Organizations use this strategy to increase and leverage brand equity (definition: the net worth and long-term sustainability just from the renowned name).
Some studies show that negative impact may dilute brand image and equity.
Ralph Lauren's Polo brand successfully extended from clothing to home furnishings such as bedding and towels.
Both clothing and bedding are made of linen and fulfill a similar consumer function of comfort and hominess.
In their 1990 model, Aaker and Keller provide a sufficient depth and breadth proposition to examine consumer behaviour and a conceptual framework.
[18][19] When consumers are faced with thousands of products to choose amongst, they are not only initially confused, but try to categorise by brand association or image given their knowledge and previous experience.
Consumers categorise new information into specific brand or product class label and store it.
[23][24] Literature related to negative effect of brand extension is limited and the findings are revealed as incongruent.
[25] Conversely, Loken and Roedder-John (1993) indicate that dilution effect do occur when the extension across inconsistency of product category and brand beliefs.
The failure of extension[26] may come from difficulty of connecting with parent brand, a lack of similarity and familiarity and inconsistent IMC messages.
Marketers spend time and money to maximise exposure and awareness of the product.
In spite of Aaker and Keller's (1990) research, which reports that prestigious brands are not harmed from failure of extensions, some evidence shows that the dilution effect has great and instant damage to the flagship product and brand family.
Still, some studies suggest that even though overall parent belief is diluted; the flagship product would not be harmed.
Coca-Cola had to make considerable efforts to regain customers who had turned to Pepsi cola.
Although there are few works about the failure of extensions, literature provides sufficient in-depth research into this issue.
Every marketer should pursue the long term equity and pay attention to every strategy in detail.