,

the brand equity of existing weak brand increases due the positive evaluation of the

high quality extended product category (Jun, Mazumdar, and Raj 1999; Keller and

Aaker 1992; Thamaraiselvan, Sivaram, 2003). Brand equity built in a certain product

catgory can also be exploited by licensing the well-known brand name to third

parties for use in a related class. The strategy is used to challenge major players in

an industry (Branson, 1998; Thamaraiselvan, Sivaram, 2003). The chances are high

for companies to exploit its high prestige brands to stretch to more remote product

categories than brands with inferior reputations (Park, Milberg, and Lawson, 1991;

Thamaraiselvan, Sivaram, 2003). Company can also exploit and overstretch its top

quality brands. Cannibalization, a decrease in sales in the original category, can

result from competition from the extensions (Buday 1991; Reddy, Holak, and Bhat

1994; Sullivan 1990; Thamaraiselvan, Sivaram, 2003). Failure of brand extensions

may weaken brand equity, or positively associate with the original brand (Boush and

Loken 1991; Gurhan-Canli and Maheswaran 1998; John, Loken, and Joiner 1998;

Thamaraiselvan, Sivaram, 2003). Sometimes the unsuccessful brand extensions

create undesirable associations, which put the company at a serious risk (Aaker

1990: Lane and Jacobson 1995; Thamaraiselvan, Sivaram, 2003). The more products

a company markets under one umbrella brand, the higher the risk that if a disaster

occurs to one of them, the effect will spill over to the rest (Sullivan, 1990;

Thamaraiselvan, Sivaram, 2003). Opportunities to create a new brand are also

foregone (Aaker, 1990; Thamaraiselvan, Sivaram, 2003).

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Consumer evaluations of brand extensions have been investigated in a number of

ways. However, one of the widely accepted findings from previous brand extension

research is that the consumer perception of fit between a new extension and its

parent brand is the most important factor in determining brand extension

evaluations (Aaker & Keller, 1990; Muroma & Saari, 1996; Zhang & Sood, 2002; Ma,

2005). This affects the consumer’s attitude transfer between the original brand and

its extension. It is generally agreed that when consumers perceive that the extension

product is similar to or consistent with the original brand, they are more likely to

transfer their positive attitudes toward the parent brand to the new extension

product. In other words, when consumers have positive attitudes toward a parent

brand, a higher level of fit between an extension and the parent brand perceived by

consumers will lead to more positive evaluations of the extension by the consumers.

Even though the consumer fit perception is the most essential and direct factor that

influences the consumer’s evaluation of a brand extension, the strength of this

relationship may be moderated by other factors. For example, there is evidence

showing that a positive consumer mood and brand advertising can improve a

consumer’s perception of fit between the original brand and the extension, thereby

increasing the consumer’s evaluation of the extension product (Barone et al., 2000;

Bridges, Keller, & Sood, 2000; Lane, 2000; Ma, 2005). It has also been suggested in

previous research that consumer knowledge, one of the consumer characteristics,

may have an impact on consumer brand extension evaluations by moderating the

effects of consumer perceived fit (Broniarczyk & Alba, 1994; Ma, 2005).

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One of the major consumer characteristics, consumer knowledge is a very important

factor in consumer behaviour research (Alba & Hutchinson, 1987; Ma, 2005). High

and low knowledge consumers react differently in a variety of consumer behaviors,

for example new product information learning, product evaluations and decision-

making (Johnson & Russo, 1984; Rao & Monroe, 1988; Selnes & Howell, 1999; Ma,

2005). Consequently, some researchers in the brand extension area have suggested

that high and low knowledge consumers may also react differently when evaluating

a brand extension (Broniarczyk & Alba, 1994; Ma, 2005).

Some evidence of the influence of consumer knowledge on brand extension

evaluations has already been found in some empirical research (Muthukrishnan &

Weitz, 1991; Roux & Boush, 1996; Ma, 2005). However, some recent theoretical

research shows that some confusion still remains about consumer knowledge in the

brand extension evaluation literature, and more empirical studies are needed to

focus on this factor (Czellar, 2003; Grime et al., 2002; Ma, 2005). These studies also

propose that consumer knowledge plays its role in brand extension evaluations

through the impact on consumer fit perceptions between an extension and its

parent brand (Czellar, 2003; Grime et al., 2002; Ma, 2005). Thus the focus of this

study is to further investigate the effects of consumer knowledge on consumer fit

perception between a new extension and its parent brand empirically.

There is no consistent way to classify consumer knowledge into different types and

levels in the literature. (Hastie, 1982, p. 72; Ma, 2005) distinguishes consumer

knowledge between ‘generic product knowledge’ and ‘individual product

knowledge’. ‘Generic product knowledge’ contains “general information about

classes of product, instances exemplifying the products, the existence of different

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types of products, and information about the attributes or dimensions that are

relevant and important in making decisions concerning the products.” On the other

hand, ‘individual product knowledge’ includes “information such as prices, colour,

taste, durability, features, etc. of each product”. In summary, ‘generic product

knowledge’ is general knowledge about the product category, whereas ‘individual

product knowledge’ is specific knowledge about a particular product.

Later, (Brucks, 1986; Ma, 2005) proposed an eight-category typology of consumer

knowledge which included terminology (knowledge of the meanings of terms used

within a domain), product attributes (knowledge of which attributes are available for

evaluating a brand), general attribute evaluation (knowledge of the overall

evaluation for an attribute), specific attribute evaluations (knowledge of specific

criteria used to evaluate an attribute), general product usage (knowledge of how the

product can be used), personal product usage (memories of usage experiences),

brand facts (overall evaluation of a brand), and purchasing and decision making

procedure (knowledge of the purchasing process). However, as suggested by

(Brucks, 1986; Ma, 2005), this eight-category typology of consumer knowledge is a

further classification of ‘generic product knowledge’ and individual product

knowledge’.

The first six categories are about ‘general product knowledge’, and the seventh

category, the brand facts, is the same as ‘individual product knowledge’. The only

one that cannot be grouped into either ‘generic product knowledge’ or ‘individual

product knowledge’ is the last category, which is named purchasing and decision-

making procedure. This one is the knowledge of rules for taking action; it is the

procedure knowledge (Brucks, 1986; Ma, 2005).

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Although (Hastie, 1982 and Brucks, 1986; Ma, 2005) proposed two different

typologies of consumer knowledge, generally there are two classifications with

which they both agree: knowledge of general product and knowledge of particular

brand.

There are also other ways to classify consumer knowledge. For example, (Brucks,

1985, Mitchell and Dacin, 1996; Ma, 2005) classify it into subjective and objective

knowledge. This method of knowledge classification usually relates to how to

measure consumer knowledge, particularly the knowledge of product category, in a

data collection method (Flynn & Goldsmith, 1999; Kanwar, Grund, & Olson, 1990;

Ma, 2005). Thus the review of this kind of knowledge classification will be presented

in a later CHAPTER, when the measurement of knowledge is discussed.

2.22 FMCG INDUSTRY AND BRAND EXTENSION:

The following strong research insights can be observed from the brand extensions

literature. Most number of brand extensions research involved with fast moving

consumer goods and durable goods except on one study (Aaker and Keller, 1990;

Thamaraiselvan, Sivaram, 2003) included McDonald’s as a service brand but they did

not make any analytical distinctions between FMCG and services. Only one study

addressed the importance of brand extensions in the services sector (Ruyter and

Wetzels, 2000; Thamaraiselvan, Sivaram, 2003). Only one study compared brand

extension judgements between FMCG and durable goods (Broniarczyk and Alba,

1994; Thamaraiselvan, Sivaram, 2003).

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The majority of the previous studies basically used consumer surveys to investigate

consumer evaluations of hypothetical brand extensions (i.e., extension not

introduced in the market). Respondents in prior surveys rated the independent

(success factors) and dependent variable (success of the extensions) on simple rating

scales (Aaker and Keller, 1990; Barone, Miniard, and Rome, 2000; Bottomley and

Doyle, 1996; Bottomley and Holden, 2001; Boush and Loken, 1991; Broniarczyk and

Alba, 1994; Dacin and Smith, 1994; Keller and Aaker, 1992; Klink and Smith, 2001;

lane, 2000; Milberg and Lawson, 1991; Thamaraiselvan, Sivaram, 2003). Most

previous research used students as subjects.

Therefore, a research issue that has remained underexposed concerns the extension

of services to unrelated markets by making use of the corporate brand. Yet, this type

of service extension is becoming a prevalent phenomenon. For instance,

deregulation and privatization caused many companies (TATA, Reliance, LIC, and SBI)

to enter into service markets, such as telecommunications, insurance sectors and

transport and spurred a number of corporate service brand extensions, particularly

service providers active in a myriad of other markets. Service providers attempt to

acquire customer trust on the basis of solidity of their reputation in the market in

which they have traditionally been active. As services consist primarily of intangible

properties, corporate service brands may be used to reduce perceived risk and to

influence frequently unobservable extension evaluation criteria, such as credibility,

quality and eventually customer patronage intentions. This seems particularly

important when services are extended to markets in which the service provider has

no proven expertise. Brands serve as cues for triggering image perceptions based on

expressive values associated with the company name.

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Brand extension strategies are used largely by companies because they believed that

the brand extension strengthens the brand positioning improves the brand

awareness and enhances the quality associations and increases the trial rate by

reducing the perceived risk involved in the new product. In India it is reported that

more than 80% of new products additions are using brand extensions strategies. A

brand extension into same product and new product category enhances and

improves their market share and brand equity in the long run (Lane Jacobson, 1995;

Thamaraiselvan, Sivaram, 2003). New products are getting relatively easy

acceptance among the target audience. A good brand association reduces the

chances of failure of new product launch.

Though, brand extension strategies tasted success in the past, still brand extension

success is uncertain. According to a research carried out by (Ernest & Young and

Nielsen, 1999; Thamaraiselvan, Sivaram, 2003) in the field of FMCG brand extensions

in European countries, reveal that there is a failure rate of around 80%. Moreover,

unsuccessful brand extensions can harm the parent brand, which can result in

substantial, loses of brand equity (Gurhan-Canli and Maheswaran, 1998;

Swaminathan, Fox and Reddy, 2001; Thamaraiselvan, Sivaram, 2003).

The success or failure of brand extensions is vastly dependent on how the customers

evaluate the brand extensions (Klink and Smith, 2001; Thamaraiselvan, Sivaram,

2003). Companies are taking hard steps to improve the success rate of brand

extensions. Theoretical and managerial understanding of how a consumer evaluates

the brand extensions is given substantial importance. In order to improve the

success rate of brand extensions it is imperative to understand the parameters or

factors affecting the brand extensions evaluations. Moreover, companies need to

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understand the significance of these factors and their relative importance to develop

a right brand extensions strategy.

2.23 BRAND LOYALTY AND CONSUMER DECISION MAKING:

The brand management has developed to take advantage of new loyalty marketing

vehicles. To build and maintain consumer loyalty, brand managers are

supplementing their mass-media advertising with more direct communications,

through direct and interactive methods, internet communications, and other

innovative channels of distribution (Pearson 1996; Baldinger & Robinson, 1996;

Rajagopal, 2006 ). Simultaneously, however, brand managers have to face more

threats to their brands, especially parity responses from competitors. Brand

loyalty can yield significant marketing advantages including reduced marketing

costs, greater trade leverage (Aaker, 1991; Rajagopal, 2006), resistance among

loyal consumers to competitors’ propositions (Dick and Basu, 1994; Rajagopal,

2006), and higher profits (Reichheld, 1996; Rajagopal, 2006). (Chaudhuri and

Holbrook, 2001; Rajagopal, 2006) have shown that brand loyalty is a key link

affecting market share and relative price. Thus, brand loyalty is justifiably included

in the approaches advocated by other researchers (e.g. Aaker and Joachimsthaler,

2000; Ambler, 2000; Rust et al., 2000; Blackston, 1992; Rajagopal, 2006). When

operationalizing brand loyalty (Jacoby and Kyner, 1973; Rajagopal, 2006), (Jacoby

and Chestnut, 1978; Rajagopal, 2006) and (Oliver, 1999; Rajagopal, 2006) argue it is

unwise to infer loyalty solely from repetitive purchase patterns (behavioral loyalty).

Preference for convenience, novelty, chance encounters and repertoire buying

behavior are but some reasons for this. (Jacoby and Kyner, 1973; Rajagopal, 2006)

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brought together the two “opposing” approaches to brand loyalty namely,

behavioral and attitudinal loyalty, integrating them into their definition, as the brand

loyalty is “the biased (non-random) behavioral response (purchase) expressed over

time by some decision-making unit with respect to one or more alternative brands

out of a set of such brands, and is a function of psychological (decision-making,

evaluative) processes.” (Oliver, 1999; Rajagopal, 2006) argues consumers become

loyal by progressing from a cognitive to an affective and finally to a co native

phase. In line with previous research showing that in service markets attitudinal

loyalty measures are more sensitive than behavioral loyalty measures, another

study explored to operationalize loyalty by questioning consumers about affective

and conative loyalty (Rundle-Thiele and Bennett, 2001; Rajagopal, 2006). Following

other researchers such as (Dall’Olmo Riley et al., 1997; Rajagopal, 2006) the

consumers were asked as how much they liked the corporate brand (affective

loyalty), as well as whether they would consider using other products from the

corporation and whether they would recommend the corporate brand to others

(conative loyalty). Readers interested in a more detailed review on operational and

conceptual aspects of brand loyalty should consult (Odinet al. , 2001; Rajagopal,

2006).

2.24 BRAND EXTENSION EFFECTS ON CONSUMER DECISION MAKING:

Consumer decision making is largely associated with the brand extensions of

familiar brands. A study on fashion brand extension addresses the need to examine

consumer behavior associated with fashion brand extension and reveals that

retailers may focus on brand or store image when extending brand from apparel to

home furnishings and merchandise multiple product categories to increase sales

across product categories (Forney et.al, 2005; Rajagopal, 2006). It has also been

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observed that a significant association exists between "company credibility" through

brand's expertise, trustworthiness and brand extension. A study using 368

consumer responses to nine real low involvement UK product and service brands,

finds support for a significant association between the variables, comparable in

strength with that between media weight and brand share, and greater than that

delivered by the perceived quality level of the parent brand (Reast, 2005;

Rajagopal, 2006).

However, no adverse impact on brand personality of core brand as a result of

introducing

extensions were found during investigating empirically the impact of brand

extensions on brand personality, using Aaker's scale to measure the latter, in an

experimental study conducted in reference to extension fit (good/poor fit) for

brand familiarity (Diamantopoulos et.al, 2005; Rajagopal, 2006).

In a similar study, the empirical research has focused on the impact of a parent

brand on the trial of the extension and the reciprocal effect of a successful trial of

new brand extensions positioned horizontally and vertically on the parent brand.

The results of the study revealed that the influence of the parent brand on the

trial of the extension was positive and successful trials also helped the parent

brand on a reciprocal basis, particularly among the non-loyal users and non-

users of the parent brand to accept the brand extensions. The moderating effect

of category positioning on the magnitude of the reciprocal effect of the brand

extension on the parent brand has also been evidenced by the study (Chen and Liu,

2004; Rajagopal, 2006). On the contrary, the evidence for the reciprocal effects of a

brand extension on its parent brand is unclear. An experiment was conducted to

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investigate the impact of an extension's quality, its fit with the parent brand,

and parent brand dominance, on parent brand evaluation. It has been evidenced by

a research study that extension quality and fit did not dilute parent brand

attitude; in other words, an extension either left parent brand attitude

unchanged or enhanced it moderately. The only effect of brand dominance was

that it enhanced parent brand attitude when the extension was a good fit (Zimmer

and Bhat, 2004; Rajagopal, 2006). The concept of brand capital has been

discussed with empirical evidence that firms with a large stock of well-

established brands have an advantage in introducing new products. One of the

theories of brand extension as a mechanism for informational leverage in which

a firm leverages off a good's reputation in one market to alleviate the problem

of informational asymmetry encountered in other markets. It is observed that brand

extension helps a multi-product monopolist introduce a new experience good with

less price distortion (Jay, 1998; Rajagopal, 2006).

Brand extension similarity is proposed as a moderator of the effects of perceived ad

spending on the perceived quality of brand extensions and on purchase intentions

in one of the research contributions. The results of an empirical study conducted in

this reference show that positive spending on advertising and communication

inference effects were more likely to occur for similar than dissimilar extensions.

Additionally, though, results show that respondents were more likely to question

the veracity of high ad spending levels for a dissimilar extension than a similar

extension, possibly resulting in lower product evaluations. Consequently, results of

this research are probably most useful to manufacturers attempting to leverage

brand equity by introducing brand extensions which are supported at

introduction with large ad spending (Taylor and Bearden, 2003; Rajagopal, 2006).

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Buyers select from among that subset of available brands of which they are

aware. When this subset grows, there are social surplus gains, but the distribution

of these gains between firms and consumers is shown to be sensitive to the

structure of the market. It is possible for either the sellers or the buyers to be worse

off in the better -informed environment (Ross, 1988; Rajagopal, 2006). However,

dilution effects were found in the context of both close and far extensions.

(Grime et.al, 2002; Rajagopal, 2006) has discussed critical issues on brand and line

extensions and integrated them into a conceptual framework, which shows that

extension and core brand evaluations are affected by the consumer perceptions.

Moderating factors that influence the relationship between fit and consumer

evaluations of the extension and the core brand are also identified. The

framework is subsequently used to develop concrete research propositions to guide

further research in the area.

2.25 BRAND ACCESSIBILITY AND DIAGNOSTICITY:

The accessibility-diagnosticity model explains that any factor that increases the

accessibility of an input is also expected to increase the likelihood with which that

input will be used for the judgment. Therefore, in the brand extension context,

temporal proximity between information about brand extension and family brand

evaluation is likely to result in a disproportionate influence of the activated or

accessible cognition (i.e., extension information) on the judgment (i.e., family

brand evaluation) made shortly after its activation. The review of previous literature

on brand extension effects indicates that dilution/enhancement effects generally

emerge in the presence of highly accessible extension information (Lane and

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Jacobson, 1997; Loken and John, 1993; Milberg et. al., 1997; Rajagopal, 2006).

Examined in his study the negative feedback effects, subjects rated the family brand

immediately after exposure to information about the extension, making extension

information highly accessible at the time when family brand evaluations were

assessed.

(Feldman and Lynch, 1988; Rajagopal, 2006) derived the accessibility-diagnosticity

theory predicting that an earlier response will be used as a basis for another

subsequent response, if the former is accessible and if it is perceived to be more

diagnostic than other accessible inputs. The framework of the theory

conceptualizes the factors that determine both the perceived diagnosticity of a

potential input, the likelihood that it will be retrieved, and the likelihood that some

alternative and potentially more diagnostic inputs will be retrieved. Belief, attitude,

or intention can be created by measurement if the measured constructs do not

already exist in long-term memory. The responses thus created can have directive

effects on answers to other questions that follow in the process of decision making.

However, beliefs, attitudes, and intentions measured by the customer also help in

analyzing the interrelationship among the brand attributes.

There are two studies conducted, based on the framework of accessibility–

diagnosticity and information integration with the focus to examine the protective

effects of brand image against lower quality countries-of-origin in global

manufacturing. The results of the former study shows that brands with high

familiarity and high quality reputations termed as called strong brands, which have

much smaller perceived-quality discounting for lower quality countries-of-origin

than brands with mediocre familiarity and mediocre quality reputations of weak

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brands. The latter study was conducted with a different set of brands and

consumers from a different country, shows similar shielding effects of brand image

and the judgment-weight allocation of influencing factors therein strongly support

the hypotheses of accessibility–diagnosticity and information integration,

explaining why the shielding effects of brand image occur (Jo et. al, 2003;

Rajagopal, 2006).

(Skowronski and Carlston, 1987; Rajagopal, 2006) argue that the greater the shared

associations between two targets, the more diagnostic information about one is for

making judgments about the other. In the context of brand extension, this finding

implies that as the shared associations between the family brand and the

extension increase so does the diagnosticity of information about brand extension

for making judgments about the family brand name. That is, one may expect a

positive relationship between extension category similarity and feedback effects.

However, there exists the scope of future research in understanding the

asymmetries in the impact of positive versus negative extension information on

family brand evaluations.

The accessibility-diagnosticity model is proposed as a parsimonious theoretical

framework that resolves some conflicts in prior research and provides a foundation

for future research on internal reference prices. This model is used to evaluate the

role of brand familiarity and involvement on the formation and use of internal

reference price standards. Empirical results show that (1) involvement is a better

predictor of confidence in internal reference prices than brand familiarity, and (2)

in forming internal reference price estimates, the offering price is discounted

more for unfamiliar brands than familiar brands, but only when involvement is low.

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On the contrary when involvement is high, the effect of brand familiarity on

reference price estimates disappears (Vaidyanathan, 2000; Rajagopal, 2006).

Brand choice models implicitly assume that consumers incorporate all relevant

marketing information such as price, display, and feature for key brands on each

purchase occasion. In the

Context of brand extensions, information about the extension will be highly

accessible when consumers are asked to report their evaluation of the family brand

immediately after reading the extension information. Under such conditions, a

highly accessible negative (positive) extension is expected to lead to a dilution

(enhancement) effect regardless of product category as observed by past studies in

this area (Loken and John, 1993; Milberg et al., 1997; Rajagopal, 2006). This is

because highly accessible information about a new extension is likely to be

sufficient for making a judgment about the family brand. It is also possible that the

accessibility of the information may influence its perceived diagnosticity.

Consumers may perceive the extension information to be more diagnostic if it is

highly accessible. In any case, extension information is likely to affect family brand

evaluations, regardless of extension category, when it is highly accessible. The

information about the extension will not be highly accessible or dominant when

consumers report their evaluation of the family brand, at a later point in time. In

such a situation, extension information will be used in the brand evaluation based

on its diagnosticity.

2.26 BRAND ASSOCIATION AND VARIETY SEEKING BEHAVIOR:

There is limited research available in the domain of risk aversion, self-confidence,

variety seeking, convenience orientation, flexibility, demographics, etc. and all differ

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measurably and significantly between shopping modes. Though the practical and

theoretical implications are largely pursued but there exists the paucity of

conceptual models that attempt to identify channel characteristics or to link them

to behavioral outcomes (Michaelidou et. al, 2005; Rajagopal, 2006).

Variety seeking has been observed in many consumer products and it has been

identified as a key determinant factor in brand switching. This type of behavior is

thought to be explained by experiential or hedonic motives rather than by

utilitarian aspects of consumption. In another study it has been discussed that

among the range of strategies available to a company, line extensions are an

important way to keep a brand alive and to realize incremental financial growth. Of

all line extensions, those involving new flavors and new packaging/sizes were most

successful. Extensions that improved product quality were found to be

unsuccessful. The market-variable such as level of competition, retailer power and

variety seeking behavior all showed a negative influence on line extension success

(Nijssen, 1999; Rajagopal, 2006). The behavior of variety seeking among the

consumers has been divided into derived or direct variations (McAlister and

Pessemier, 1982; Rajagopal, 2006).

The consumer behavior emerging out of external or internal forces that have no

concern with a preference for change in and of itself may be referred as derived

varied behavior while direct varied behavior has been defined in reference to

'novelty', unexpectedness', 'change' and 'complexity' as they are pursued to gain

inherent satisfaction. In a study the influence of product-category level attributes

were examined and six influential factors, which are involvement, purchase

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frequency, perceived brand difference, hedonic feature, strength of preference

and purchase history have been identified (Van Trijp et.al, 1996; Rajagopal, 2006).

Over the past two decades, marketing scientists in academia and industry have

employed consumer choice models calibrated using supermarket scanner data to

assess the impact of price and promotion on consumer choice, and they continue to

do so today. Despite the extensive usage of scanner panel data for choice modeling,

very little is known about the impact of data preparation strategies on the results of

modeling efforts. In most cases, scanner panel data is pruned prior to model

estimation to eliminate less significant brands, sizes, product forms, etc., as well as

households with purchase histories not long enough to provide information on

consumer behavior concepts such as loyalty, variety seeking and brand

consideration. A study conducts an extensive simulation experiment to investigate

the effects of data pruning and entity aggregation strategies on estimated price and

promotion sensitivities (Andrews and Currim, 2002; Rajagopal, 2006). The results

show that data preparation strategies can result in significant bias in estimated

parameters. Intrinsic variety seeking has been analyzed as an individual consumer’s

trait affecting consumers’ varied behavior. However, very little research has been

done on the consumer service sector. In this paper, the authors explore the

negative role of variety seeking on customer retention for services. This basic

hypothesis is tested through structural equation modeling applied to an empirical

study of food-service at three Universities. The results support the hypothesis:

variety seeking negatively affects customer retention and lessens the impact of the

management efforts to improve service quality and customer satisfaction (Berné

et.al, 2001; Rajagopal, 2006).

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2.27 BRAND SWITCHERS:

A brand switcher is a person who moved from buying from a brand to another for a

particular reason and the causes of this behavior are several. For example, in

sneaker case, the switcher is justified by the product itself.

Sneakers market is not so different from clothing and casual wearing. Therefore,

the loyalty to one brand might be only apparent, as it can be determinate by the

fact that a certain company produces a particular kind of shoes, or augments them

with detailed features. For this reason, a certain person owns several shoes from

the same brand, but because he/she is charmed by the product, he/she will

easily switch to other brands when they will produce the right appealing sneakers.

(Blythe, 2006; Rubini, 2010) summarizes six main sales promotion techniques that

on the whole they might also caused brand switching:

2.27.1 Free taster: For the launch of new product, companies usually

recurs to free samples either placed in stores or send home by post.

This technique is expensive but very effective. Adidas annot send you

home a new pair of shoes, but they can send small sample of

aftershaves for example.

2.27.2 Money-off vouchers: company published in magazines (or send

to customers‟ houses by post) money-off vouchers for having discount

in the purchase of their preselected products. Usually this techniques

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lead to a short-term brand switching, as the switching ends when the

campaign ends or the voucher is spent.

2.27.3 Two-for-one price: this form of promotion is to sell two identical

products by the price of one. But as it is aimed to price-sensitivity, this

technique produces short-term brand switching.

2.27.4 Piggy-backing: this method is similar of the two-for-one price, but

it consists in adding an extra product, but this time different. For

example, if a customer purchase shoes, he/she gets also enamel or

polish. However, this technique hardly produces a brand switching, as

the customer is already oriented to the product and not to the extra

item.

2.27.5 Lottery: in this case, the purchase of a certain product will give to

the customer the possibility to participate to a lottery with different

prices. Most common are cash, holiday trips, cars and vouchers for

purchasing branded products.

2.27.6 Gift: companies include free gifts in the packaging. For example, extra

laces. This techniques, however, works especially with children, when

companies includes toys in their packaging (i.e. Happy Meal by

McDonalds)

In addition, we can include once more the loyalty to the store. If customers are

loyal to a store, for either behavioral or attitudinal reasons, the fact that a store

stop the sells to a certain brand might cause also brand switching as clients prefer

to change brand that shop. Another strong reason for brand switching is caused

by advertising and brand communication. A strong marketing campaign, or the

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adoption of the right testimonials (i.e. a customer favorite footballer plays with

Adidas), will definitely increase the awareness of a particular brand, and as

consequence, the company can attract new customers.

(Kotler, 2009; Rubini, 2010) pointed out also another reason for brand switching

can derive as cause, or as consequence, of brand extension.

Cause: A customer buys Adidas deodorant and being completely satisfied

with it, he also starts to purchase other Adidas products (like aftershaves,

shower soap, and so on), replacing the old products, and therefore, the old

brands, with Adidas.

Consequence: A customer buys a Nike mp3 player and being

extremely disappointed with the purchase, he/she will stop to buy also

other Nike products (i.e. shoes, gym suit, and so on)

To conclude, in case of behavioral loyalty, the switching might be caused by the

nature of the loyalty itself, as it was basically accidental, and the switch to another

brand can be caused just because even one time a customer did not find a product

from the usual brand on the shelf.

2.28 DIFFERENT INFLUENCES OF PRODUCT KNOWLEDGE AND BRAND

KNOWLEDGE:

In previous consumer research, (Fiske, Luebbehusen, Miyazaki, and Urbany, 1994;

Ma, 2005) have studied the different effects of ‘brand knowledge’ and ‘product

knowledge’. They found that these two constructs affect information search

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behaviour very differently. Thus, in this study, product knowledge and brand

knowledge are also considered as two separate variables in order to investigate

their roles in brand extension evaluations separately. These two types of consumer

knowledge were found to play different roles in brand evaluations. In (Bei and

Heslin’s, 1997; Ma, 2005) research, they found that consumers who choose brands

that give more value for the price are knowledgeable about the product category.

The term of ‘more value’ in their study means the best balance between the

product quality and price. This tends to be the functional aspects of the product.

Those consumers who choose famous and more expensive brands consider the

consistency between the brand images and their personalities, egos, or interests

more than the functional aspects of products. These findings indicate that

consumer product knowledge and brand knowledge play different roles in brand

evaluations. Product knowledge can help consumers to evaluate brands from a

product-related aspect, while brand knowledge helps consumers to evaluate

brands from a non-product-related facet.

Consequently, product and brand knowledge may play different roles in brand

extension evaluations. Since product knowledge helps consumers to evaluate from

a product-related aspect, consumers with high product knowledge may more easily

notice the product-related fit, or similarities between the new extension product

and the parent brand product. On the other hand, brand knowledge may help

consumers to detect the symbolic meaning consistency between the new extension

product and the parent brand. As discussed earlier, the importance of two

dimensions of fit varies between the functional brand and the prestige brand. The

product-related fit is more important for a functional brand, whereas a non-

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product-related fit is more important for a prestige brand. Therefore, the

importance of two kinds of consumer knowledge may also vary between the

functional brand and prestige brand.

In summary, the relationship between consumer knowledge and fit perceptions in

brand extension evaluations is investigated by reviewing the literature in both the

brand extension and consumer knowledge fields. In reviewing the fit perceptions in

brand extension evaluations, two dimensions of fit (product-related vs. non-

product-related) are identified. Furthermore, it is suggested that these two

dimensions of fit have different effects on the extensions of two types of brands

(functional vs. prestige). In reviewing the literature about consumer knowledge, the

previous findings of the effects of knowledge on consumer behaviors indicate that

consumer knowledge may have effects on brand extension evaluations. Moreover,

consumer knowledge is classified into two types: product and brand knowledge.

These two types of knowledge may have different effects on consumer fit

perceptions in brand extension evaluations.

2.29 DIFFERENCES IN FIT PERCEPTION IN BRAND EXTENSION EVALUATIONS:

Since high knowledge consumers are different from low knowledge consumers in

terms of cognitive structures, capabilities of analysis and inference, memories,

internal knowledge transfer, and similarity judgment, they may also have different

‘fit’ perceptions and brand extension evaluations due to the differences between

their knowledge levels.

Firstly, consumers organize information about products hierarchically with the

product category node at the highest level, then subcategories, then brands, and

finally the attributes and other information associated with each brand. The degree

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of expertise determines how well the information will be organized hierarchically

(Cowley & Mitchell, 2003; Ma, 2005).

Consumers who are lacking in knowledge have more difficulty with forming well-

developed complex and hierarchical cognitive structures. Thus, when evaluating a

new extension product, a novice consumer may only be able to categorize it into a

very broad product category, but not the subcategory, or even its original brand

group, due to his/her limited cognitive structures.

Secondly, (Sujan’s, 1985; Ma, 2005) research on the effects of consumer

knowledge on evaluation strategies indicates that expert consumers with more

developed category knowledge in memory are more sensitive to the consistency

and inconsistency between incoming information and category knowledge.

However, for novice consumers, it is difficult to detect consistency and

inconsistency as clearly as experts can. This indicates that in brand extension

evaluations, expert consumers may perceive the ‘fit’ or ‘inconsistency’ between

the extension and the original brand more correctly than novice consumers.

CHAPTER - 3
3.1 PROBLEM:
Any inconsistent attribute information about a new brand extension results in a

modification of the corresponding belief about the corporate brand. With expansion

strategies there is often a risk for negative outcome and brand extension is not an

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exception. The greatest risk with brand extension is cannibalism of sales and

deterioration of the corporate brand. Further they mean that it will have greater

probability to increase these risks when extensions are inconsistent with the brand

image or that fail with regard to consumer expectations. After the Brand Extension

customer forget the mother brand and even in some cases they don’t recognize the

brand name. There are some problems in taste and packaging of some newly

extended brands. LU in Pakistan has a good market value but still people don’t know

about its new products and their taste.

3.2 METHODOLOGY:

The Purpose of research is ‘Descriptive’ in nature; the type of investigation is Causal.

The ‘Researcher Interference’ is moderate for this study. The study setting is Non-

Contrived and the researcher performed Field experiment. The Unit of Analysis is

Group. For this research Time Horizon is Cross-Sectional.

3.3 METHODOLOGY:

Population:

All consumers of LU Continental Biscuits especially Bekri biscuits for last two years or

more having age between 20 to 40 years.

Sampling:

Simple Random Sampling is used to get responses from the LU Continental Biscuits

especially consumers of Bekri Biscuits.

CHAPTER – 4

Statistical Analysis and Evaluation

4.1 HYPOTHESIS OF BRAND FAMILIARITY:

Ho: There is No Association between Age and Brand Familiarity


HA: There is An Association between Age and Brand Familiarity

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Level of Significance:
α = 0.05
Calculation:

Case Processing Summary


Cases
Valid Missing Total
N Percent N Percent N Percent
Age * Brand Familiarity 35 100.0% 0 .0% 35 100.0%
7 7
Qualification * Brand Familiarity 35 100.0% 0 .0% 35 100.0%
7 7

Crosstab
Brand Familiarity Total
NO YES
Age 21-30 Count 16 248 264
Expected Count 21.4 242.6 264.0
31-40 Count 7 59 66
Expected Count 5.4 60.6 66.0
41-50 Count 5 16 21
Expected Count 1.7 19.3 21.0
50 And Above Count 1 5 6
Expected Count .5 5.5 6.0
Total Count 29 328 357
Expected Count 29.0 328.0 357.0

Chi-Square Tests
Value df Asymp. Sig. (2-sided)
a
Pearson Chi-Square 9.560 3 .023
Likelihood Ratio 7.364 3 .061
Linear-by-Linear Association 7.986 1 .005
N of Valid Cases 357
a. 2 cells (25.0%) have expected count less than 5. The minimum expected count is .49.

Critical Region:
Reject Ho as p value (0.023) < 0.05
Analysis:

Page 97 of 170
At significance level of 95% the p value (0.023) is less than 0.05; so research rejected
the Null Hypothesis and accepted the Alternate Hypothesis. So, it means that there
is a strong association between age and the brand familiarity.

Ho: There is No Association between Qualification and Brand Familiarity


HA: There is An Association between Qualification and Brand Familiarity

Level of Significance:
α = 0.05
Calculation:

Crosstab
Brand Familiarity Total
NO YES
Qualification 0 Count 0 1 1
Expected Count .1 .9 1.0
Graduation Count 15 200 215
Expected Count 17.5 197.5 215.0
Post graduation Count 9 103 112
Expected Count 9.1 102.9 112.0
Ms/ M Phil Count 4 21 25
Expected Count 2.0 23.0 25.0
Doctoral Count 1 3 4
Expected Count .3 3.7 4.0
Total Count 29 328 357
Expected Count 29.0 328.0 357.0

Chi-Square Tests
Value df Asymp. Sig. (2-
sided)
a
Pearson Chi-Square 4.073 4 .396
Likelihood Ratio 3.256 4 .516
Linear-by-Linear Association 2.861 1 .091
N of Valid Cases 357
a. 5 cells (50.0%) have expected count less than 5. The minimum expected count is .08.

Critical Region:
Accept Ho as p value (0.396) > 0.05

Page 98 of 170
Analysis:
At significance level of 95% the p value (0.396) is greater than 0.05; so research
accept the Null Hypothesis and rejected the Alternate Hypothesis. So, it means that
there is no association between Qualification and the brand familiarity.

4.2 HYPOTHESIS OF BRAND TASTE:


Ho: There is No Association between Age and Brand Taste.
HA: There is An Association between Age and Brand Taste.

Level of Significance:
α = 0.05

Calculation:

Case Processing Summary


Cases
Valid Missing Total
N Percent N Percent N Percent
Age * Brand Taste 357 100.0% 0 .0% 357 100.0%
Profession * Brand Taste 357 100.0% 0 .0% 357 100.0%

Gender * Brand Taste 357 100.0% 0 .0% 357 100.0%

Crosstab
Brand Taste Total
NO YES
Age 21-30 Count 67 197 264
Expected Count 79.9 184.1 264.0
31-40 Count 24 42 66
Expected Count 20.0 46.0 66.0
41-50 Count 13 8 21
Expected Count 6.4 14.6 21.0

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50 And Above Count 4 2 6
Expected Count 1.8 4.2 6.0
Total Count 108 249 357
Expected Count 108.0 249.0 357.0

Chi-Square Tests
Value df Asymp. Sig. (2-sided)

a
Pearson Chi-Square 17.882 3 .000
Likelihood Ratio 16.509 3 .001
Linear-by-Linear Association 16.897 1 .000
N of Valid Cases 357
a. 2 cells (25.0%) have expected count less than 5. The minimum expected count is 1.82.

Critical Region:
Reject Ho as p value (0.000) < 0.05

Analysis:
At significance level of 95% the p value (0.000) is less than 0.05; so research rejected
the Null Hypothesis and accepted the Alternate Hypothesis. So, it means that there
is a strong association between age and the brand taste.

Ho: There is No Association between Gender and Brand Taste.


HA: There is An Association between Gender and Brand Taste.

Level of Significance:
α = 0.05
Calculation:
Crosstab
Brand Taste Total
NO YES
Gender Male Count 73 182 255
Expected Count 77.1 177.9 255.0
Female Count 35 67 102

Page 100 of 170


Expected Count 30.9 71.1 102.0
Total Count 108 249 357
Expected Count 108.0 249.0 357.0

Chi-Square Tests
Value df Asymp. Exact Sig. Exact Sig.
Sig. (2- (2-sided) (1-sided)
sided)
a
Pearson Chi-Square 1.116 1 .291
b
Continuity Correction .863 1 .353
Likelihood Ratio 1.101 1 .294
Fisher's Exact Test .309 .176
Linear-by-Linear 1.113 1 .291
Association
N of Valid Cases 357
a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 30.86.
b. Computed only for a 2x2 table

Critical Region:
Accept Ho as p value (0.291) > 0.05

Analysis:
At significance level of 95% the p value (0.291) is greater than 0.05; so research
accept the Null Hypothesis and rejected the Alternate Hypothesis. So, it means that
there is no association between Gender and the brand taste.

4.3 HYPOTHESIS OF COMPETITOR’S KNOWHOW:

Case Processing Summary


Cases
Valid Missing Total
N Percent N Percent N Percent
Income * 357 100.0% 0 .0% 357 100.0%
Competitor’s
Knowhow
Qualification * 357 100.0% 0 .0% 357 100.0%
Competitor’s
Knowhow

Page 101 of 170


Area * Competitor’s 357 100.0% 0 .0% 357 100.0%
Knowhow

Chi-Square Tests
Value df Asymp. Sig. (2-
sided)
a
Pearson Chi-Square .302 3 .960
Likelihood Ratio .303 3 .959
Linear-by-Linear Association .185 1 .667

Ho: There is No Association between Income and Competitors’ knowhow.


HA: There is An Association between Income and Competitors’ knowhow.

Level of Significance:
α = 0.05

Calculation:
Crosstab
Competitor’s Total
Knowhow
NO YES
Income 10,000-20,000 Count 47 105 152
Expected Count 49.4 102.6 152.0
21,000-30,000 Count 38 75 113
Expected Count 36.7 76.3 113.0
31,000-40,000 Count 18 35 53
Expected Count 17.2 35.8 53.0
41,000 & Above Count 13 26 39
Expected Count 12.7 26.3 39.0
Total Count 116 241 357
Expected Count 116.0 241.0 357.0

Page 102 of 170


N of Valid Cases 357
a. 0 cells (.0%) have expected count less than 5. The minimum expected count is
12.67.

Critical Region:
Accept Ho as p value (0.960) > 0.05

Analysis:
At significance level of 95% the p value (0.960) is greater than 0.05; so research
accept the Null Hypothesis and rejected the Alternate Hypothesis. So, it means that
there is no association between Income and the Competitors’ knowhow.

Page 103 of 170


Ho: There is No Association between Qualification and Competitors’ knowhow.
HA: There is An Association between Qualification and Competitors’ knowhow.

Level of Significance:
α = 0.05

Calculation:
Crosstab

Competitor’s Total
Knowhow
NO YES

Qualification 0 Count 0 1 1

Expected .3 .7 1.0
Count
Graduation Count 64 151 215

Expected 69.9 145.1 215.0


Count
Post Graduation Count 37 75 112

Expected 36.4 75.6 112.0


Count
MS/ M PHIL Count 13 12 25

Expected 8.1 16.9 25.0


Count
Doctoral Count 2 2 4

Expected 1.3 2.7 4.0


Count
Total Count 116 241 357

Expected 116.0 241.0 357.0


Count

Chi-Square Tests
Value df Asymp. Sig. (2-
sided)
a
Pearson Chi-Square 6.120 4 .190
Likelihood Ratio 6.104 4 .191
Linear-by-Linear Association 4.501 1 .034
N of Valid Cases 357
a. 4 cells (40.0%) have expected count less than 5. The minimum expected count is .32.

Page 104 of 170


Critical Region:
Accept Ho as p value (0.190) > 0.05

Analysis:
At significance level of 95% the p value (0.190) is greater than 0.05; so research
accept the Null Hypothesis and rejected the Alternate Hypothesis. So, it means that
there is no association between Qualification and the Competitors’ knowhow.

Ho: There is No Association between Area of residence and Competitors’ knowhow.


HA: There is An Association between Area of residence and Competitors’ knowhow.

Level of Significance:
α = 0.05
Calculation:
Crosstab
Competitor’s Total
Knowhow
NO YES
Area DHA Count 16 26 42
Expected 13.6 28.4 42.0
Count
Clifton Count 10 22 32
Expected 10.4 21.6 32.0
Count
P.E.C.H.S Count 29 61 90
Expected 29.2 60.8 90.0
Count
Gulshan - E-Iqbal Count 30 61 91
Expected 29.6 61.4 91.0
Count
Saddar Count 11 25 36
Expected 11.7 24.3 36.0
Count
North Nazimabad Count 20 46 66
Expected 21.4 44.6 66.0
Count
Total Count 116 241 357
Expected 116.0 241.0 357.0
Count

Page 105 of 170


Chi-Square Tests
Value df Asymp. Sig. (2-sided)

a
Pearson Chi-Square .842 5 .974
Likelihood Ratio .828 5 .975
Linear-by-Linear Association .487 1 .485
N of Valid Cases 357
a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 10.40.

Critical Region:
Accept Ho as p value (0.974) > 0.05
Analysis:
At significance level of 95% the p value (0. 974) is greater than 0.05; so research
accept the Null Hypothesis and rejected the Alternate Hypothesis. So, it means that
there is no association between Area of residence and the Competitors’ knowhow.

4.4 HYPOTHESIS OF BRAND ATTRACTION:

Case Processing Summary

Cases
Valid Missing Total
N Percent N Percent N Percent
Age * Brand Attraction 357 100.0% 0 .0% 357 100.0%

Gender * Brand 357 100.0% 0 .0% 357 100.0%


Attraction
Profession * Brand 357 100.0% 0 .0% 357 100.0%
Attraction

Page 106 of 170


Ho: There is No Association between Age and Brand Attraction.
HA: There is An Association between Age and Brand Attraction.

Level of Significance:
α = 0.05

Calculation:

Crosstab
Brand Attraction Total
NO YES
Age 21-30 Count 106 158 264
Expected Count 108.7 155.3 264.0
31-40 Count 25 41 66
Expected Count 27.2 38.8 66.0
41-50 Count 14 7 21
Expected Count 8.6 12.4 21.0
50 And Above Count 2 4 6
Expected Count 2.5 3.5 6.0
Total Count 147 210 357
Expected Count 147.0 210.0 357.0

Chi-Square Tests
Value df Asymp. Sig. (2-
sided)
a
Pearson Chi-Square 6.197 3 .102
Likelihood Ratio 6.110 3 .106
Linear-by-Linear Association 1.307 1 .253
N of Valid Cases 357
a. 2 cells (25.0%) have expected count less than 5. The minimum expected count is 2.47.

Critical Region:
Accept Ho as p value (0.105) > 0.05
Analysis:
At significance level of 95% the p value (0. 105) is greater than 0.05; so research
accept the Null Hypothesis and rejected the Alternate Hypothesis. So, it means that
there is no association between age and the Brand Attraction.

Page 107 of 170


Ho: There is No Association between Gender and Brand Attraction.
HA: There is An Association between Gender and Brand Attraction.

Level of Significance:
α = 0.05
Calculation:

Crosstab
Brand Attraction Total
NO YES
Gender Male Count 101 154 255
Expected Count 105.0 150.0 255.0
Female Count 46 56 102
Expected Count 42.0 60.0 102.0
Total Count 147 210 357
Expected Count 147.0 210.0 357.0

Chi-Square Tests
Value df Asymp. Sig. Exact Sig. Exact Sig.
(2-sided) (2-sided) (1-sided)
a
Pearson Chi-Square .907 1 .341
b
Continuity Correction .694 1 .405
Likelihood Ratio .902 1 .342
Fisher's Exact Test .344 .202
Linear-by-Linear .904 1 .342
Association
N of Valid Cases 357
a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 42.00.
b. Computed only for a 2x2 table

Critical Region:
Accept Ho as p value (0.341) > 0.05
Analysis:
At significance level of 95% the p value (0.341) is greater than 0.05; so research
accept the Null Hypothesis and rejected the Alternate Hypothesis. So, it means that
there is no association between Gender and the Brand Attraction.

Page 108 of 170


Ho: There is No Association between Profession and Brand Attraction.
HA: There is An Association between Profession and Brand Attraction.

Level of Significance:
α = 0.05

Calculation:

Crosstab
Brand Attraction Total
NO YES
Profession Marketing Count 28 46 74
Expected Count 30.5 43.5 74.0
Banking Count 44 74 118
Expected Count 48.6 69.4 118.0
Engineering Count 9 11 20
Expected Count 8.2 11.8 20.0
Doctor Count 10 7 17
Expected Count 7.0 10.0 17.0
Teacher Count 10 10 20
Expected Count 8.2 11.8 20.0
Others Count 46 62 108
Expected Count 44.5 63.5 108.0
Total Count 147 210 357
Expected Count 147.0 210.0 357.0

Chi-Square Tests
Value df Asymp. Sig. (2-
sided)
a
Pearson Chi-Square 4.116 5 .533
Likelihood Ratio 4.070 5 .539
Linear-by-Linear Association 1.214 1 .271
N of Valid Cases 357
a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 7.00.

Page 109 of 170


Critical Region:
Accept Ho as p value (0.533) > 0.05
Analysis:
At significance level of 95% the p value (0.533) is greater than 0.05; so research
accept the Null Hypothesis and rejected the Alternate Hypothesis. So, it means that
there is no association between Profession and the Brand Attraction.

4.5 HYPOTHESIS OF PRODUCT AVAILABILITY:

Case Processing Summary


Cases
Valid Missing Total
N Percent N Percent N Percent
AREA * Product 357 100.0% 0 .0% 357 100.0%
Availability
PROFESSION * 357 100.0% 0 .0% 357 100.0%
Product
Availability
AGE * Product 357 100.0% 0 .0% 357 100.0%
Availability

Ho: There is No Association between Area and Product Availability.


HA: There is An Association between Area and Product Availability.
Level of Significance:
α = 0.05

Page 110 of 170


Calculation

Crosstab
Product Availability Total
NO YES
Area DHA Count 14 28 42
Expected 13.9 28.1 42.0
Count
Clifton Count 12 20 32
Expected 10.6 21.4 32.0
Count
P.E.C.H.S Count 28 62 90
Expected 29.7 60.3 90.0
Count
Gulshan - e-Iqbal Count 33 58 91
Expected 30.1 60.9 91.0
Count
Saddar Count 14 22 36
Expected 11.9 24.1 36.0
Count
North Nazimabad Count 17 49 66
Expected 21.8 44.2 66.0
Count
Total Count 118 239 357
Expected 118.0 239.0 357.0
Count

Chi-Square Tests
Value df Assmp. Sig. (2-
sided)
a
Pearson Chi-Square 3.006 5 .699
Likelihood Ratio 3.051 5 .692
Linear-by-Linear Association .422 1 .516
N of Valid Cases 357
a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 10.58.

Page 111 of 170


Critical Region:
Accept Ho as p value (0.699) > 0.05
Analysis:
At significance level of 95% the p value (0.699) is greater than 0.05; so research
accept the Null Hypothesis and rejected the Alternate Hypothesis. So, it means that
there is no association between Area and the Product Availability.

Ho: There is No Association between Profession and Product Availability.


HA: There is An Association between Profession and Product Availability.
Level of Significance:
α = 0.05
Calculation

Crosstab
Product Availability Total
NO YES
Profession Marketing Count 19 55 74
Expected 24.5 49.5 74.0
Count
Banking Count 39 79 118
Expected 39.0 79.0 118.0
Count
Engineering Count 7 13 20
Expected 6.6 13.4 20.0
Count
Doctor Count 11 6 17
Expected 5.6 11.4 17.0
Count
Teacher Count 9 11 20
Expected 6.6 13.4 20.0
Count
Others Count 33 75 108
Expected 35.7 72.3 108.0
Count
Total Count 118 239 357
Expected 118.0 239.0 357.0
Count

Page 112 of 170


Chi-Square Tests
Value df Asymp. Sig. (2-
sided)
a
Pearson Chi-Square 11.146 5 .049
Likelihood Ratio 10.569 5 .061
Linear-by-Linear Association .526 1 .468
N of Valid Cases 357
a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 5.62.

Critical Region:
Reject Ho as p value (0.049) < 0.05
Analysis:
At significance level of 95% the p value (0.049) is less than 0.05; so research Reject
the Null Hypothesis and accepted the Alternate Hypothesis. So, it means that there
is an association between Profession and the Product Availability.

Ho: There is No Association between Age and Product Availability.


HA: There is An Association between Age and Product Availability.
Level of Significance:
α = 0.05
Calculation

Crosstab
Product Availability Total
NO YES
Age 21-30 Count 74 190 264
Expected 87.3 176.7 264.0
Count
31-40 Count 31 35 66
Expected 21.8 44.2 66.0
Count
41-50 Count 11 10 21
Expected 6.9 14.1 21.0
Count
50 And Above Count 2 4 6
Expected 2.0 4.0 6.0
Count
Total Count 118 239 357
Expected 118.0 239.0 357.0
Count

Page 113 of 170


Chi-Square Tests
Value df Asymp. Sig. (2-
sided)
a
Pearson Chi-Square 12.332 3 .006
Likelihood Ratio 11.886 3 .008
Linear-by-Linear Association 8.506 1 .004
N of Valid Cases 357
a. 2 cells (25.0%) have expected count less than 5. The minimum expected count is 1.98.

Critical Region:
Reject Ho as p value (0.006) < 0.05
Analysis:
At significance level of 95% the p value (0.006) is less than 0.05; so research Reject
the Null Hypothesis and accepted the Alternate Hypothesis. So, it means that there
is an association between Age and the Product Availability.

4.6 HYPOTHESIS OF CONSUMER BUYING BEHAVIOR WITH RESPECT


TO FLAVOR:

Case Processing Summary


Cases
Valid Missing Total
N Percent N Percent N Percent
Age * Consumer 357 100.0% 0 .0% 357 100.0%
Buying Behavior
with respect to
Flavor
Gender * 357 100.0% 0 .0% 357 100.0%
Consumer Buying
Behavior with
respect to Flavor

Area * Consumer 357 100.0% 0 .0% 357 100.0%


Buying Behavior
with respect to
Flavor

Page 114 of 170


Ho: There is No Association between Age and consumer buying behavior with
respect to flavor.
HA: There is An Association between Age and consumer buying behavior with
respect to flavor.

Level of Significance:
α = 0.05

Calculation

Crosstab
Consumer Buying Behavior with respect to Flavor Total
Classic Coconut Date Plain
AGE 21-30 Count 77 112 28 47 264
Expected 75.4 105.7 31.8 51.0 264.0
Count
31-40 Count 19 26 11 10 66
Expected 18.9 26.4 7.9 12.8 66.0
Count
41-50 Count 4 3 3 11 21
Expected 6.0 8.4 2.5 4.1 21.0
Count
50 And Above Count 2 2 1 1 6
Expected 1.7 2.4 .7 1.2 6.0
Count
Total Count 102 143 43 69 357
Expected 102.0 143.0 43.0 69.0 357.0
Count

Chi-Square Tests
Value df Asymp. Sig. (2-sided)
a
Pearson Chi-Square 19.298 9 .023
Likelihood Ratio 16.654 9 .054
Linear-by-Linear Association 4.689 1 .030
N of Valid Cases 357
a. 6 cells (37.5%) have expected count less than 5. The minimum expected count is .72.

Page 115 of 170


Critical Region:
Reject Ho as p value (0.023) < 0.05
Analysis:
At significance level of 95% the p value (0.023) is less than 0.05; so research Reject
the Null Hypothesis and accepted the Alternate Hypothesis. So, it means that there
is an association between Age and Consumer Buying Behavior with respect to Flavor.

Ho: There is No Association between Gender and Consumer Buying Behavior with
respect to Flavor.
HA: There is An Association between Gender and consumer buying behavior with
respect to flavor.

Level of Significance:
α = 0.05

Calculation

Crosstab
Consumer Buying Behavior with respect to Total
Flavor
Classic Coconut Date Plain
Gender Male Count 76 106 32 41 255
Expected 72.9 102.1 30.7 49.3 255.0
Count
Female Count 26 37 11 28 102
Expected 29.1 40.9 12.3 19.7 102.0
Count
Total Count 102 143 43 69 357
Expected 102.0 143.0 43.0 69.0 357.0
Count

Chi-Square Tests
Value df Asymp. Sig. (2-sided)

a
Pearson Chi-Square 6.048 3 .109
Likelihood Ratio 5.753 3 .124
Linear-by-Linear Association 4.112 1 .043
N of Valid Cases 357
a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 12.29.

Page 116 of 170


Critical Region:
Accept Ho as p value (0.105) > 0.05
Analysis:
At significance level of 95% the p value (0.105) is greater than 0.05; so research
Accept the Null Hypothesis and rejected the Alternate Hypothesis. So, it means that
there is No association between Gender and Consumer Buying Behavior with respect to
Flavor.

Ho: There is No Association between Area and Consumer Buying Behavior with
respect to Flavor.
HA: There is An Association between Area and consumer buying behavior with
respect to flavor.
Level of Significance:
α = 0.05
Calculation

Crosstab
Consumer Buying Behavior (Flavor) Total
Classic Coconut Date Plain
Area DHA Count 13 15 3 11 42
Expected 12.0 16.8 5.1 8.1 42.0
Count
Clifton Count 7 12 5 8 32
Expected 9.1 12.8 3.9 6.2 32.0
Count
P.E.C.H.S Count 30 34 8 18 90
Expected 25.7 36.1 10.8 17.4 90.0
Count
Gulshan - E-Iqbal Count 25 41 13 12 91
Expected 26.0 36.5 11.0 17.6 91.0
Count
Saddar Count 4 17 5 10 36
Expected 10.3 14.4 4.3 7.0 36.0
Count
North Nazimabad Count 23 24 9 10 66
Expected 18.9 26.4 7.9 12.8 66.0
Count
Total Count 102 143 43 69 357
Expected 102.0 143.0 43.0 69.0 357.0
Count

Page 117 of 170


Chi-Square Tests
Value df Asymp. Sig. (2-sided)

a
Pearson Chi-Square 15.531 15 .414
Likelihood Ratio 16.744 15 .334
Linear-by-Linear Association .419 1 .518
N of Valid Cases 357
a. 2 cells (8.3%) have expected count less than 5. The minimum expected count is 3.85.

Critical Region:
Accept Ho as p value (0.414) > 0.05
Analysis:
At significance level of 95% the p value (0.414) is greater than 0.05; so research
accept the Null Hypothesis and rejected the Alternate Hypothesis. So, it means that
there is No association between Area and Consumer Buying Behavior with respect to
Flavor.

4.7 HYPOTHESIS OF CONSUMER BUYING BEHAVIOR WITH RESPECT


TO TASTE:

Case Processing Summary


Cases
Valid Missing Total
N Perce N Percent N Percent
nt
Age * Consumer Buying Behavior with respect 357 100.0 0 .0% 357 100.0%
to Taste %
Gender * Consumer Buying Behavior with 357 100.0 0 .0% 357 100.0%
respect to Taste %

Ho: There is No Association between Age and Consumer Buying Behavior with
respect to Taste.

HA: There is An Association between Age and consumer buying behavior with
respect to Taste.

Level of Significance:
α = 0.05

Page 118 of 170


Calculation
Crosstab
Consumer Buying Behavior (Taste) Total
Classic Coconut Date Plain
Age 21-30 Count 69 100 42 53 264
Expected 70.3 97.6 45.8 50.3 264.0
Count
31-40 Count 16 24 15 11 66
Expected 17.6 24.4 11.5 12.6 66.0
Count
41-50 Count 6 6 5 4 21
Expected 5.6 7.8 3.6 4.0 21.0
Count
50 And Above Count 4 2 0 0 6
Expected 1.6 2.2 1.0 1.1 6.0
Count
Total Count 95 132 62 68 357
Expected 95.0 132.0 62.0 68.0 357.0
Count
Chi-Square Tests
Value df Asymp. Sig. (2-sided)

a
Pearson Chi-Square 8.742 9 .461
Likelihood Ratio 9.753 9 .371
Linear-by-Linear Association .997 1 .318
N of Valid Cases 357
a. 6 cells (37.5%) have expected count less than 5. The minimum expected count is 1.04.

Critical Region:
Accept Ho as p value (0.461) > 0.05
Analysis:
At significance level of 95% the p value (0.461) is greater than 0.05; so research
accept the Null Hypothesis and rejected the Alternate Hypothesis. So, it means that
there is No association between Age and Consumer Buying Behavior with respect to
Taste.

Ho: There is No Association between Gender and Consumer Buying Behavior with
respect to Taste.
HA: There is An Association between Gender and consumer buying behavior with
respect to Taste.

Level of Significance:
α = 0.05

Page 119 of 170


Calculation

Crosstab
Consumer Buying Behavior (Taste) Total
Classic Coconut Date Plain
Gender Male Count 74 89 46 46 255
Expected 67.9 94.3 44.3 48.6 255.0
Count
Female Count 21 43 16 22 102
Expected 27.1 37.7 17.7 19.4 102.0
Count
Total Count 95 132 62 68 357
Expected 95.0 132.0 62.0 68.0 357.0
Count

Chi-Square Tests
Value Df Asymp. Sig. (2-sided)

a
Pearson Chi-Square 3.692 3 .297
Likelihood Ratio 3.761 3 .288
Linear-by-Linear Association 1.121 1 .290
N of Valid Cases 357
a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 17.71.

Critical Region:
Accept Ho as p value (0.297) > 0.05
Analysis:
At significance level of 95% the p value (0.297) is greater than 0.05; so research
accept the Null Hypothesis and rejected the Alternate Hypothesis. So, it means that
there is No association between Gender and Consumer Buying Behavior with
respect to Taste.

Page 120 of 170


4.9 HYPOTHESIS OF CONSUMPTION PATTERN (BUYING DECISION):

Case Processing Summary


Cases
Valid Missing Total
N Percent N Percent N Percent
Age * Consumption 357 100.0% 0 .0% 357 100.0%
Pattern (Buying
Decision)

Income * 357 100.0% 0 .0% 357 100.0%


Consumption
Pattern (Buying
Decision)
Area * 357 100.0% 0 .0% 357 100.0%
Consumption
Pattern (Buying
Decision)
Gender * 357 100.0% 0 .0% 357 100.0%
Consumption
Pattern (Buying
Decision)

Ho: There is No Association between Age and consumption pattern (Buying


Decision).
HA: There is An Association between Age and consumption pattern (Buying
Decision).
Level of Significance:
α = 0.05

Page 121 of 170


Calculation

Crosstab
Consumption Pattern (Buying Decision) Total
Name Price Availability Taste 5
Ag 21-30 Count 40 79 41 103 1 264
e Expected 39.9 79.1 44.4 99.8 .7 264.0
Count
31-40 Count 8 21 12 25 0 66
Expected 10.0 19.8 11.1 25.0 .2 66.0
Count
41-50 Count 5 4 6 6 0 21
Expected 3.2 6.3 3.5 7.9 .1 21.0
Count
50 And Count 1 3 1 1 0 6
Above Expected .9 1.8 1.0 2.3 .0 6.0
Count
Total Count 54 107 60 135 1 357

Expected 54.0 107.0 60.0 135.0 1.0 357.0


Count

Chi-Square Tests
Value df Asymp. Sig. (2-sided)

a
Pearson Chi-Square 6.861 12 .867
Likelihood Ratio 6.907 12 .864
Linear-by-Linear Association .780 1 .377
N of Valid Cases 357
a. 10 cells (50.0%) have expected count less than 5. The minimum expected count is .02.

Critical Region:
Accept Ho as p value (0.867) > 0.05
Analysis:
At significance level of 95% the p value (0.867) is greater than 0.05; so research
accept the Null Hypothesis and rejected the Alternate Hypothesis. So, it means that
there is No association between Age and consumption pattern (Buying Decision).

Page 122 of 170


Ho: There is No Association between Income and consumption pattern (Buying
Decision).
HA: There is An Association between Income and consumption pattern (Buying
Decision).

Level of Significance:
α = 0.05
Calculation

Crosstab
Consumption Pattern (Buying Decision) Total
Name Price Availability Taste 5
Income 10,000- Count 17 52 24 59 0 152
20,000 Expected 23.0 45.6 25.5 57.5 .4 152.0
Count
21,000- Count 18 36 20 38 1 113
30,000 Expected 17.1 33.9 19.0 42.7 .3 113.0
Count
31,000- Count 7 12 12 22 0 53
40,000 Expected 8.0 15.9 8.9 20.0 .1 53.0
Count
41,000 & Count 12 7 4 16 0 39
Above Expected 5.9 11.7 6.6 14.7 .1 39.0
Count
Total Count 54 107 60 135 1 357
Expected 54.0 107.0 60.0 135.0 1. 357.0
Count 0

Chi-Square Tests
Value df Asymp. Sig. (2-sided)

a
Pearson Chi-Square 17.162 12 .144
Likelihood Ratio 16.429 12 .172
Linear-by-Linear Association .299 1 .585
N of Valid Cases 357
a. 4 cells (20.0%) have expected count less than 5. The minimum expected count is .11.

Critical Region:
Accept Ho as p value (0.144) > 0.05

Page 123 of 170


Analysis:
At significance level of 95% the p value (0.144) is greater than 0.05; so research
accept the Null Hypothesis and rejected the Alternate Hypothesis. So, it means that
there is No association between Income and consumption pattern (Buying Decision).

Ho: There is No Association between Area and consumption pattern (Buying


Decision).
HA: There is An Association between Area and consumption pattern (Buying
Decision).
Level of Significance:
α = 0.05

Calculation
Crosstab
Consumption Pattern (Buying Decision) Total
Name Price Availability Taste 5
Area DHA Count 9 11 9 13 0 42
Expected 6.4 12.6 7.1 15.9 .1 42.0
Count
Clifton Count 4 9 5 14 0 32
Expected 4.8 9.6 5.4 12.1 .1 32.0
Count
P.E.C.H.S Count 16 24 17 32 1 90
Expected 13.6 27.0 15.1 34.0 .3 90.0
Count
Gulshan - E- Count 11 28 15 37 0 91
Iqbal Expected 13.8 27.3 15.3 34.4 .3 91.0
Count
Saddar Count 4 16 3 13 0 36
Expected 5.4 10.8 6.1 13.6 .1 36.0
Count
North Count 10 19 11 26 0 66
Nazimabad Expected 10.0 19.8 11.1 25.0 .2 66.0
Count
Total Count 54 107 60 135 1 357

Expected 54.0 107.0 60.0 135.0 1.0 357.0


Count

Page 124 of 170


Chi-Square Tests
Value df Asymp. Sig. (2-sided)

a
Pearson Chi-Square 12.249 20 .907
Likelihood Ratio 11.993 20 .916
Linear-by-Linear Association .196 1 .658
N of Valid Cases 357
a. 7 cells (23.3%) have expected count less than 5. The minimum expected count is .09.

Critical Region:
Accept Ho as p value (0.907) > 0.05
Analysis:
At significance level of 95% the p value (0.907) is greater than 0.05; so research
accept the Null Hypothesis and rejected the Alternate Hypothesis. So, it means that
there is No association between Area and consumption pattern (Buying Decision).

Ho: There is No Association between Gender and consumption pattern (Buying


Decision).
HA: There is An Association between Gender and consumption pattern (Buying
Decision).
Level of Significance:
α = 0.05

Calculation
Crosstab
Consumption Pattern (Buying Decision) Total
Name Price Availability Taste 5
Gender Male Count 42 64 40 108 1 255
Expected 38.6 76.4 42.9 96.4 .7 255.0
Count
Female Count 12 43 20 27 0 102
Expected 15.4 30.6 17.1 38.6 .3 102.0
Count
Total Count 54 107 60 135 1 357
Expected 54.0 107.0 60.0 135.0 1.0 357.0
Count

Page 125 of 170


Chi-Square Tests
Value df Asymp. Sig. (2-sided)
a
Pearson Chi-Square 14.067 4 .007
Likelihood Ratio 14.281 4 .006
Linear-by-Linear Association 3.446 1 .063
N of Valid Cases 357
a. 2 cells (20.0%) have expected count less than 5. The minimum expected count is .29.

Critical Region:
Reject Ho as p value (0.007) < 0.05

Analysis:
At significance level of 95% the p value (0.007) is less than 0.05; so research rejected
the Null Hypothesis and accepted the Alternate Hypothesis. So, it means that there
is a strong association between Gender and consumption pattern (Buying Decision).

4.10 HYPOTHESIS OF CONSUMPTION PATTERN (TASTE):

Case Processing Summary


Cases
Valid Missing Total
N Percent N Percent N Percent
Age * 357 100.0% 0 .0% 357 100.0%
Consumption
Pattern (Taste)
Income * 357 100.0% 0 .0% 357 100.0%
Consumption
Pattern (Taste)
Area * 357 100.0% 0 .0% 357 100.0%
Consumption
Pattern (Taste)
GENDER * 357 100.0% 0 .0% 357 100.0%
Consumption
Pattern (Taste)

Page 126 of 170


Ho: There is No Association between Age and consumption pattern (Taste).
HA: There is An Association between Age and consumption pattern (Taste).

Level of Significance:
α = 0.05

Calculation

Crosstab
Consumption Pattern (Taste) Total
Sweet Crispy Hygiene Bitter
Age 21-30 Count 103 88 55 18 264
Expected 97.6 93.2 54.0 19.2 264.0
Count
31-40 Count 20 29 12 5 66
Expected 24.4 23.3 13.5 4.8 66.0
Count
41-50 Count 8 9 3 1 21
Expected 7.8 7.4 4.3 1.5 21.0
Count
50 And Above Count 1 0 3 2 6
Expected 2.2 2.1 1.2 .4 6.0
Count
Total Count 132 126 73 26 357
Expected 132.0 126.0 73.0 26.0 357.0
Count

Chi-Square Tests
Value df Asymp. Sig. (2-sided)

a
Pearson Chi-Square 14.909 9 .093
Likelihood Ratio 13.833 9 .128
Linear-by-Linear Association 1.960 1 .162
N of Valid Cases 357
a. 7 cells (43.8%) have expected count less than 5. The minimum expected count is .44.

Critical Region:
Accept Ho as p value (0.093) > 0.05
Analysis:
At significance level of 95% the p value (0.093) is greater than 0.05; so research
accept the Null Hypothesis and rejected the Alternate Hypothesis. So, it means that
there is No association between Age and consumption pattern (Taste).

Page 127 of 170


Ho: There is No Association between Income and consumption pattern (Taste).
HA: There is An Association between Income and consumption pattern (Taste).

Level of Significance:
α = 0.05

Calculation

Crosstab
Consumption Pattern (Taste) Total
Sweet Crispy Hygiene Bitter
Income 10,000-20,000 Count 64 53 25 10 152
Expected 56.2 53.6 31.1 11.1 152.0
Count
21,000-30,000 Count 39 36 29 9 113
Expected 41.8 39.9 23.1 8.2 113.0
Count
31,000-40,000 Count 17 19 11 6 53
Expected 19.6 18.7 10.8 3.9 53.0
Count
41,000 & Above Count 12 18 8 1 39
Expected 14.4 13.8 8.0 2.8 39.0
Count
Total Count 132 126 73 26 357
Expected 132.0 126.0 73.0 26.0 357.0
Count

Chi-Square Tests
Value df Asymp. Sig. (2-sided)

a
Pearson Chi-Square 8.961 9 .441
Likelihood Ratio 9.057 9 .432
Linear-by-Linear Association 1.358 1 .244
N of Valid Cases 357
a. 2 cells (12.5%) have expected count less than 5. The minimum expected count is 2.84.

Critical Region:
Accept Ho as p value (0.441) > 0.05

Page 128 of 170


Analysis:
At significance level of 95% the p value (0.441) is greater than 0.05; so research
accept the Null Hypothesis and rejected the Alternate Hypothesis. So, it means that
there is No association between Income and consumption pattern (Taste).

Ho: There is No Association between Income and consumption pattern (Taste).


HA: There is An Association between Income and consumption pattern (Taste).

Level of Significance:
α = 0.05

Calculation

Crosstab
Consumption Pattern (Taste) Total
Sweet Crispy Hygiene Bitter
Area DHA Count 17 17 7 1 42
Expected 15.5 14.8 8.6 3.1 42.0
Count
Clifton Count 10 11 8 3 32
Expected 11.8 11.3 6.5 2.3 32.0
Count
P.E.C.H.S Count 27 36 20 7 90
Expected 33.3 31.8 18.4 6.6 90.0
Count
Gulshan - E-Iqbal Count 39 28 18 6 91
Expected count 33.6 32.1 18.6 6.6 91.0
Saddar Count 9 16 8 3 36
Expected 13.3 12.7 7.4 2.6 36.0
Count
North Nazimabad Count 30 18 12 6 66
Expected 24.4 23.3 13.5 4.8 66.0
Count
Total Count 132 126 73 26 357
Expected 132.0 126.0 73.0 26.0 357.0
Count

Page 129 of 170


Chi-Square Tests
Value df Asymp. Sig. (2-sided)

a
Pearson Chi-Square 11.631 15 .707
Likelihood Ratio 12.257 15 .660
Linear-by-Linear Association .000 1 .994
N of Valid Cases 357
a. 4 cells (16.7%) have expected count less than 5. The minimum expected count is 2.33.

Critical Region:
Accept Ho as p value (0.707) > 0.05
Analysis:
At significance level of 95% the p value (0.707) is greater than 0.05; so research
accept the Null Hypothesis and rejected the Alternate Hypothesis. So, it means that
there is No association between Area and consumption pattern (Taste).

Ho: There is No Association between Gender and consumption pattern (Taste).


HA: There is An Association between Gender and consumption pattern (Taste).

Level of Significance:
α = 0.05

Calculation

Crosstab
Consumption Pattern (Taste) Total
Sweet Crispy Hygiene Bitter
Gender Male Count 99 88 51 17 255
Expected 94.3 90.0 52.1 18.6 255.0
Count
Female Count 33 38 22 9 102
Expected 37.7 36.0 20.9 7.4 102.0
Count
Total Count 132 126 73 26 357
Expected 132.0 126.0 73.0 26.0 357.0
Count

Page 130 of 170


Chi-Square Tests
Value df Asymp. Sig. (2-sided)

a
Pearson Chi-Square 1.534 3 .675
Likelihood Ratio 1.536 3 .674
Linear-by-Linear Association 1.281 1 .258
N of Valid Cases 357
a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 7.43.

Critical Region:
Accept Ho as p value (0.675) > 0.05
Analysis:
At significance level of 95% the p value (0.675) is greater than 0.05; so research
accept the Null Hypothesis and rejected the Alternate Hypothesis. So, it means that
there is No association between Gender and consumption pattern (Taste).

4.11 HYPOTHESIS OF BRAND EXTENSION’S EFFECTS:


Ho: Respondent don not agree that Brand extension of LU (Bakeri) have no
difference from the existing brands of LU
HA: Respondent agrees that Brand extension of LU (Bakeri) have difference from the
existing brands of LU

Level of Significance:
α = 0.05
Calculation

Z Test of Hypothesis for the Mean

Data
Null Hypothesis m= 3
Level of Significance 0.05
Population Standard Deviation 1.16
Sample Size 357
Sample Mean 2.57

Intermediate Calculations
Standard Error of the Mean 0.06139371
Z Test Statistic -7.003974793

Upper-Tail Test
Upper Critical Value 1.644853627
p-Value 1
Do not reject the null hypothesis

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Critical Region:
Accept Ho as p value (1) > 0.05
Analysis:
At significance level of 95% the p value (1) is greater than 0.05; so research accept
the Null Hypothesis and rejected the Alternate Hypothesis. So, it means Brand
extension of LU (Bakeri) have no difference from the existing brand of LU.

Level of Significance:
α = 0.01
Calculation

Data
Null Hypothesis = 3
Level of Significance 0.01
Population Standard Deviation 1.16
Sample Size 357
Sample Mean 2.57

Intermediate Calculations
Standard Error of the Mean 0.06139371
Z Test Statistic -7.003974793

Upper-Tail Test
Upper Critical Value 2.326347874
p-Value 1
Do not reject the null hypothesis

Critical Region:
Accept Ho as p value (1) > 0.01
Analysis:
At significance level of 99% the p value (1) is greater than 0.01; so research accept
the Null Hypothesis and rejected the Alternate Hypothesis. So, it means Brand
extension of LU (Bakeri) have no difference from the existing brand of LU.

Ho: Respondent don not agree that Brand extension of LU (Bakeri) sabotage the mother
brand LU.
HA: Respondent agrees that Brand extension of LU (Bakeri) sabotage the mother brand
LU.
Level of Significance:
α = 0.05

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Calculation
Data
Null Hypothesis = 3
Level of Significance 0.05
Population Standard Deviation 1.04
Sample Size 357
Sample Mean 2.74

Intermediate Calculations
Standard Error of the Mean 0.055043
Z Test Statistic -4.72361

Upper-Tail Test
Upper Critical Value 1.644854
p-Value 0.999999
Do not reject the null hypothesis

Critical Region:
Accept Ho as p value (0.99) > 0.05
Analysis:
At significance level of 95% the p value (0.99) is greater than 0.05; so
research accept the Null Hypothesis and rejected the Alternate Hypothesis. So, it
means that Brand extension of LU (Bakeri) did not sabotage the mother brand LU
but it enhance the revenue for the mother brand.
Level of Significance:
α = 0.01
Calculation
Data
Null Hypothesis = 3
Level of Significance 0.01
Population Standard Deviation 1.04
Sample Size 357
Sample Mean 2.74

Intermediate Calculations
Standard Error of the Mean 0.055043
Z Test Statistic -4.72361

Upper-Tail Test
Upper Critical Value 2.326348
p-Value 0.999999
Do not reject the null hypothesis

Critical Region:
Accept Ho as p value (0.999) > 0.01

Analysis:
At significance level of 99% the p value (0.999) is greater than 0.01; so research
accept the Null Hypothesis and rejected the Alternate Hypothesis. So, it means
Brand extension of LU (Bakeri) have no difference from the existing brand of LU.

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Ho: Respondent don not agree that Brand extension of LU (Bakeri) increase the
customer’s options to choose the best product.
HA: Respondent agrees agree that Brand extension of LU (Bakeri) increase the
customer’s options to choose the best product.

Level of Significance:
α = 0.05
Calculation
Data
Null Hypothesis = 3
Level of Significance 0.05
Population Standard Deviation 1.12
Sample Size 357
Sample Mean 2.26

Intermediate Calculations
Standard Error of the Mean 0.059277
Z Test Statistic -12.4838

Upper-Tail Test
Upper Critical Value 1.644854
p-Value 1
Do not reject the null hypothesis

Critical Region:
Accept Ho as p value (1) > 0.05
Analysis:
At significance level of 95% the p value (1) is greater than 0.05; so research accept
the Null Hypothesis and rejected the Alternate Hypothesis. So, it means that Brand
extension of LU (Bakeri) increase the customer’s options to choose the best product.
In other words Brand Extension makes consumer life easy with a multiple choices.

Level of Significance:
α = 0.01

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Calculation

Data
Null Hypothesis = 3
Level of Significance 0.01
Population Standard Deviation 1.12
Sample Size 357
Sample Mean 2.26

Intermediate Calculations
Standard Error of the Mean 0.059277
Z Test Statistic -12.4838

Upper-Tail Test
Upper Critical Value 2.326348
p-Value 1
Do not reject the null hypothesis

Critical Region:
Accept Ho as p value (1) > 0.01
Analysis:
At significance level of 99% the p value (1) is greater than 0.01; so research accept
the Null Hypothesis and rejected the Alternate Hypothesis. So, it means that Brand
extension of LU (Bakeri) increase the customer’s options to choose the best product.
In other words Brand Extension makes consumer life easy with a multiple choices

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CHAPTER – 5

CONCLUSION AND RECOMMENDATION

5.1 CONCLUSION:

After complete analysis and evaluation it has been observed that age and brand

familiarity is related to each other. As the consumer gaining experience day by day

he/she easily familiar with the brand and always ask on repeatedly basis. But young

one always wanted to explore new product/brand to increase their own experience.

But adults or aged consumers prefer to use the same brand again and again. Old

persons never tried to explore new ideas no matter how improve or beneficial to

them.

After the analysis and evaluation it has been observed that qualification and brand

familiarity has no association. As a consumer there is no effect of individual

qualification. There is a possibility that high qualified persons can be unaware of the

brand. It depends upon their association of the brand. So company should be clear

that their target audience in not only educated or higher educated people.

After complete analysis and evaluation it has been observed that age and brand

taste is related to each other. As the consumer gaining experience day by day he/she

easily use the brand and always ask on repeatedly basis. But young one always

wanted to explore new product/brand to increase their own experience. But adults

or aged consumers prefer to use the same brand again and again. Old persons never

tried to explore new ideas no matter how improve or beneficial to them.

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Research about the association of gender and brand taste gave a very interesting

results that there is no association between gender and brand taste liking. It means

it is now clear that that one taste can favorite among the two genders as well. No

need to increase the brand portfolio for separate gender a separate product. Narrow

down to one particular brand and improve its taste and packaging which can attract

more customers.

Income is one the major factor of consumers spending but our research gave

tremendous results about the income that it has no role in the general knowledge

about the competitive products in the market. Just need’s satisfaction is primary

objective they don’t care about the other brand in the market. Here as Brand

Manager one should focus on the product specification that their product should be

distinguished among the other brands in the shelf of any wholesale market.

After the complete analysis and evaluation it has been observed that qualification

has no role in the competitors’ knowhow in the consumers. Research gave us the

statistics that qualification is one of the factors of general knowledge but it has no

role in the choice of consumer at the time of shopping. As for the LU it is good that

their brand Bakeri has no specific target segment with respect to their education.

Barkeri should focus on its segment with improvement in quality as taste.

Area of residence is very important for the segmentation of target market. Research

analysis and evaluation tells that there is no role of area of residence in the general

knowledge of other available brands in the market. Like posh area people may be

unaware of the Bakeri product and on other hand people downtown area know well

about the Bakeri and other available brands.

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Analysis and evaluation of the research has been observed that age and brand

attraction are not related to each other. As the consumer gaining experience day by

day he/she don’t want to make experience with product they are using for long

time. But teen always wanted to explore new product/brand to increase their

experience.

Research denies the relationship of gender and brand attraction; means there is no

specific product that we can say a separate for male consumer or there is no specific

change in linking in brand choice among ladies. Barki Biscuits that’s why has good

line of taste for each segment of market, choice of taste made consumers life easy.

According to research in confectionary’s market profession has no association with

the brand attraction. Researcher evaluate that there is no specific brand for the

doctors or for the teacher. Teacher can like Plain Bakeri while the Doctor can like

Coconut or can be vice versa. Brands are not limited to profession but profession

has choice to choose any of their favorite brands.

After the analysis and evaluation researcher come to conclusion that the variables

like area of residence and product availability has no association between them.

Area of residence can increase the sale as there is some strong area of residence

where rate of buying is very higher as compare to other area of same city. For

example in Karachi city there are area where sale at wholesale market vary from one

to other as we can see in Imtiaz super market at Bahadarabad and in the EBCO super

market at the Forum (Clifton).

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After the complete analysis and evaluation it has been observed that product

availability and profession of consumer has very strong relationship. That indicates

that consumer who is a Banker need product at their tea time as they have very

limited time for the break so they don’t wait. Similarly is a case of teacher who has

very minutes in the recession time so product availability is very important

otherwise theses professional people will choose another available product for their

need.

Evaluation and analysis of two key variables age and product availability has strong

relationship between each others. Different age people show their association with

the product specially the old age people need the right product at the right time.

Same outcome are from the teens that their association’s analysis show very strong

relation with the availability of product. Both old age and teen are the more than 60

percent of the consumers of any FMCG product. Manufacturers should keep in mind

the product availability is very important for their sale.

Consumer buying behavior and the age of customer has very strong association

between each others. Complete analysis and evaluation has been observed that age

of customer has direct effect on the purchasing behavior of customer. Loyalty is

associated with the maturity of customers; mature customers are more loyal as

compare to teen agers. Teens are excited and eager to explore new variety and taste

at every time of shopping.

The result of analysis of gender and consumer buying behavior are very interesting

that there is no association between these two variables at all. There is no specific

consumer behavior for the ladies or for the gents. Their choice can be same and on

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same hand their choice can vary from each others. Most important is note down the

need of gender not the buying behavior.

Researcher comes to conclusion after the complete analysis and evaluation that

there is no association between area of residence and consumer buying behavior

with respect of any particular flavor of the product. There is no such need of flavor

or preference from different areas consumers; they generally prefer the product

with respect to their need or on the family demand.

Research showed that age and consumer buying behavior with respect to taste has

no association with each other. Similar types of conclusions are given in the age and

taste because there is a segment of society that has maturity of age they don’t

prefer to try new taste every day. They are loyal customers of any particular

product, than teen agers who love to try new taste every time.

Analysis and evaluation of gender and consumer buying behavior with respect to

taste are observed that they are not associated with each others. Male or female

don’t have a specific choice during the purchasing time. If they choose any taste to

LU (Bakeri) that is because of their need.

One key reason of research conduct was to check the influence of age on the buying

decision; although consumer buy product either for his/ her personal use or for their

family members. Analysis and evaluation of research are that age has no relationship

with the buying decision. Buying can from the any age segment; no one can restrict

their buying to any age factors.

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As income play vital role in purchasing power of customer but according to analysis

and evaluation of research it has no relationship with buying decision of LU (Bakeri)

product. It is not necessary that manager can eat Bakeri (Coconut), even though

office clerk can purchase for personal use or for the family usage. So income is not

the factor of buying decision.

After the complete analysis and evaluation of research it has been observed that

there is no relationship between the area of residence of consumers and their

buying decision. Buying decision is totally dependent on the choice of customer, his/

her loyalty and their need. Area has no role in the choice of particular product of LU

Biscuits.

To check the consumption pattern of consumer it important to check first the most

influencing factor in consumption and research analysis told that gender is one

factor that strong relationship with buying decision in the consumption of consumer.

Female sometimes play more important role in the purchase of family grocery items

on monthly basis. In some societies male play more roles in the daily consumption.

So gender is one factor that has influence in the consumption pattern of consumer’s

decision making.

Researcher one motive was to check the effects of brand extension on the mother

brand that either it sabotages the reputation of parent brand or it enhances the sale

of company. Research analysis and evaluation are conducted at significance level of

95% and 99% that brand extension of LU has enhanced the sale and increase the

customers by giving them more varieties of taste and innovative packaging.

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Finally it was important to check the consumer is either happy and satisfied with

brand extension of LU (Bakeri) biscuits or the evaluation of research are very

satisfactory that consumers are happy and satisfied with the brand extension

process. Consumer is happy that LU makes their choice easy with giving them variety

of Biscuits with different taste.

5.2 RECOMMENDATIONS:

As age is one of the common factors for consumer to develop brand familiarity. So,

the manufacturer should always consider developing brand extension as per

different age of consumers. Whenever a manufacturer introduce brand extension of

their brand so it is important to provide awareness among the old consumers to use

the same. At the time of any change in the product, manufacturer should consider

each and every aspect before launch the same in the marketing for the old

consumers.

As we know that qualification play a very common role in information search, but in

the matter of choice of any biscuit from the market doesn’t depend upon their

education. It depends upon their taste and other factors which play major role in the

brand familiarity. Manufacturer of Bakeri should be clear after this reach that their

target market is not only highly educated person, that can be someone who is not

graduate and can be school going teen or old person.

As age is one of the common factors for consumer to develop brand taste. So, the

manufacturer should always consider developing brand extension as per different

age of consumers. Whenever a manufacturer introduce brand extension of their

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brand so it is important to provide awareness among the old consumers to use the

same. At the time of any change in the product, manufacturer should consider each

and every aspect before launch the same in the marketing for the old consumers.

There is a perception that ladies and gents liking are not same, but research results

tell us that there is no association between gender and their taste. Taste of gents

and ladies can one common favorite taste. Brand Manager should be clearly focus

on the improvement of taste, packaging and improve their brand awareness to

increase their loyal customers satisfaction level.

As income is one of the major factors of consumer’s spending but it is not necessary

that well earning person’s has more knowhow about the available brands in the

market. Here we get the message that Bakeri Brand a new dimension for the

consumer for the consumer. Right advertisement and good positioning of the Bakeri

will more increase the sale and bring more revenue for the LU.

As qualification is one factor in maturity of consumer and play a major role in their

selection. Research proves that qualification has no association between the

competitor’s knowhow; Means it is not necessary that educated people has the

awareness of the available brands in the same category. Continental Biscuit

Company can improve their packaging, taste and the marketing campaign to create

a good knowledge about the product.

Area of residence has major effect on the sale of product. Research analysis and

evaluation make it very clear that area has no role on the awareness of any brand; it

is marketing campaign and proper advertisement which create the awareness about

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any brand. LU should focus on the densely populated area and make awareness

campaign among those areas rather than to focus on posh area of the city.

When marketer evaluate the segmentation for them age of consumer is very

important to know their right target. But research clearly mentioned that that brand

attraction has no effect on age. Experience people don’t like to change their taste on

daily basis; while on other hand teens can be attracted with new style of packaging

and taste. Before the Brand extension in FMCG product marketer must do

comprehensive research on the different age liking and disliking about the new

upcoming product.

As male and female has different line of their choices; some choices are same but

they have different directions in most of the case. Same is in case of brand attraction

and gender choice. There is no specific brand in the market that is dedicated to

particular segment. Bakeri is in a good position that it has strong line extension with

respect to taste that is one of the differences in the gender choice.

Profession is one element of societal segmentation but there is strong association

between profession of anyone and the brand attraction. In simple words brand are

not bound to one profession but they target the mass market. LU (Bakeri) has great

potential for the growth as it has variety of taste in the market. So, Continental

Biscuits should not narrow down their target market but narrow down the brand for

further improvement in taste and quality.

Area of residence is one of the major factors that have effects on the sale of any

FMCG product. Availability of product is very important to make loyal customer

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please at the time of shopping. If a needy person want to buy Bakeri Biscuits and at

the shelf he/she found empty place then loyal customer will not wait for the product

placement. It is a marketer responsibility to insure that availability and placement at

shelf at leading super stores and small retailer shops is properly done as per the

need of customers.

As we already discuss the effects of different professional people on the sale.

Manufacturer of LU (Bakeri) should make clear that availability of their Biscuit at the

different tuck shops and cafeterias of different institutions. There is a strong effect

of availability of product to convert simple consumer into your loyal customers.

Age of consumer is main factor for the segmentation of target market. Area of

residence and the qualification has some impact on the sale but age of the

consumer has more impact of the sale. Aged consumer is more loyal customer as

compare to young age customers who need to try new verity and taste. In the

Biscuit manufacturers product availability make clear difference in their sale.

As discussed earlier that age of customer has a prominent effect on the sale and

availability of product. Consumer buying behavior is also one other factor which

cannot be neglected at anyhow. For the manufacturer and marketer it is very

important to know that which age segment has more attention in their existing

product and for the upcoming product as well. Even though if company is planning

for any change in taste and variety then must do comprehensive survey.

Buying behavior of consumer is very important for the marketer and manufacturer

to enhance the production of existing brand and for the new product as well. It is

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important to know that what is basic need of specific gender like what female wants

and what male customers want in their product. Researcher recommends that

marketer and manufacturer should be keen on need rather than the buying behavior

of gender.

Area of residence has effects on sale but there is no specific taste or flavor which we

can specify for a particular area. According to research results Continental Biscuits

should focus on the equal availability of their product to all the residence area

without any discrimination among them in case of flavor or taste linking. Important

is the presence of LU (Bakeri) biscuits on the shelf of all small shops and super

markets.

As segmentation of target audience with respect to age gave us strong result that

aged customers are more loyal to any product, they don’t prefer to try new taste

every time. They need quality and same taste every time. Manufacturer should be

clear while introduce new taste or bring any change in their old product that their

loyal customers must be taken into confidence before any change. They sometime

reject the good product because of their close association with the old product.

As gender playing major role purchase the right product for their daily usage.

Research outcomes are totally shocking that gender has no specific choice in the

purchase of LU (Bakeri) biscuits with respect to specific taste. Their purchase reflects

that their basic need is fulfilled through it otherwise they don’t have particular taste

for them. Manufacturer of LU (Bakeri) should focus on their quality of product for

the both ladies and gents. They will buy as per their need and choice.

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Buying Decision is important for the marketer to know who has more influence at

this factor of shopping. But research said there are no effects of age on consumer

buying decision. Sometimes children play more roles in purchasing of confectionary

items and sometimes the old family members. Continental Biscuits cannot narrow

down their target segment, as their products are for the mass market. From

grandfather to grandson is their target market, no age limit for their any product.

As purchasing is dependent on income and income play big role to increase the

consumer’s choice but research’s analysis indicate that marketer should focus on

mass market. It is not necessary that a person who is earning well can be the right

customer for the Bakeri biscuits, anyone can purchase it. Company major target is to

give variety of choice to consumer what he/ she likes can pick from the portfolio of

LU Brand.

As the research outcomes are that area of residence has no role in the decision

power of consumer. A consumer living in DHA can buy Bakeri (Date) for his need and

for his taste; similarly consumer of Nazimabad can also buy the Bakeri (Date) as his/

her will and wish. So researcher recommends the LU (Bakeri) manufacturers that

they should place them equally in all area of residence and market them in equal

way so their product availability is more important.

Consumption patter on consumer is very important for the manufacturer and for the

retailer as well. Manufacturer will produce their products as per consumption and

retailer will maintain the stock as consumer consumption. So research indicates that

gender is barometer of decision making in the consumption of FMCG product

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specially LU (Bakeri) Biscuits. Marketer should focus the gender in their

advertisement and bring their attention on key elements for each market.

Most of the companies extend their brand to cater more customers and increase the

sale and revenue for them, same case with LU when it extended brand with the

introduction of Bakeri. Very interesting results of research are that brand extension

of LU (Bakeri) increase the reputation of pattern brand name LU. Researcher

recommends that LU that their decision of extension of brand was a good decision

and it further line extension is giving more sale and reputation.

Finally research come to conclusion that brand extension make consumer life easy.

Consumers are happy with range of available taste and product as per their need

and demand. LU decision of Bakeri brand was very successful and it’s line extension

with respect to different taste like coconut, date, classic etc are further steps to

satisfied their loyal customers.

LU can increase its sale by bring the small ticky packs of Bakeri all flavors to target

the school going children. LU already introduced TUC, Tiger and Prince Biscuits in

ticky packs so now it is a good time to leverage their Bakeri brand with ticky packs in

the market.

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QUESTIONNAIRE
Thank you for your cooperation to complete the questionnaire. The information you provide me will be
confidential and will not be used for any other purpose.
Instructions: Please read each item and CIRCLE the number that most accurately reflects your opinion
Gender Age
�Male �Female �21 – 30 �31 – 40 �41 – 50 �50 and Above
Qualification
�Graduation �Post Graduation �MS/Phil �Doctoral
Income
�10,000 –20,000 �21,000 – 30,000 �31,000 – 40,000 �41,000 & Above
Area of residence?
�DHA �Clifton �P.E.C.H.S �Gulshan-e-Iqbal �Saddar �North
Nazimabad
Profession
�Marketing �Banking �Engineering �Doctor �Teacher �Others
Brand knowledge:
1- Are you familiar with Brand Name LU (Bakery) Biscuits? Yes / No
2. Did you know what are the products of the LU (Bakery) Biscuits taste like? Yes / No
3. Can you recognize LU(Bakery) Biscuits brand among other competitive brands? Yes / No
4. Is corporate LU brand is appealing to you? Yes / No
5. Is the products of the company with brand extension do satisfy your need? Yes / No
6. Is brand extension like any other extension in the industry satisfy your need? Yes / No

Brand Extension effects:


(5-Strongly agreed 4- Agreed 3-Netiher agreed nor disagreed 2-Disagreed
1-Strongly Disagreed)
1- Do you agree that extensions of LU Bakery have no difference with the existing one? 5 4 3 2 1
2- Did you agree that the Extension of Bakery Biscuits sabotage the Lu Bakery Biscuits? 5 4 3 2 1
3- Are you agree that Extension of Brand make our choice easy? 5 4 3 2 1

Brand Extension and Consumer Buying Behavior:


1- Which taste would you like to purchase after Brand Extension of LU (Bakery)?
�Classic �Coconut �Date �Plain
2- In your opinion do you assess which taste would prefer more to buy the customers?
�Classic �Coconut �Date �Plain
3- In your opinion which brand need more improvement to get customer attention
�Classic �Coconut �Date �Plain
Brand Extension and Consumption Pattern of the Consumer;

1- Pick any one factor which affects your buying decision : �Name �Price �Availability �Taste

2- Pick any one factor which affects your selection of taste: �Sweet �Crispy �Hygiene �Bitter

Page 149 of 170


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