Brand Extensions of FMCG in Pakistan A Modular Approach To Study The Impact of Brand Extensions

BRAND EXTENSIONS OF
FMCG IN PAKISTAN
A
MODULAR APPROACH TO STUDY THE
IMPACT OF BRAND EXTENSIONS
BY
TARIQ JALEES
THESIS SUBMITTED IN
PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE DEGREE OF M-PHIL
MAY 2008
ACKNOWLEDGMENTS
It took me more time than anticipated, more than a year to finalize my thesis. I
am obliged to and thank acknowledge all those people who have been a
source of encouragement, inspiration and motivation. Since I have not
maintained a proper record of all these helping hands, I would like to
apologize to those whose names I am not able to mention, here. Nonetheless,
I shall ever remain grateful and indebted to them all. I am thankful to the
management PAF-Karachi Institute of Economics and Technology, for having
provided an opportunity to upgrade my qualifications, and a stepping stone for
a Doctorate. In this context, I would like specially to mention the names of Air
Commodore (Retired) Mohammad Khalid Hussain, the President of the
Institution, Ex- Dean of the institute, Dr. Javaid A. Ansari, Ex-Director of
College of Management Science Mr. Raza Kamal, and the present Dean of
the institute Dr. Manzoor A. Khalidi. It would not be fair, if I do not mention the
name of Associate Professor Mr. A.A.Kanwar, of PAF-KiET, who not only
encouraged me all the time, in fact he
has always been breathing on my neck not only to complete the M-Phil, but
also go for a PhD.
I would also like to thank my Dr. Javed R. Laghari, Ms. Azra Maqsood, Dr.
Amanat Ali Jalbani, Dr. Mustaghis-ur-Rahman and Mr. Zia Memon of
SZABIST and Dr Wasim Qazi, Mr. Imtiaz Arif of IQRA with whom I had been
associated for a while before joining the PAF-KIET.
Last but not least, I would like to thank my supervisor Dr. Tahir Ali for
providing all the necessary guidance and supervision due to which I was not
only able to complete the thesis but was also able to present the summarized
versions of the thesis at an international conference at Dubai, UAE and
various other international journals.

i
CERTIFICATE OF STATEMENT
I hereby certify that this paper constitutes my own product, that where the
language of others is set forth, quotation mark so indicate, and that
appropriate credit is given where I have used the language, idea, expression
or writing of the others
SIGNED ______________________
TARIQ JALEES
ii
APPROVAL PAGE
BRAND EXTENSIONS OF
FMCG IN PAKISTAN
A
MODULAR APPROACH
TO STUDY THE IMPACT S OF BRAND EXTENSION
BY
TARIQ JALEES
APPROVED____________
SUPERVISOR: Dr. Tahir Ali
APPROVED
______________
Dr. Manzoor A. Khalidi
Dean of College of Management Sciences
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TABLE OF CONTENTS
ACKNOWLEDGMENTS ..........................................................................................................................I
CERTIFICATE OF STATEMENT ......................................................................................................... II
APPROVAL PAGE ............................................................................................................................... III
TABLE OF CONTENTS........................................................................................................................IV
ABSTRACT ........................................................................................................................................... VII
CHAPTER-1 .............................................................................................................................................. 1
INTRODUCTION ..................................................................................................................................... 1
1.1 PURPOSE OF THE STUDY ..........................................................................................................2
1.3 CONTRIBUTION OF THIS STUDY ............................................................................................2
1.3 PROBLEM STATEMENT.............................................................................................................3
CHAPTER - 2 ............................................................................................................................................ 4
LITERATURE SURVEY ......................................................................................................................... 4
2.1 BRAND...........................................................................................................................................4
2.2 BRAND EQUITY...........................................................................................................................6
2.3 BRAND MANAGEMENT STRATEGY.......................................................................................8
2.4 BRAND EXTENSION ...................................................................................................................9
2.5 RISK IN BRAND EXTENSIONS................................................................................................13
2.6 RATIONAL AND BENEFIT OF BRAND EXTENSION...........................................................14
2.7 CATEGORIZATION THEORY ..................................................................................................18
2.8 CONGRUITY THEORY..............................................................................................................19
CHAPTER-3 ............................................................................................................................................ 20
EMPIRICAL MODEL VIZ. HYPOTHESES .............................................................................................20
3.1 EMPIRICAL MODEL ..................................................................................................................20
3.2 HYPOTHESES .............................................................................................................................21
CHAPTER -4 ........................................................................................................................................... 22
METHODOLOGY .................................................................................................................................. 22
4.1 STIMULI SELECTION................................................................................................................22
4.2 MEASUREMENTS......................................................................................................................22
4.2.1 DEPENDENT VARIABLE ................................................................................................ 23
4.2.1.1 CONSUMER EVALUATION OF BRAND......................................................................... 23
4.2.2 INDEPENDENT VARIABLES .......................................................................................... 23
4.2.2.1 SIMILARITY......................................................................................................................... 23
4.2.2.2 REPUTATION OF PARENT BRAND ................................................................................ 23
4.2.2.3 PERCEIVED RISK ............................................................................................................... 24
4.2.2.4 INNOVATIVENESS............................................................................................................. 24
4.2.2.5 MULTIPLE BRAND EXTENSIONS................................................................................... 24
4.2.2.6 PARENTS BRAND CHARACTERISTICS......................................................................... 24
4.2.2.7 PARENT BRAND CONSISTENCY .................................................................................... 25
4.2.2.8 BRAND EXTENSIONS FIT................................................................................................. 25
4.3 SAMPLE SIZE..............................................................................................................................25
CHAPTER-5 ............................................................................................................................................ 27
RESULTS AND DISCUSSIONS ........................................................................................................... 27
5.1 DISCUSSIONS RESULTS OF REPUTATION, SIMILARITY & ASSOCIATION .................27
5.1.1 SIMILARITY ...................................................................................................................... 27
5.1.2 PARENT BRAND CHARACTERISTIC & EVALUATION............................................... 28
5.1.3 REPUTATION................................................................................................................... 29
5.1.4 STIMULI ........................................................................................................................... 29
5.1.5 HYPOTHESIS ONE: ...................................................................................................................30
5.1.5.1 CLOSE EXTENSION................................................................................................................... 30
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5.1.5.2 DISTANCE EXTENSION............................................................................................................. 32
5.2 DISCUSSIONS & RESULTS OF INNOVATIONS & PERCEIVED RISK ..............................35
5.2.1 PERCEIVED RISK.......................................................................................................................35
5.2.2 INNOVATIVENESS........................................................................................................... 36
5.2.3 STIMULI ........................................................................................................................... 36
5.2.4 HYPOTHESIS TWO: ...................................................................................................................36
5.2.4.1 CLOSE EXTENSION..................................................................................................................... 37
5.2.4.2 DISTANCE EXTENSION............................................................................................................. 38
5.3 DISCUSSIONS & RESULTS OF CONCEPT CONSISTENCY ................................................41
5.3.1 BRAND CONCEPT CONSISTENCY & EXTENSION ..................................................... 41
5.3.2 HYPOTHESIS.................................................................................................................... 42
5.3.2.1 CLOSE EXTENSION.................................................................................................................... 42
5.3.2.2 DISTANCE EXTENSIONS .......................................................................................................... 44
5.4 RESULTS AND DISCUSSIONS ON BRAND EXTENSION FIT.............................................47
5.4.1 BRAND EXTENSION AND PERCEIVED FIT ................................................................ 47
5.4.1 HYPOTHESIS-4 ................................................................................................................ 48
5.4.2.1 CLOSE EXTENSION ........................................................................................................... 49
5.4.2.2 DISTANCE EXTENSION .................................................................................................... 51
5.5 DISCUSSIONS AND RESULTS ON MULTIPLE BRAND EXTENSIONS ............................54
5.5.1 MULTIPLE BRAND EXTENSIONS AND EVALUATION............................................... 54
5.5.1 HYPOTHESIS 5 ................................................................................................................ 55
5.5.1.1 CLOSE EXTENSION ........................................................................................................... 55
5.5.5.2 DISTANCE EXTENSION .................................................................................................... 57
CHAPTER 6............................................................................................................................................. 59
CONCLUSIONS...................................................................................................................................... 59
CHAPTER 7 ................................................................................................................................................64
RECOMMENDATIONS ............................................................................................................................64
REFERENCES........................................................................................................................................ 66
APPNEDIX-1 QUESTIONNAIRE ........................................................................................................ 74
LIST OF TABLES
Table 1: Town wise Population and size................................................................................ 26
Table 2: Multiple regression of Close distance extension ...................................................... 31
Table 3: ANOVA (Close Extension) ....................................................................................... 31
Table 4: Coefficient (Close Extension)................................................................................... 31
Table 5: Multiple Regression of Distance Extension .............................................................. 33
Table 6: ANOVA-Distance Extension .................................................................................... 33
Table 7: Coefficients- Distance Extension ............................................................................. 33
Table 8: Multiple Regression of Close Extension................................................................... 37
Table 9: ANOVA of Close Extension ..................................................................................... 37
Table 10: Coefficients of Close Extension ............................................................................. 38
Table 11: Multiple Regression of Distance Extension ............................................................ 39
Table 12: ANOVA, Distance Extension.................................................................................. 39
Table 13: Coefficients, Distance Extension............................................................................ 39
Table 14: Multiple Regression of Close Extension................................................................. 43
Table 15: ANOVA, Close Extension ...................................................................................... 43
Table 16: Coefficients, Close Extension ................................................................................ 43
Table 17: Multiple Regression of Distance Extension ............................................................ 44
Table 19: Coefficients Distance Extension............................................................................. 45
Table 20: Multiple Regression, Close Extension.................................................................... 49
Table 22: Coefficients, Close Extension ................................................................................ 50
Table 23: Multiple Regression Distance Extension ................................................................ 51
Table 26: Multiple Regression, Close Extension.................................................................... 56
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Table 28: Coefficient, Close Extension .................................................................................. 56
LIST OF GRAPHS
Graph 1: Scattered Chart-Close Extension............................................................................ 31
Graph 2: Scattered Chart-Distance extension ....................................................................... 33
Graph 3: Scattered Chart, Close Extension ........................................................................... 38
Graph 4: Distance Extension ................................................................................................. 39
Graph 5: Scattered Chart Close Extension ............................................................................ 43
Graph 6: Scattered Chart, Distance Extension ..................................................................... 45
Graph 7: Scattered Chart, Close Extension .......................................................................... 50
Graph 8: Scattered Chart Distance Extension ....................................................................... 52
Graph 9: Scattered Diagram, Close Extension ...................................................................... 56
Graph 10: Scattered Chart, Distance Extension .................................................................... 58
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ABSTRACT
Most of the previous researches have used up to four factors for ascertaining
how consumers evaluate brand extension by using hypothetical brand
extension and college students as a subject. This study has identified several
variables that could influence the consumer evaluation of the brand extension
and then have used eight of them to ascertain the relationship of these
variables with the dependent variable “consumer evaluation” of brand
extension. The variables used in the empirical models are listed as (1)
similarity (2) reputation (3) innovativeness (4) perceived risk (5) multiple
extensions (6) parent brand characteristics (7) concept and consistency (8)
brand extension fit.
Moreover, four different real life brands have been used as stimulus in this
study which are: (1) Tapal Tea Viz. Tapal Tea Bag., (2) Life Buoy Soap Viz.
Lifebuoy Shampoo. (3) Sufi Vegetable Oil and Sufi Washing Soap. (4)
Woodward Gripe Water and Woodward Toothpaste. Two of the stimuli were
close brand extensions and the other two were distance brand extensions.
Based on these variables, a questionnaire was developed that was
administered to a sample size of 700. Quota sampling was used for drawing
samples from 18 Union District Council (UDC) of Karachi. The subject has
been drawn in such a manner that it would be a representative sample. The
research has established that the relationships of independent and dependent
variables is highly on related to “close brand extension” and “distance brand
extension”
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CHAPTER-1
INTRODUCTION
The present chapter introduces the theme of this master thesis, and the
motives, problems and findings that lie behind this choice. It includes a short
background, of the area of investigated and continues with objective and
ends up with the problem statement.
Growth is necessary for companies to stay competitive, and for achieving

growth, firms must launch new products, consistently. However, a failure rate
for a new launch is very high. Researchers found that failure rate of new
product in early eighties and nineties were between 30 to 35% (Montoya-
Weiss & Calanone 1994). Crawford (1997) findings on new products’ failure
were more alarming as he found that the failure rates in nineties were as high
as 80%.
New product failure could hurt the firm quite substantially and the loss could
run in millions. “RCA lost $850 million on its Selecta Vision. Texas instrument
lost a staggering $660 million on disc computer before withdrawing from the
home computer business; web TV lost $725 million before it was shut down.”
(Kotler & Armstrong 2006). It has become very difficult for a new product to
succeed because of ever increasing advertisement cost and sever
competition for limited shelf space. (Aaker 1991; 1996)
In view of the built-in risk associated with new products, brand extensions are
commonly used by companies for pursuing growth strategies.
In 1980s, the brand extension strategy for expansion became so popular that
of the entire new products launched in this era, about 80% of them were
brand extensions (Ries & Trout 1986). However, by 1990s the share of brand
extensions increased to 90%. Firms have adapted to this growth strategy
because financial and marketing benefits of this strategy are enormous (Aaker
1991). The researchers have found that the growth rate of introducing new
products by using brand extension strategy has an increasing trend. The
reasons for such a trend were: (1) substantial benefit and (2) reduced risks
associated with the brand extensions. Market intelligence service (2001) in
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this context reports that about 31,432 new consumer related products were
launched in the year 2000; this was 21% higher than the preceding year. And
again, the market share of the brand extension remained 90%.
Brand extension may also adversely affect the brand name that happens to
be the most important asset of any company. Wrong extension, not only
results in substantial loss of time and other market opportunities, but it may
also lead to the “damaging association that may be expensive or even
impossible to change” (Ries & Trout 1986).
Consistent and repeated brand extensions may dilute the brand equity and
lead to the death of the brand name associated with the brand equity (Gibson
1990). Other researchers found no evidence that suggests a positive
relationship between unsuccessful brand extension and dilution of brand
equity (Keller & Aaker 1992). Aaker (1992) and Romeo (1991) found that
brand extension failures in terms of sales and product performance had no
adverse impact on the prominent and established brands (Aaker 1992;
Romeo 1991).
Popularity of brand extensions as a growth strategy has opened various

avenues of brand extension related research, including, how consumer
evaluate brand extensions, and what are the factors that contribute towards
the success of brand extensions.
1.1 PURPOSE OF THE STUDY
The objectives of the study were to (1) identify the variables that affect the
consumer evaluation of brand extensions, (2) develop an empirical model
showing relationships of the variables and, (3) test the validity of the empirical
model, separately for close and distance brand extensions.
1.3 CONTRIBUTION OF THIS STUDY
Researchers have made significant contributions in the last few decades

towards explaining how consumers evaluate brand extension (Nkwocha
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2000). However, the scope of the previous researches has had a certain
degree of limitation. Most of the previous researches have used up to four
factors for ascertaining how consumers evaluate brand extension. The stimuli
in most of the previous studies were found to be hypothetical brand extension,
and the subjects, in most of the studies, were college students. The
contribution of this study is that it has attempted to ascertain the relationship
of eight variables that are related to consumer evaluation of brand extension.
Moreover, four different real life brands have been used as stimulus in this
study. Two of the stimuli were close brand extensions and the other two were
distance brand extensions. The subject has been drawn in such a manner
that it would be a representative sample. To the best of author’s knowledge,
no such comprehensive study on brand extension in Pakistan’s scenario has
ever been carried out
1.3 PROBLEM STATEMENT
The failure rates of new product over the last few decades have increased
tremendously; therefore, firms have resorted to brand extensions, because of
inherent advantages including its acceptability, low promotion cost and
comparatively lesser degree of failures. Despite these advantages, the failure
rate of brand extension has remained significant in the last one decade.
Therefore, the researchers have been focusing in identifying the factors that
consumers use for “evaluating the brand extension”, or the factors that are
contributes towards the success or failure of brand extensions. The focus of
this study is to identify the variables that consumers uses for evaluating brand
extension. The variables used in this study are inclusive of (1) similarity, (2)
reputation of parent brand, (3) perceived risk, (4) Innovativeness, (5) multiple
brand extensions (6) parent brand characteristics (7) parent brand
characteristics (8) brand extension fit. The behavior and relationships of these
independent variables, with the dependent variable “consumer evaluation” of
brand extension will help marketers to use brand extension strategy more
effectively and successfully.
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CHAPTER - 2
LITERATURE SURVEY
This chapter intends to set a theoretical framework of the thesis by introducing

the main areas needed to create basis of our analysis, shaping the way
toward our main purpose. Thus, it begins with a short description of the brand,
brand equity, brand management strategy, brand extension, risk in brand
extension, and rationale behind brand extension, categorization theory and
ends on congruity theory.
2.1 BRAND
Branding has an ancient history. It could be traced back to times when the
ancient Egypt brick makers used to stamp symbols on bricks for identification
and distinction purposes (Farghuhar 1990). Nilson (1998) on the other hand
found that ancient farmers used to put symbols on cattle with the help of hot
iron, which meant burning. The word “brand” has been derived from the
Scandinavian word "branna" that means to burn. In Swedish language the
word "brand", means fire. Thus, when a producer puts some marks or
symbols on their product, it will come in the category of branding (Nilson
1998). One of the advantages of strong brand name is that it helps in
penetrating in a new market or a new market category. Globalization has
created tremendous brand awareness and this awareness is not dependent
on the availability of the products. (Czinkota & Ronkainen 2001). For
example, brands such as McDonald, Pizza Hut and KFC had very strong
awareness in Pakistan even before they opened their franchises in the
country.
The evolution of brands continued in early twentieth century. There were

several commonly recognizable brands in this era. By the mid of twentieth
century (1950) this branding concept gained substantial momentum, so much
so that it became strategic marketing activities for market oriented companies
(Blois 2000). Since the nineties, companies started treating brands as an
important asset (Nijssen 1999).
The success stories of leading and powerful corporation will tell that all of
them owned “strong brand”. Realizing the importance of brand, the companies
4
are now giving more attention to brands, which was previously reserved for
employees or tangible assets such as capital and equipment (Daivs 2002).
Kotler and Armstrong (2007) 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 (Kotler & Armstrong 2007). According to American Marketing
Association 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," (American Marketing Association
2007).
The scope of branding is beyond product identification. Brands not only reflect
quality but it helps in creating competitive advantage and helps customers in
making purchase decisions (Kapoor 2005). Keller (1996) also adds that
branding should be used for creating brand awareness and developing
associations in accordance with the firm's strategic goals.
Branding has two perspectives. One is product plus view and the other is
holistic view. In product plus view, brand is perceived as an addition to the
product; therefore, it is also termed as an identifier. In holistic view, the scope
of brand is not restricted to product. In fact, in holistic view, it is a reflection of
all the 4p’s of the marketing mix. Brand, besides offering product, contains
certain attributes that may provide satisfaction to the purchaser. These
attributes are not restricted to tangibility or rationality but are inclusive of
intangible or invisible features (Ambler & Styles 1996).
Researchers are of the opinion that branding is beyond creating unique

identity, it helps in establishing preferences, creating habits, loyalties and
building relationship between a brand and customers. Thus, the customers
are not only able to distinguish one brand from another but are also able to
develop their relative positioning. Brand also helps in adding more value to
the product. (Wells & Burnett & Moriarty 2000).
5
Branding is an important managerial activity for creating awareness about the
brand and its benefits and helping competitors to differentiate their products.
Brands thus are important assets of organizations and in some cases the
book value of a company may show that brands have a significant share as
compared to other tangibles (Kamakura & Russell 1991). Business week
(2004) reported that the market capitalization of the Coca Cola Company as
of early 2004 was approximately $120 billion, out of which more than 50%
($70 billion) was it’s brand value. Similarly, Procter & Gamble sold to
Cadbury-Schweppes its “Hires” and “Crush” product-line at $220 million. Of
this aggregate, about 90% of the total price was associated with brand assets.
(Kamakura & Russell 1991).
2.2 BRAND EQUITY
Brand equity is a relationship between customers and brands, resulting in a

profit to be realized at a future date (Wood 2000). Kotler and Armstrong
(1996) 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. (Kotler &
Armstrong 1996)
Ambler and Styles (1997) 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
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cause confusion, because of the difficulty in measuring it (Amler & Styles
1997).
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). The recent merger and acquisition trend
has also increased the importance of measuring brand equity (Tauber 1988).
The role of brands is now far beyond product differentiation or competing for
market share. They are accumulated annuities which the firm can acquire from
its balance sheet (Tauber 1998).
Firms could have a strong competitive edge over competitors, if they could
create brand equity ‘through building awareness, image, and linking
associations’ (Keller 1998). 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.
(Keller 1998).
Brand equity, since last one decade, has remained popular for attracting new
market segments (Pitta & Katsanis, 1995). This phenomenon of brand equity
has coincided with the newly emerged but equally popular phenomenon of
brand extension (Ambler & Styles 1997). 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 (Pitta & Katsanis 1995.)
Investment and brand equity both have a limited life. Brand equity cycle is
comprised of growth, reinforcement or decay, and is vulnerable to
7
competitors. Organizational actions have a direct bearing on the brand equity.
Strong brand equity also helps in reducing the introduction cost of new
brands. (Pitta & Katsanis 1995),
Some of the brand equity definitions are based on strategic marketing

perspective and others on financial theory perspective (Kapoor 2005). 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, p.7).
Keller (1993) 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, p. 2).
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). It has been found
that one of the strongest motivating factors for inducing trial purchase is
established brand name (Aaker 1990). 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).
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 brands. Thus, retention of loyal customer is easier than non-loyal
customer (Aaker 1992).
2.3 BRAND MANAGEMENT STRATEGY
The concept of brand management is not entirely new in the marketing of

consumer products. Proctor & Gamble (P&G) when launched “Camy” brand in
8
1930, they were afraid that this brand would fail, as it would have to compete
directly with the company’s established brands (e.g., Ivory). In order to give
protection to the newly launched “Camy” the company for the first time in
history, introduced the “brand manager system.” Under this system, a brand
manager was appointed for “Camy”, and he was given all the authority,
including competing directly against the established brands (Zenor 1994). The
strategy of brand management was so successful that the firm formally adopted
this philosophy. Subsequently, other industries, including food, soap, toiletries,
and chemical industries, adopted the brand management strategy initiated by
Procter & Gamble for Camy Soap (Low & Fullerton 1994).
Four brand strategies are available for a company: multi-brands, to introduce

a new brand, line extensions, or brand extensions (Kotler & Armstrong 2007).
Multi-branding is introducing additional brands in the same product category in

which the company is presently active. The purpose of multi-branding is to
establish different features so that they are appealing to several different
buying segments at the same time. Procter & Gamble following this strategy
has thus included nine different kinds of laundry detergents. The second
strategy is a creation of a new brand when launching into a new product
category. Generally, a new brand is developed when firms believe that the
current brand is loosing its charm and a new brand name is needed or when
the firm feels that the current brand name is not appropriate for a new product
(Kotler & Armstrong 2007). The other two concepts of brand extension and
line extensions are discussed in subsequent sections.
2.4 BRAND EXTENSION
Some of the commonly used definitions of brand extensions are as follows:

Using an established name of one product class for entering another product
class (Aaker 1991). Using a successful brand name for launching a new or
modified product or line is known as brand extension strategy (Kotler 1991).
An expansion strategy in which firms use already established and successful
brand name for introducing a new or modified product (Kotler & Armstrong
1990). Using an established brand name for introducing a new product into
9
product category which is new to the company is known as franchise strategy
(Hartman & Price & Duncan 1990).
There are several ways for “accomplishing” brand extensions, including

horizontal extension, distance extension, and vertical extension (Pitta and
Katsanis 1995).
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 (Pitta and Katsanis 1995). Horizontal
extension again could be extended into two categories. One is line extension
and other is franchise extension. Aaker and Keller (1990) 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 (Aaker & Keller 1990). 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 (Aaker and Keller 1990). 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 entering a product category that is
new to the company (Tauber 1981).
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).
Distancing is a deliberate effort to increase the perception distance of the core

brand and extension product (Kamal 2003). 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).
10
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) 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)
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). 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 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 (Nkocha 2000)
Ambler and Styles (1997), 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. The definition proposed by
Ambler and Styles(1997) is: 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, it comes in the category of line extension. These line-
extensions are commonly used in dairy products, and shampoo (Kotler &
Armstrong, 2007)
However, launching a new or modified product in a new category but using

successful brand name would be brand-extension (Kotler & Armstrong 1996).
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
11
(Kotler & Armstron, 1996). 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).
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 chances of successful brand extension would be bright (Ambler &
Styles 1997).
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
(Nijssen 1999). 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).
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). 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). 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).
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). 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).) 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). The firm must understand the managerial process
12
involved in brand extensions and study the factors that contribute to the
success of brand extensions (Ambler & Styles 1997).
2.5 RISK IN BRAND EXTENSIONS
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)
Ries and Trout (1986) 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) 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) 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. Loken & John
(1993) 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 of the parent’s brand are weak as well.
(Shocker, Srivastava & Rueker 1994)
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 “closes ness” between parent brands from the
consumers’ perspective. (Sharp 1993; Farquhar 1990).
13
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).
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). 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).
2.6 RATIONAL AND BENEFIT OF BRAND EXTENSION
The cost of launching a new product has increased tremendously and the risk
of failure is high. These constraints have made brand extension strategy very
popular. Brand extension is not only cost efficient but it is less risky as
compared to a new brand launch (Ambler & Styles 1997). The survival rate of
brand extensions is generally higher than a new brand launch (Grime & Smith
2002).
Of all the reasons for adopting brand extension strategy, the most vital is that
it facilitates growth (Kapferer 2001). The biggest advantage of brand
extension is that the growth could easily be achieved by keeping the cost
within controllable limits (Sharp 1993). The penetration capability of a new
product with the same name would be considerably higher than the product
with a new brand name. The brand extension strategy has the potential to
capture substantial market share of growing segment by drawing a parallel
between the positive values associated with the core brand and extended
brand (Kapferer 2001). Brand extension increases the market coverage, its
strength, and creates a segment that was not in existence previously (Kim &
Lavack 1996)
14
In this context, Virgin Company is one of the many companies that have
successfully ventured into new market by using the reputation of the existing
brand. The company initially was a publisher and a retailer of popular music,
subsequently, it successfully ventured through brand extension strategy into
diversified business such as airlines, cola production, and financial services
(Randall 2000).
Brand extension growth strategy has several economic advantages.

Therefore its popularity has also increased because of this cost advantage.
The cost in brand extension strategy reduces quite considerably as the firms
may not have to incur expenses for searching a suitable name for the product,
advertising expenses would be minimal as the customer may be aware of the
extended brand because of the strong brand name of established parent
brand (Aaker 1992). According to an estimate, launching a new brand is
expensive as it cost about one billion dollars in USA, whereas the cost of
launching an extended brand is a fraction of new brand (Randall 2000). The
extended brands inherit a strong positioning from the established core brand,
therefore, the risk of failure of extended brand is also low (Aaker 1992).
Whether a new product is launched with a new brand or is extended with an

established name in both the cases a certain portion of sales are allocated for
advertising and other fixed expenses. In case of brand extension the
possibility of a reasonable return on small volume is higher as the advertising
and other fixed expenses in this case are reasonably low (Buday 1998).
Ambler and Styles (1997) were of the opinion that the cost of building
awareness is low in case of brand extension because the core brand has a
certain reputation, thus parent and extension both will promote each other as
both of them have the same strong brand name. Advertisement costs in brand
extension are distributed to more than one product, thus this advantage of
economies of scale makes the brand extension more attractive. Customers
are more familiar with the strong brand therefore its extension generally
receives positive and stronger response. In view of high revenue generating
capability of well-managed brand extension this expansion strategy is
becoming more attractive to the firms ( Buday 1989; Nilson 1998).
15
While deliberating on the economic rationales for brand extension Kapferer
(2001) warned that the firms should not get mixed up between two different
issues which are (1) increasing profitability and (2) reducing cost. The
production cost, distribution cost and communication cost varies from one
market to other, therefore, the profitability may also vary accordingly. Hence,
the profitably ratios of all the companies may not be the same. Thus, the
brand extension strategy should be used for those markets where the degree
of profit is high and cost structure is low (Kapferer 2001). If the extension is of
a strong brand then the company could take the liberty of charging a higher
premium of about 17% on it extended product (Buday 1989).
Brand extensions of strong and familiar core brands provide a certain degree
of comfort and assurance to the customers, therefore, the customers would
not hesitate in trying such extended brands. Thus, the trial cost for brand
extension would be quite lower than the new brand (Smith & Park 1992).
Other researchers also found that brand extension of established name have
several advantages including low cost, high success rate and it helps
“customer trial” ( Pitta & Katsanis 1995; Aaker & Keller 1990).
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 others but the quality of the core brand leads to higher
level of acceptance and increase the awareness of the brand extension (Pitta
& Katsanis 1995).
Brands with strong reputation can capitalize its name and success by
extending it in other categories (Randall 2000). Pitta and Katsanis (1995)
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) 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.
16
Customer based equity helps in increasing the brand image while the parent
brand and the extended brand makes the brand stronger and helps in creating
a “mega brand” (Pitta & Katsanis 1995). A mega-brand helps in increasing
distributors’ bargaining power creating investment opportunities, and
enhancing value of brands that critically affects brand positioning (Ambler &
Styles 1997). The firm, thus, in its media campaign could focus on perceived
quality and value of brands that helps in avoiding product specification based
advertising battle (Pitta & Katsanis, 1995).
The environment is constantly changing, and according to Kapferer (2001),

brand extensions help in increasing and maintaining its equity in this
vulnerable environment within and outside the country. The old brand tends to
have an aging affect. Brand extensions helps in “revitalizing” the old and
aging brands of the company. Launching a new brand with the same name
not only allows the company to recaptures its reputation, but also helps in
enhancing the image, and widens its appeal (Kapferer 2001).
The competitors are always targeting the niche gaps that the prevailing
brands may not be protecting effectively and efficiently. Brand extensions help
firms to fill those vulnerable gaps which the competitors may target. Filling
shelf space is an important marketing strategy for preventing the competitors
to sneak in. The brand extensions help in filling shelf space in the market and
make it more difficult for the competitors to attack from this end (Randall
1997). Some product categories lack quality and may not fulfill the consumer
needs in one part of the world. The brand extensions help to fulfill the demand
of other parts of world where the brand has strong reputation and more need
for it (Weilbacher 1995).
The company, at times, possesses certain technologies and expertise. This

indigenous technology and the expertise in Research and Development could
be utilized to develop a new product with the objective of extending the strong
core brand (Randall 2000; Ambler & Styles 1997). Consumer perceives the
level of transferability of expertise from one product to other differently. If
customer feels that the technological transferability to new product is difficult
17
the consumer acceptance would be positive, otherwise the level of
acceptance would be low (Randall 2000).
2.7 CATEGORIZATION THEORY
Categorization theories state that consumer attitude would be positive for

those extensions that are closer to the parent brand category (Fiske &
Pavelchak 1986; Sujan 1985). Consumer, while evaluating brand extension,
either adopts category based process or a piece meal process. If there is a
similarity between the extension and the schema (previous perception), then
according to categorization theory the consumer judgment would be based on
family resemblance. If there is a mismatch between the parent brand and
extension in terms of category then according to piece meal process the
consumer judgment is based on the specific attribute of the extension
(Nkwockha 2000). Aaker and Keller (1990) extension study was based on the
categorization theory. This study was carried out to study the consumer
perception and reactions on brand extensions. For this purpose, Aaker and
Kelly (1990) used six non-durable consumer goods and twenty hypothetical
brand extensions for ascertaining how the consumers evaluate brand
extension. The consumer evaluation for the product extension was positive for
those extensions that have a certain level of fit between core brand and
extended (Nkwocha 2000). The subject in the study had positive attitude
towards the core brand (crest) and hypothetical extension (crest mouth wash).
In view of the similarity between the core brand and extension, some of the
respondents were of the opinion that the crest mouthwash not only tastes like
tooth paste but would also fight cavities. Comparatively, the respondents’
opinion on the extension of Heineken beer to Heineken wine and popcorn was
poor, despite the positive opinions on the two brands. Thus, this example
supports the premise of categorization theory that positive attitude would only
transfer to the extension, when there is a certain level of fitness between two
product classes. Respondents felt that the beer and wine is a bad
combination and also beer and popcorn does not mix (Nkwocha 2000).
18
2.8 CONGRUITY THEORY
Schema congruity theories (Handler 1982) propose that cues (e.g., brand
names) state that some degree of congruity has a relationship with the level of
processing used by the consumers. If there is some degree of incongruity
than the consumer will process brand extension more positively. However, the
consumer evaluation will not be that positive if the (1) cues are congruent or
extremely incongruent (Nkwocha 2000).
How consumer makes judgment depends on structural congruity between

event and schema. If new events are similar to the existing schema it would
have a positive evaluation familiarity, acceptability, and liking. On the other
hand if the new events are “incongruent”, then it would lead to evaluation
process that may have positive or negative results (Mandler 1982). In this
context, when one sees a Pierre Cardin clothing on display with no price tag
he will assume that the displayed clothing is expensive. In this case, the
consumer has drawn the conclusion from schema (past experience) that
Pierre Cardin products are expensive and prestigious (Nkwocha 2000).
19
CHAPTER-3
EMPIRICAL MODEL VIZ. HYPOTHESES
This chapter illustrates an empirical model showing relationships of variables

used in the study and ends with the derived hypothesis which is the main
theme of the study.
3.1 EMPIRICAL MODEL
The relationships of different variables with the dependent variables have

been illustrated through an empirical model which is presented below:
FIGURE-1
EMPIRICAL MODEL
SIMILARITY
REPUTATION H1
PARENT BRAN. CHARACTERISTIC

CONSUMER
PERCEIVED RISK EVALUATION
H2 OF
INNOVATION
BRAND
MULTIPLE EXTENSION H3 EXTENSION
CONCEPT AND CONSISTENCY H4
BRAND EXTENSION FIT H5
In the above empirical model, the dependent variable is consumer evaluation

of brand extension. The relationships of the independent variables with
dependent variables have also been illustrated through five derived
hypothesis which are discussed in the subsequent section.
20
3.2 HYPOTHESES
Based on the literature survey and variables discussed in the previous

chapters, the hypotheses that have been derived for testing have been stated
below:
H1: Those brands that have a stronger (a) reputation, (b) extended to
similar brand category, (c) share strong association, would get a
stronger consumer evaluation.
H2: There is a positive relationship between (a) how consumer perceived

risk (b) consumer level of innovativeness and how consumer
evaluates brand extension.
H3: Consumer evaluation would be positive for those brand extensions

that have a strong reputation for introducing multiple brands.
H4. The “consumer’s brand evaluation” would be positive for those brands
that have more “concept consistency”
H5: The “consumer perception fit” between the core brand and
extended brand would have a positive impact on the “consumer
evaluation of the brand”.
21
CHAPTER -4
METHODOLOGY
The research methodology chapter explains the author’s research position,

the approaches used in determining the structure, of the thesis, and the
research strategy that was necessary for achieving the paper’s objective.
Initially, the paper discusses the procedure adopted for stimuli selection,
followed by discussions on the variables used in the questionnaire along with
the required citations. The population and sampling procedures discuss its
size and how it was drawn and administered. This section ends with the
methods used for data analysis.
4.1 STIMULI SELECTION
There are more than 30 brand extensions associated to FMCGs, in Pakistan.

In order to have a manageable stimulus, a focus group discussion was held in
which the respondents were asked to select four sets of core brand and their
extensions in such a manner that they have varied degree of similarity ranging
from “very close” to “far”. Thus, the following four brand extensions were
finalized each representing different level of synergy amongst them:
a) Tapal Tea and Tapal Tea Bag.

b) Lifebuoy Soap and Lifebuoy Shampoo
c) Sufi Vegetable Oil and Sufi Washing Soap.
d) Woods wards Gripe Water and Woods ward Toothpaste.
The first two stimuli come in the category of close extension, and the later two
in the category of distance extension.
4.2 MEASUREMENTS
The dependent variables and independent variables of this study are

presented below along with discussions on how they were measured:
22
4.2.1 DEPENDENT VARIABLE
4.2.1.1 CONSUMER EVALUATION OF BRAND
The dependent variable for the study was “consumer evaluation” of brand
extension. Keller and Aaker (1992) have used the following statement for
measuring overall evaluation: “I am very positive to the extension of the
“XYZ.” In this study, the same was used for measuring “Consumer Evaluation”
of brand extension. Reference may be made to question No.8 of the
questionnaire attached as Appendix -1.
4.2.2 INDEPENDENT VARIABLES
4.2.2.1 SIMILARITY
Similarity between the parent brand and extended brand has been measured
differently by different researchers (Aaker and Keller (1990) and Smith and
Park (1992) have measured similarity by asking “think of a brand__ how
similar is the competence for making the original and extension brand”. “Think
of what you associate with brand____ how much overlap exists” (Bouschs
et.al 1987). In this study, the (Boush et. Al 1987) statement was modified for
measuring the similarity between for brands and their extensions. (Refer
question no.1, appendix-1).
4.2.2.2 REPUTATION OF PARENT BRAND
Aaker and Keller (1990); Loken and John (1993) have used similar measures
for measuring reputation of parent brand. (1) “All- together, I am very positive
with the brand XYZ” (2) “Altogether, I am very satisfied with the brand XYZ”.
(3) “Altogether, I associate positive things with the brand XYZ”.
In this study, the statement-1 above was modified for measuring reputation of
parent brands. (Refer to Question -2 of the questionnaire, appendix-1).
23
4.2.2.3 PERCEIVED RISK
Heim (2001) has used five factors for measuring perceived risk. Of those five
factors, the following two factors have been used in this study for measuring
perceived risk. (Refer question No.3 of Appendix one)
a) “When I am in front of the___ section, I always feel unsure about what

to pick”.
b) “When you buy an____, it is easy to make wrong choices”.
4.2.2.4 INNOVATIVENESS
Heims (2001) has used five different sub-variables for measuring

innovativeness. In this study the following two statements have been used for
measuring innovativeness:
(1) “I am continuously seeking new ideas” (2) “When things get boring, I like to
find some new and unfamiliar experience”. Based on these constructs two
questions were developed. (Refer question number-4, of the questionnaire at
appendix-1)
4.2.2.5 MULTIPLE BRAND EXTENSIONS
Aaker (1992) has found a relationship between the brand extension history
and the consumer evaluation of the brand. Respondents in this study were
asked to rate the history of introducing multiple brand extensions. (Refer
question number 5, questionnaire at appendix-1)
4.2.2.6 PARENTS BRAND CHARACTERISTICS
Smith (1994) has defined parents’ characteristics in reference to “broad

association”. For example, “Sony” has broad association as this brand name
could be associated with several product categories. Narrow associations
means that brand could be associated with limited number of products. Based
on this construct, the respondents were asked to rate the selected brand in
terms of broad and narrow association. (Refer question number 6 of the
questionnaire at appendix-1).
24
4.2.2.7 PARENT BRAND CONSISTENCY
The independent variable parent brand consistency has been defined by

(Park.et.al 1991) in terms of “price” and “product expensive design”. The
respondents in this study were asked to rate the four selected core brands in
terms of “price perception” and “expensive design”. (Refer to question number
7.1 and 7.2 of Appendix 1).
4.2.2.8 BRAND EXTENSIONS FIT
The independent variable has been defined by Aaker and Keller (1990) and
Keller, (1992), in terms of (1) Complimentary, (2) Suitability (3) Transferability
and (4) Difficulty. In this context, the respondents were asked to rate the four
brands in terms of these four sub dimensions. (Refer question number 8a, 8b,
8c, 8d, of the questionnaire, appendix-1).
4.3 SAMPLE SIZE
For multivariate sampling, at least 30 samples per variable are required to

have an appropriate representation (Sekran 2005). This study has 12
variables; therefore sample size of 360 would have been appropriate.
However, in order to have more appropriateness a sample size of 700 has
been used in this study.
Karachi is divided into 18 Union District Council (UDC) and each UDC
different population. It is as high as 0.723 million for Orangi and as low as
0.289 million for Gadap. To ensure appropriate representation from each
UDC, quota sampling technique was used for drawing 700 samples. The
population of all the 18 UDC along with the samples drawn form each town is
presented below:
25
Table 1: Town wise Population and size
Union Population as per

Sr. No. District Council 1998 census Sample size
1 Baldia town 406,165 30
2 Bin Qaisim town 315864 23
3 Gadap 289,564 21
4 Gulberg 453490 34
5 Gulshan-e-Iqbal 646,662 48
6 Jamshed_town 733,821 54
7 Kemari 383,778 28
8 Korangi town 564,504 42
9 Landhi town 666,784 49
10 Liquatabad 649,091 48
11 Lyari Town 607,922 45
12 Malir town 389,289 29
13 New Karachi 684,183 51
14 North Nazimabad 496,194 37
15 Orangi town 723,694 54
16 Saddar Town 616,151 46
17 Shahra-eFaisal 335,823 25
18 Site 476,560 35
9,439,539 700
It may be pointed out that and Gulshan and Orangi Towns are the most
populated towns with populations of and 646, 662 and 616,151, respectively.
Comparatively, the Bin Qasim and Gadap are the least populated with the
population of 315,864 and 289,564, respectively.
26
CHAPTER-5
RESULTS AND DISCUSSIONS
Results and discussions have been presented into five sub-chapters with
each chapter containing the derived hypothesis and its results, along with the
variables used in the hypothesis.
5.1 DISCUSSIONS RESULTS OF REPUTATION, SIMILARITY &

ASSOCIATION
In this sub-chapter, the derived hypothesis was based on four variables.

Dependent variable was “consumer evaluation” of brand extension, and
independent variables were: (1) similarity between parent brand and extended
brand, (2) stronger reputation, and (3) stronger association. These variables
were measured through four stimuli: (1) Tapal Tea Viz. Teabag (2) Lifebuoy
Soap viz. Shampoo (3) Sufi Vegetable oil viz. Soap (4) Woodward Gripe
Water viz. Tooth paste. The first two stimuli come in the category of close
extension, and the other two in distance extension. In this and subsequent
sub-chapters, the close-extensions and distance extensions have been tested
separately.
The empirical model developed earlier shows that the independent variables
reputation, similarity and brand association have strong relationship with the
consumer evaluation of the brand. These variables have been briefly
discussed below:
5.1.1 SIMILARITY
The similarity refers to degree of resemblance of consumer perception on the

extensions and the core brand (Smith & Park 1992). Most of the researches
have deliberated on the level of perceived similarity between the original and
extended brand and found that if the level of similarity is higher between the
core and extended brand category then the extended brands would have
more chances of inheriting the positives and negative aspects of the core
brand (Aaker & Keller 1990; Park, et al. 1991; Boush & Loken 1991; Dacin &
Smith 1994; Herr, et al. 1996; Keller and Sood 2001). This conjecture is
27
based on the premise that consumers’ attitude will be more favorable towards
those extensions where they find higher level of congruence between the
extended and the original brand (Boush, et al. 1987)
5.1.2 PARENT BRAND CHARACTERISTIC & EVALUATION
The terms such as product attributes, product benefits and costumers

characteristics are generally used for conceptualization of brand association
(Keller 1993). Brand names such as “Sony” have broad association and are
used for diversified range of products. There are some brand names like
“close-up” that has narrow association and could be used for one or few
products (Bousch & Loken, 1999).
Product portfolio characteristics of parent brands generally have moderating

effect on product category fit and the evaluation of parent brand (Dacin &
Smith, 1994). Dacin and Smith (1994) studied the impact of: (1) number of
products associated with brand (2) the quality of variance across these
products and (3) the relatedness of product to each other and the parent
brands.
Dacin and Smith (1994), major findings were: The consumer’s evaluation
would be positive for those brands that are associated with several products,
provided there is no significant parity between the qualities of product. In fact,
addition of product would enhance positive evaluation, provided the quality
level of additional product is the same. Their research also found that it may
not be advisable to extend the brands un-discriminately into unrelated
product, even if the quality of the core brand is high. First, extension must be
carried out into moderately related categories and then to unrelated category.
This step wise extension from one category to moderately unrelated category
would help consumer in maintaining the perception of relatedness (Kapoor
2005).
A brand could have association with several products. However, the level of
association of brand name with all products may vary. Products that have
strong association with the core brand could be easily evaluated by
28
consumers. Contrarily, products that have weaker association with the core
brand are dependent on a certain degree of “cues” for evaluation purpose
(Kapoor 2005)
5.1.3 REPUTATION
The basic assumption in brand extension strategy is that the leverage

providing capabilities of parent brands to extensions varies from brand to
brand. It is higher for stronger brands and lower for weaker brands (Aaker &
Keller 1992; Smith & Park 1992). Brand reputation refers to consumer’s
perceptions on the quality associated with a brand (Aaker & Keller 1990;
Barone, et al. 2000). The consumers tend to evaluate those brands more
favorably that have higher perceived quality as compared to low perceived
quality brands (Aaker & Keller 1990; Keller & Aaker 1992; Sunde & Brodie
1993; Dacin & Smith 1994; Bottomley and Doyle 1996). Reputation in the
above studies has been conceptualized as a combination of: (a) product
quality, (b) firm’s marketing activities and (c) acceptance in the market place
(Fombrun & Van Riel 1997). Consumer while evaluating brands that have
higher perceived reputation would feel that purchasing the same would be
comparatively less risky, thus their evaluations would be more positive
towards these brands as compared to brands carrying lower brand
reputation (Wernerfelt 1988; Zeitham & Berry & Parasuraman 1996).
5.1.4 STIMULI
The stimuli used for this study can be categorized into two categorize. One is
close and other is distance extension. Brand extensions such as Tapal Tea
Viz. Teabags, comes in the category of close-extension. The brand
extensions such as Sufi Soap viz. Vegetable Oil and Woodward Gripe Water
viz. Tooth Paste comes in the category of distance extension. The hypothesis
for close and distance extensions have been tested separately.
29
5.1.5 HYPOTHESIS ONE:
Variables such as brand reputations, similarity, and associations have been

used by various authors for measuring the relationship of these variables with
consumers’ overall evaluation of brand extensions. The hypothesis developed
in this context is presented below:
H1O: Brands that have (a) stronger reputation (b) similarity between parent
brands and extended brand, and (c) strong associations would have strong
consumer evaluation.
H1A. At least one of the variables has linear relationship with the dependent
variable “consumer evaluation”
Statistical representation of the above hypothesis is presented below:
H1O: β1=β2=β3=0
H1A: β1≠β2≠β3≠ 0
The above hypothesis was tested separately for close and distance
extensions:
5.1.5.1 CLOSE EXTENSION
Brands such as Tapal viz. Teabags and Lifebuoy viz. Shampoo have lesser
distance. The combined relationships of these stimuli in terms of similarity,
reputation and association with overall evaluation were tested through
multiple regressions.
The multiple estimating regression equation for close extensions used as

stimuli is presented below:
Y= a + b1SimilarityTapal tea + b2SimilarityLifebuoy + b3ReputationTapal tea +

b4ReputationLifebuoy + b5AssociationTapal tea + b6AssocaitonLifebuoy
Summarized multiple regression results are presented below:
30
Table 2: Multiple regression of Close distance extension
Regression Statistics
Multiple R 0.96
R Square 0.92
Adjusted R Square 0.92
Standard Error 0.11
Observations 700.00
Table 3: ANOVA (Close Extension)

Df SS MS F Significance F
Regression 6.00 95.69 15.95 1,292.32 -
Residual 693.00 8.55 0.01
Total 699.00 104.25
Table 4: Coefficient (Close Extension)

Standard Lower
Coefficients Error t Stat P-value 95%
Intercept 0.01 0.05 0.19 0.85 (0.09)
Similarity –Lifebuoy 0.42 0.01 31.31 0.00 0.40
Similarity –Tapal Tea 0.18 0.02 9.86 0.00 0.15
Reputation –Tapal Tea 0.10 0.02 5.72 0.00 0.06
Reputation -Lifebuoy 0.31 0.02 16.14 0.00 0.28
Association – Tapal Tea (0.03) 0.02 (1.74) 0.08 (0.06)
Association. Lifebuoy 0.01 0.00 1.92 0.06 (0.00)
Graph 1: Scattered Chart-Close Extension
Similarity-tapal
6.00
Brand Evaluation
5.00
Similarity-
4.00 lifbuoy
3.00 Reputation-
2.00 tapal
1.00 Reputation-
- Lifebuoy
0 5 10 15 Assosciation-
Close Extension Tapal
Assosciation-
(Respondent’s opinions have been grouped)
The hypothesis that at least one of the independent variables will have the
relationship with the dependent variable “consumer evaluation” of the brand
extension was accepted. The ANOVA Table shows that the F< 0, meaning it
is significant. Moreover, all the P values are less than .05 except
“association”. This indicates that all the coefficients are relevant to the model
except “Association-Tapal” and “Association-Lifebuoy”. The R2 is 0.92, which
31
indicates that the combined effect of the independent variables that is
similarity, reputation and parent brand characteristics (association) will cause
the dependent variable, consumer evaluation of brand extension to move by
92%, which is an indication of a very strong relationship.
The coefficient of determination for similarity Lifebuoy, and reputation lifebuoy are
0.42 and 0.31, respectively indicating that these two predictor variables/stimuli
have comparatively stronger influence on the dependent variable as
compared to other variables/stimuli.
The above tables and graphs indicates that in case of “Lifebuoy Soap Viz.
Shampoo” similarity and reputation were found to be stronger predictors for
“consumer evaluation” of brand extensions as compared to “reputation” and
“parent brand characteristics (association)”. The variable “similarity” was
found to be, comparatively, stronger predictor in case of “Tapal Tea viz.
Teabag”, as compared to other variables.
5.1.5.2 DISTANCE EXTENSION
Brands such as “Sufi viz. Vegetable Oil” and “Lifebuoy viz. Shampoo”
Woodward viz. Grip Water” have more distance. The combined relationships
of these stimuli in terms of similarity, reputation and association with overall
evaluation were tested through multiple regressions. The multiple estimating
regression equation for distance extensions used as stimuli is presented
below:
Y= a + b1SimilaritySufi + b2SimilarityWoodward + b3ReputationSufI +

b4Reputation Woodward + b5Assocation Sufi + b6AssciationWoodward.
Summarized multiple regression results of distance extensions are presented

below:
32
Table 5: Multiple Regression of Distance Extension
Multiple R 0.76
R Square 0.58
Standard Error 0.47
Observations 700.00
Table 6: ANOVA-Distance Extension

Regression 6.00 216.43 36.07 162.51 0.00
Residual 693.00 153.82 0.22
Total 699.00 370.25
Table 7: Coefficients- Distance Extension

Coefficients Standard t Stat P-value Lower Upper
Error 95% 95%
Intercept 0.25 0.11 2.24 0.03 0.03 0.47
Similarity-Sufi 0.09 0.02 4.47 0.00 0.05 0.13
Similarity Woodward (0.04) 0.02 (2.05) 0.04 (0.08) (0.00)
Reputation –Sufi 0.26 0.02 11.09 0.00 0.21 0.30
Reputation –Woodward 0.37 0.03 11.72 0.00 0.30 0.43
Association –Sufi 0.06 0.01 4.26 0.00 0.03 0.09
Association –Wood 0.20 0.03 6.17 0.00 0.14 0.26
Graph 2: Scattered Chart-Distance extension

Similarity-Sufi
5.00
Overall evaluatin
4.00 Similarity-
3.00 Woodw ar
Rep-Sufi
2.00
1.00
Rep-Wood
0.00
0 5 10 15 Assos-Sufi
Distance
Brand Extension Assos-Wood
(Respondents’ opinions have been grouped)
was also accepted for the distance extension. The ANOVA table shows that
the F< 0, meaning it is significant. Moreover all the P values are less than .05,
further confirming the relationship of the model. The R2 is 0.58, which
33
indicates that the combined effect of the independent variables will cause the
dependent variable “consumer evaluation” of brand extension to move by
58%, which is an indication of a strong relationship.
The coefficient of determinations for Reputation Sufi, and Reputation Woodward
are 0.26 and 0.37, respectively indicating that these two predictor
variables/stimuli have comparatively stronger influence on the dependent
variable “consumer evaluation” of brand as compared to other variables.
From the above, it could also, be inferred that in case the parent brand is
extended to similar category, then the similarity between parent brand and
brand extension would be vital for respondents’ evaluation of brand extension.
In case extension is of distance nature (not in similar category) than
reputation of parent brand would be used by respondents for evaluation of
brand extension. It may also be observed from the above that the predicator
variable “reputation” is comparatively stronger in case of close and distance
extensions.
Firms, whose brands have strong reputation, could afford the luxury of
venturing into distance brand extension. Firms with weaker brand reputation
should focus on enhancing the brand reputation, and if they have to extend
their brand, it should be in the same category (Close distance).
34
5.2 DISCUSSIONS & RESULTS OF INNOVATIONS &
PERCEIVED RISK
In this sub-chapter, the derived hypothesis was based on two variables.

Dependent variable was “consumer evaluation” of brand extension, and
independent variables were: (1) consumer’ innovativeness, and (2) how
consumer perceives risks. Close and distance extensions were again tested
separately, followed by recommendation.
The major premise in this case is that consumer evaluation of brand

extensions is not dependent on the characteristics of parent or extended
brand but on consumers’ personally traits like how innovative consumers are,
and how they perceive risks. These variables have been briefly discussed
below:
5.2.1 PERCEIVED RISK
Consumers before purchasing goods feel uncertainty in reference to expected

loss that may incur from purchasing and using the product. This uncertainty is
referred as perceived risk (Bauer 1960; Cox 1967). The term uncertainty has
two perspectives: (1) consequences of making a mistake; and (2) uncertainty
about the outcome (Derbaix 1983; Gronhaug & Stone 1995; Mitchell 1999)
Most of the researches on perceived risk suggest that consumers while

dealing with a recognized brand feel that it has lesser degree of perceived risk
(Cox 1967; Roselius 1971; Rao & Monroe 1989). Brand extension to a new
category affects consumers from two perspectives. One, it provides new
alternative; second, it enhances the consumer perception of risk. Thus, a well
known brand not only induces trial but also helps in relieving the risk (Heim
2000). Berlyne (1970) observed that novel stimuli give adverse reactions.
However, repeated exposure helps in developing familiarity with a brand
which not only helps in decreasing perceived risk but also helps in increasing
positive affect (Baker, et al. 1986; Obermiller 1985).
35
5.2.2 INNOVATIVENESS
An individual who is receptive to new ideas and is willing to try new practices
and brand is considered to possess a personality trait of innovativeness
(Rogers 1989). “The innovators are venturesome; they try new ideas and take
some risk…where as late adopters (laggard) are tradition bound, they are
suspicious of changes, and adopt innovation when it has become some thing
of a tradition itself” (Kotler & Armtrong, 2007). The innovative consumers tend
to get comfort when they take risk.
5.2.3 STIMULI
Like preceding section, close brand extensions such as “Tapal Tea Viz. Tea
Bags”, and “Lifebuoy Soap viz. Shampoo”, and distance brand extensions
such as “Sufi Soap viz. Vegetable oil” and “Woodward Gripe Water viz.
Tooth Paste” have been tested, separately.
5.2.4 HYPOTHESIS TWO:
Variables such as respondent’s innovative nature, and the perceived risk

according to several authors would effect how consumers evaluate brand
extensions. The hypothesis developed in this context is presented below:
H2O: There is a positive relationship between (a) how consumer perceived

risk, and (b) consumer level of innovativeness with “consumer evaluation” of
brand extension.
H2A. At least one of the variables has linear relationship with the dependent
variable “consumer evaluation”
The statistical representation of the above hypothesis is presented below:
H2O: β1=β2=0
H2A: β1≠β2≠ 0
36
The above hypothesis was tested by two different methods. In method one,
the relationship of the close-extensions was tested and in method two the
relationship of distance-extensions was tested:
The relationship of independent variables “Perceived Risk” and consumer

level of “Innovativeness” were, also, measured with the dependent variable
consumer evaluation of close brand extensions that is “Tapal Tea viz.
Teabag”, and “Lifebuoy Soap Viz. Shampoo
The multiple estimating regression equation for the above variables is

presented below:
Y= a + b1Innovativeness + b2Percived Risk.
Where “Y” in the above equation is an average of consumer evaluation of

close extensions, (1) “ Tapal Tea viz. Teabag, and (2) Lifebuoy Soap viz.
Shampoo.
The summarized multiple regression results are presented below:
Table 8: Multiple Regression of Close Extension

Multiple R 0.37
R Square 0.14
Standard Error 0.36
Observations 700.00
Table 9: ANOVA of Close Extension

Regression 2.00 14.46 7.23 56.12 0.00
Residual 697.00 89.79 0.13
Total 699.00 104.25
37
Table 10: Coefficients of Close Extension
Standard Lower Upper
Coefficients Error t Stat P-value 95% 95%
Intercept 3.78 0.07 53.50 0.00 3.64 3.91
Perceived Risk 0.05 0.02 2.94 0.00 0.02 0.08
Innovativeness 0.15 0.02 9.03 0.00 0.12 0.19
Graph 3:
Scattered Chart, Close Extension
Evaluation 6
4
Brand
2
0
1 2 3 4 5 6 7 6 9 10
Close Brand Extension
Percieved Risk Innovativeness

Close Extension
relationship with the dependent variable “consumer evaluation” of the close
brand extension was accepted. The ANOVA Table shows that the F< 0,
meaning it is significant. Moreover, all the P values are less than .05, further
confirming the relationship of the model. The R2 is 0.14, which indicates that
the combined effect of the independent variable will cause the dependent
variable to move by 14% which is a very weak relationship. Innovative
consumers tend to evaluate close brand extension more positively (coefficient
of determination being 0.15) as compared with consumer with a higher degree
of “perceived risk” (coefficient of determination being 0.05).
The relationship of independent variables “perceived risk” and consumer level

of “innovativeness” were also measured with the dependent variable
“consumer evaluation” of distance brand extensions that is “Sufi Soap Viz.
Vegetable Oil” and “Woodward Grip Water viz. Tooth paste”. Multiple
estimating regression equation for the above variables is presented below:
38
Y= a + b1Innovativeness + b2Percived Risk
Where Y is the average of consumers responses in relation to how they

evaluate distance extensions that is: (1) Sufi viz. Vegetable oil, and
Woodward viz. Gripe water. Summarized multiple regression results are
presented below:
Multiple R 0.42
R Square 0.18
Standard Error 0.66
Observations 700.00
Table 12: ANOVA, Distance Extension

df SS MS F Significance F
Regression 2.00 66.06 33.03 75.68 0.00
Residual 697.00 304.19 0.44
Total 699.00 370.25
Table 13: Coefficients, Distance Extension

Coefficients Standard t Stat P-value Lower Upper Lower
Error 95% 95% 95.0%
Intercept 2.53 0.13 19.46 0.00 2.27 2.78 2.27
Perceived Risk 0.36 0.03 12.16 0.00 0.30 0.41 0.30
Innovativeness (0.04) 0.03 (1.41) 0.16 (0.11) 0.02 (0.11)
Graph 4: Distance Extension
6.00
Evaluation
Consumer
4.00
2.00
-
1 2 3 4 5 6 7 8 9 10
Distance Extension
Perceived Risk Innovativeness

Distance Extension
relationship with the dependent variable “consumer evaluation” of brand was
accepted. The ANOVA Table shows that the F< 0, meaning it is significant.
Moreover, all the P values are less than .05 except “innovativeness” indicating
that “innovativeness” has no relationship with the dependent variable that is
39
“consumer evaluation” of brand extension. The R2 is 0.18, which indicates that
the combined effect of the independent variables will cause the dependent
variable to move by 18% which is a very weak relationship. The overall level
of “innovativeness” and “perceived risk” of respondents were high, but their
relationships to distance brand extensions were weak.
The coefficients for “perceived risk” and “innovativeness” are 0.36 and -0.04,
respectively indicating that consumers with high level of innovativeness would
tend to evaluate distance brand extensions lowly and negatively. Consumers
with high level of “perceived risk” have evaluated distance extensions
comparatively more positively with coefficient being 0.36
Firms that are extending their brands to similar category (close extension)
should target consumers that have high level of “innovativeness”.
Comparatively, companies that are extending their brand into non-similar
category (distance extension) must target those customers that have high
level of “perceived risk”.
40
5.3 DISCUSSIONS & RESULTS OF CONCEPT
CONSISTENCY
In this sub-chapter, the derived hypothesis was based on dependent

variable “consumer evaluation” of brand extension, and independent
variable was “Brand Concept Consistency”. Like preceding sections,
first the related variable concept consistency is discussed and
subsequently the derived hypothesis was tested separately for close
extensions, and distance extension followed by recommendations
5.3.1 BRAND CONCEPT CONSISTENCY & EXTENSION
Market is dynamic, therefore is always changing. To remain aligned with

market, firms must modify their offering, enter different market segments, and
re-position their offering. In view of such complexities, the measure of fit while
introducing brand extension may be relevant in one situation and not in
another situation (Kapoor 2005). Park et.al. (1991) were of the opinion that
the measure of fitness between core brand and extended brand based on one
factor “similarity” has certain limitation. They were of the opinion that
consumer evaluation would only be positive for those brand extensions that
have consistency in brand concept. Brand concept is “Brand unique abstract
meaning (e.g high status that typically originate from a particular configuration
of product features. (eg. High price, expensive looking design, etc.) and a
firms efforts to create meanings for these arrangements (e.g. The relentless
pursuit of perfection by Lexus)” (Park .et, al. 1991, p.186)
Factor “similarity” is important but it fails to explain all the aspects related to
fitness. Two objects could have several common physical attributes, but it
does not mean that both the objects would have similar brand concepts. For
example Sieko and Rolex watches share several common product level
features. But as far as brand concepts of the two watches are concerned,
Seiko has reputation of functional brand and Rolex as a prestige brand (Park
et al 1991). Thus the perceived fit is “combination of (1) product feature
similarity and (2) brand concept consistency.
41
5.3.2 HYPOTHESIS
Variable such as parent “brand concept consistency” have been used by

various researchers for ascertaining how consumer evaluate brand
extensions. The product concept consistency is related to (1) design, and (2)
price. The hypothesis developed in this context is presented below:
H3O. The “consumer’s brand evaluation” would be positive for those brands
H3A. The “consumer’s brand evaluation” would be positive for those brands
H3O: β1=β2=0
H3A: β1≠β2≠ 0
The above hypothesis was tested for close extensions and distance
extension, separately.
The brands “Tapal viz. Teabags” and “Lifebuoy viz. Shampoo” have lesser
distance. The combined relationships of these stimuli in terms of: (1) design,
and (2) price, with overall evaluation were tested through multiple regressions.
Multiple estimating regression equation for close extensions used as stimuli is
presented below:
Y= a + b1PriceTapal + b2Price Lifebuoy + b3DesignTapal +b4DesignLifebuoy
42
Table 14: Multiple Regression of Close Extension
Multiple R 0.82
R Square 0.67
Standard Error 0.22
Observations 700.00
Table 15: ANOVA, Close Extension

Regression 4.00 70.19 17.55 358.04 0.00
Residual 695.00 34.06 0.05
Total 699.00 104.25
Table 16: Coefficients, Close Extension

Error 95% 95%
Intercept 1.25 0.10 12.60 0.00 1.05 1.44
Price-Tapal Tea (0.04) 0.01 (2.54) 0.01 (0.07) (0.01)
Price-Lifebuoy 0.20 0.02 12.46 0.00 0.17 0.23
Design-Tapal Tea 0.55 0.02 26.38 0.00 0.51 0.59
Design-Lifebuoy 0.01 0.01 1.37 0.17 (0.01) 0.03
Graph 5: Scattered Chart Close Extension
6.00 Price-Tapal
Tea
Brand evaluation
5.00
4.00 Price-Lifebuoy
3.00
2.00 Design-Tapal
Tea
1.00
Design-
-
Lifebuoy
1 2 3 4 5 6 7 8 9 1
Evaluation of
Close Extension close brands
relationship with the dependent variable “consumer evaluation” of brand was
accepted. The ANOVA Table shows that the F< 0, meaning it is significant.
Moreover, all the P values except design of lifebuoy are less than .05. This
indicates that except the design of lifebuoy other variables validate the model.
The R2 is 0.67, which indicates that the combined effect of the independent
43
variables will cause the dependent variable
to move by 67% which is an indication of strong relationship.
The coefficients for design and price of Tapal Tea is 0.55, and -0.04,
respectively indicating that consumers while evaluating Tapal tea were more
influenced with the “design” of tea as compared to the “price” of Tapal tea. In
case of Lifebuoy, the coefficients for “design” and “prices” were 0.01, and
0.20, respectively, indicating that while evaluating Lifebuoy, consumer
appears to be more influenced with price, as compared to design of Lifebuoy
soap.
5.3.2.2 DISTANCE EXTENSIONS
The brand concept consistency for distance extensions “Sufi Soap viz.
Vegetable Oil”, and “Woodward Gripe Water viz. Tooth Paste” brands were
measured in terms of: (1) design, and (2) price, which were then related with
“consumer overall evaluation” of brand extension. Multiple estimating
regression equation for distance extensions used as stimuli is presented
below:
Y= a + b1Price Sufi + b2PriceWoodward + b3DesignSufi +b4DesignWoodward


Multiple R 0.56
R Square 0.32
Standard Error 0.60
Observations 700.00

Regression 4.00 117.68 29.42 80.96 0.00
Residual 695.00 252.57 0.36
Total 699.00 370.25
44
Table 19: Coefficients Distance Extension
Error 95% 95%
Intercept 1.88 0.10 19.69 0.00 1.70 2.07
Price-Sufi 0.14 0.03 5.05 0.00 0.08 0.19
Price Woodward 0.13 0.02 5.79 0.00 0.09 0.18
Design-Sufi 0.19 0.03 6.76 0.00 0.14 0.25
Design-Woodward 0.01 0.02 0.71 0.48 (0.02) 0.05
Graph 6: Scattered Chart, Distance Extension

Price-Sufi
12.00
Brand Evaluation
10.00
8.00 Price
6.00 Woodward
4.00
2.00 Design-Sufi
-
0 5 10 15
Design-
Distance Extension
Woodward
was accepted. The ANOVA Table shows that the F< 0, meaning it is
significant. Moreover, all the P values except of the design of Woodward
Gripe water are less than .05. This indicates that the design of Woodward has
no relationship with the dependent variable “consumer evaluation” of brand
extension. The R2 is 0.32, which indicates that the combined effect of the
independent variables will cause the dependent variable to move by 32%
which is a weak relationship.
The coefficient of determinations for Sufi’ design and price are 0.19 and 0.14,
respectively indicating that in case of Sufi design is comparatively a stronger
predictor than price. Comparatively, price of Woodward is stronger predictor
and design has no relationship with consumer evaluation of distance brand.
In case of close extensions such as Tapal Teabag the firm must concentrate
on the design, which Tapal was found to be doing it. However, in case of
45
distance extension, no relationship was found with the design of Woodward
Gripe Water. Woodward needs to improve the design of the gripe water
packaging in order to remain competitive.
46
5.4 RESULTS AND DISCUSSIONS ON BRAND EXTENSION
FIT
In this sub-chapter, first the related variable brand extension fit has
been deliberated and subsequently the derived hypothesis was tested
separately for close extensions, and distance extension, followed by
recommendations.
5.4.1 BRAND EXTENSION AND PERCEIVED FIT
Different researchers have defined “perceived fit”, differently. The commonly

used determinants of the perceived fit are, (1) complementary, (2) suitability,
and, (3) transferability. These determinants relate to consumer perception on
the degree of similarity between the two products (Aaker & Keller 1990; Aaker
& Keller, 1992). Rousch and Loken (1991) believe that “typicality” is an
important concept of perceived fit. Where as (Park & Melberg & Lawsan 1991)
are of the opinion that “product similarity” and “brand concept consistency”,
are the determinants of “perceived fit”. Kling and Smith, (1997) are of the
opinion that determinants such as component parts, product feature, product
function, needs they satisfy, usage situations, manufacturing processes are
related to perceived fit. Most of the researchers suggest that affect of brand
name in one category will transfer to another product category, if consumer
perceptions about the core, and extended product category is same in terms
of similarly and fitness. Smith (1997) while criticizing the earlier studies
observed that most of such studies had remained focused on product related
or attributes information while comparing two product classes. Additionally,
these researches have restricted factor “attribute information” to one cue i.e.
brand name (Klink & Smith, 1997). Since most of the previous brand
extension studies are based on (1) attribute information, and (2) single cue,
therefore, it may give an inflated effect of “perceived fit” (Nkowocha 2000).
Some of the researchers have used two components in their brand extension
fit studies. For example Park and Srivnvason (1994) proposed two concepts
which were (1) product related similarities (2) and product concept
consistency. The relationship between function orientation and prestige
47
orientation were used for studying brand concept consistency (Nkwocha
20005). Similarly, Park et.al., (1991) proposed a concept in which they
identified product related similarity through concrete measures i.e. attribute
matching or abstract (e.g. shared usage situation) for studying the relationship
between the parent brand and extended brand(Nkwocha 2000)
In another brand extension related study, a comparison of relative influence of

brand specific association against category similarity was proposed (Broniarcz
& Alba’s 1994). The authors were of the opinion that those brands that are
less effective in their category will be more successful in another category,
provided consumer perceives that this brand contains some attributes that are
more relevant to the extended category (Brioniarzh & Alba’s 1994).
Broniarcz and Alba’s (1994) in the same study used two tooth pastes that are
“close-up” and “crest” as stimuli for extending into product category
“mouthwash”. The finding of this research was that crest tooth paste was
more acceptable in mouth wash category. Reasons for these conclusions
were that “crest” tooth paste is more associated with breath-freshening, which
is relevant to mouth wash category. In the same context “crest” toothpaste
was not evaluated favorably because, it is more associated with “dental care”,
which has little or no relevance with mouth wash category (Nkwocha 2000).
5.4.1 HYPOTHESIS-4
Variable such as parent brand fitness have been used by various author in
relation to how the consumer evaluates brand. Some of the commonly used
sub-variables for brand fitness are complimentary, supplementary,
transferability, and difficulty, which have, also, been used in this study. The
developed hypothesis in this context is presented below:
H4O: The “consumer perception fit” between the core brand and
extended brand would have a positive impact on the “consumer
48
H4A: The “consumer perception fit” between the core brand and
extended brand would not have a positive impact on the “consumer
H4O: β1=β2=β3=β4=0
H4A: β1≠β2≠ β1≠β2≠0
The above hypothesis was tested for close and distance extensions
separately.
The independent variable “perceived fit” comprised of four sub-variables

which are, (1) complimentary (2) substitute, (3) transferability, and (4)
difficulty. These sub-variables of perceived fitness were measured for close
stimuli “Tapal Tea viz. Tea Bag”, and “Lifebuoy Soap Viz. Shampoo. The
multiple estimating regression equation for the above variables is presented
below:
Y= a + b1ComplimentaryTapal-Tea + b2SuplimentaryTapal Tea + b3Tranferabiity Tapal
Tea +b4DifficutlyTapal-Tea + b5ComplimentaryLifebuoy + b6SuplimentaryLifebuoy+

b7Tranferabiity Lifebuoy +b8DifficutlyLifebuoy
Table 20: Multiple Regression, Close Extension
Multiple R 0.84
R Square 0.71
Standard Error 0.21
Observations 700.00

Regression 8.00 73.89 9.24 210.29 0.00
Residual 691.00 30.35 0.04
Total 699.00 104.25
49
Table 22: Coefficients, Close Extension
Error 95% 95%
Intercept 1.67 0.08 20.83 0.00 1.51 1.83
Tapal compliment 0.01 0.01 0.85 0.40 (0.01) 0.02
Tapal substitute 0.24 0.03 8.58 0.00 0.19 0.30
Tapal transferability 0.23 0.03 8.02 0.00 0.17 0.29
Tapal difficulty (0.01) 0.02 (0.49) 0.62 (0.05) 0.03
Lifebuoy-Compliment 0.07 0.01 5.40 0.00 0.04 0.09
Lifebuoy-Substitute (0.09) 0.01 (9.11) 0.00 (0.11) (0.07)
Lifebuoy-Transferability 0.18 0.01 12.21 0.00 0.15 0.21
Lifebuoy-Difficulty 0.02 0.01 2.54 0.01 0.00 0.04
Graph 7: Scattered Chart, Close Extension
Tapal- comp.
6.00
Brand Evaluation
5.00
Tapal- sub.
4.00
3.00 Tapal-trans.
2.00
1.00 Tapal-diff.
-
1 2 3 4 5 6 7 8 9 1 Lifebuoy-
Close Brand Extension Comp.
Lifebuoy-Sub
(Respondents have been grouped)
meaning it is significant. Moreover, all the P values except tapal- difficulty and
Tapal tea-compliment are less than .05. This indicates tapal-tea difficulty, and
tapal tea-compliment has no relationship with the dependent variable that is
consumer evaluation of brand. The R2 is 0.71, which indicates that the
combined effect of the independent variables will cause dependent variable to
move by 71% which is an indication of very strong relationship.
Comparatively, stronger predictors in this relationship were Tapal(substitute),

Tapal (Transferability), and Lifebuoy (Transferability) with coefficient of
determinations being, 0.24, 0.23 an 0.18 respectively. This indicates that
50
these variables are stronger predictors for the dependent variable “perceived
fitness”. The rest of the variables are weak predictors for the perceived fitness
with all the coefficients of determination being less than 0.18.
The independent variable “perceived fit” comprised of four sub-variables

which are (1) complimentary (2) substitute, (3) transferability, and (4) difficulty.
These sub-variables of perceived fitness were measured for distance stimuli
“Sufi viz. Vegetable Oil”, and “Woodward Gripe Water viz. Tooth Paste”. The
multiple estimating regression equation for the above variables is presented
below:
Y= a + b1ComplimentarySufi Soap + b2SuplimentarySufi Soap + b3RTranferabiitySufi

Soap
+b4DifficutlySufi Soap + b5ComplimentaryWoodward + b6SuplimentaryWoodward +

b7Tranferabiity Woodward +b8DifficutlyWoodward
Table 23: Multiple Regression Distance Extension

Multiple R 0.39
R Square 0.15
Standard Error 0.36
Observations 700.00

Regression 8.00 15.51 1.94 15.09 0.00
Residual 691.00 88.74 0.13
Total 699.00 104.25
51
Error 95% 95%
Intercept 4.46 0.05 88.52 - 4.36 4.55
Sufi-Complimentary (0.02) 0.01 (1.20) 0.23 (0.04) 0.01
Sufi-Substitute 0.00 0.01 0.35 0.73 (0.02) 0.03
Sufi-Transferability 0.08 0.02 4.30 0.00 0.05 0.12
Sufi-Difficulty (0.09) 0.01 (7.06) 0.00 (0.12) (0.07)
Woodward compliment 0.01 0.01 0.78 0.44 (0.02) 0.04
Woodward substitute 0.03 0.00 6.19 0.00 0.02 0.04
Woodward transferability (0.06) 0.02 (3.65) 0.00 (0.09) (0.03)
Woodward difficulty 0.07 0.02 4.40 0.00 0.04 0.10
Graph 8: Scattered Chart Distance Extension

Suf-Comp.
4.00
Brand Evaluation
3.00 Sufi-subs.
2.00 Sufi-Trans
1.00
Sufi-diff.
-
0 5 10 15 Woodward.Co
Distance Extension m
Woodward.Sub
meaning it is significant. Moreover, all the P values are less than .05 except
Sufi-complimentary, Sufi-substitute, and Woodward complimentary, indicating
that these mentioned variables have no relationship with the dependent
variable. The R2 is 0.15, which indicates that the combined effect of the
independent variables will cause dependent variable to move by 15% which is
a very weak relationship.
The entire image of coefficients was weak. It was as high as 0.08 for Sufi-
transferability, and as low as 0.01 for Woodward complimentary. Almost no
relationships were found in cases of Sufi-complimentary, Sufi-substitute, and
Woodward-complimentary.
52
Sufi vegetable oil does not compliment soap, and Sufi vegetable oil does not
substitute soap. Similarly, the Woodward toothpaste does not compliment
gripe water.
In case of distance extension, firms must not extend their brands to category
that consumer would hate to assume it as substitute or complement. The
owners of Sufi and Woodward despite knowing this has dared to extend in
these categories assuming that while evaluating their extension, the
customers will take cues from the reputation of the company.
53
5.5 DISCUSSIONS AND RESULTS ON MULTIPLE BRAND
EXTENSIONS
In this sub-chapter, first the related variable “Multiple brand extension”

has been deliberated and subsequently the derived hypotheses were
tested separately for “close extensions”, and “distance extensions”,
followed by recommendations
5.5.1 MULTIPLE BRAND EXTENSIONS AND EVALUATION
Firms that pursue growth strategy through multiple brand extension are
dynamic and their brand association modifies with introduction of brand
extension. Thus, this process has an impact on the perception of fit between a
brand and its future extension. On the introduction of new brand extension,
consumer recalls the previous perception of brand and modifies it that affects
the fit between a brand and its future extension (Lynch & Sru1 1982). Keller
and Aaker (1992) have suggested that the relationship between core brand
and its extension would be moderated on previous brand extension history
and the quality levels of the parent brands. If a firm has previous history of
brand extension then consumer while evaluating brand extension would see
(1) if previous extensions were successful or not (2) If there is any similarity in
the core brand and proposed extension (Keller & Aaker 1992). If brand
extensions were "dissimilar" (lacked fit) consumer perception on the quality of
brand will also be adversely affected. The proposed brand extension would be
affected, if there was no parity between the quality of the core brand and
intermediate extension. If the quality of the intermediate brand is lower than
the core brand, the consumer evaluation would be low. Intermediate brand will
improve perception of core brand, if the quality of intermediate brand is of
average level. If there is parity between intermediate and core brand, then
there will be no change of perception on proposed brand (Kapoor 2005).
54
5.5.1 HYPOTHESIS 5
The consumers tends to evaluate the “brand extension”, positively that have
a strong reputation of introducing multiple brand extensions. The hypothesis
developed in this context is presented below:
H50. : Consumer evaluation would be positive for those brand

extensions that have strong reputation for introducing multiple
brands.
H5A. : Consumer evaluation would not be positive for those brand

extensions that have strong reputation for introducing multiple
brands.
H5O: β1=0
H5A: β1≠ 0
The above hypothesis was tested for close extensions and distance
extension, separately.
The independent variable “Multiple brand extension” was measured through

close stimuli “Tapal Tea viz. Tea Bag”, and “Lifebuoy Soap Viz. Shampoo.
presented below:
Y= a + b1Multiple-Brand-ExtensionTapal-Tea + b2Multiple-Brand-ExtensionLifebuoy
55
Table 26: Multiple Regression, Close Extension
Multiple R 0.35
R Square 0.12
Standard Error 0.36
Observations 700.00

Regression 2.00 12.65 6.32 48.12 0.00
Residual 697.00 91.60 0.13
Total 699.00 104.25
Table 28: Coefficient, Close Extension

Standard Lower Upper Lower
Coefficients Error t Stat P-value 95% 95% 95.0%
Intercept 3.49 0.11 32.22 0.00 3.28 3.70 3.28
Tapal 0.14 0.02 6.95 0.00 0.10 0.18 0.10
Lifebuoy 0.10 0.02 4.37 0.00 0.06 0.15 0.06
Graph 9: Scattered Diagram, Close Extension

5.00
Brand Evaluation
4.00
Mult-tapal
3.00
Mult-Lifbuoy
2.00
Overall-Assoc.
1.00
-
0 5 10 15
Close Brand Extension
significant. Moreover all the P values are less than .05 further confirming the
relationship of the model. The R2 is 0.12, which indicates that the combined
effect of the independent variables will cause dependent variable to move by
12% which is a very weak relationship.
56
The coefficients of Tapal tea and lifebuoy in reference to multiple extension
are o.14 and 0.10, respectively indicating that the consumers while
evaluating Tapal tea and Lifebuoy soap were not influenced with the
reputation of multiple extensions. In fact, it has diluted the brand reputation.
The relationship of “Multiple brand extension” and “consumer evaluation” of

the brand extension were measured through distance stimuli “Sufi Vegetable
Soap viz. Oil”, and “Woodward Gripe Water viz. Shampoo”

presented below:
Y= a + b1Multiple-Brand-ExtensionSufi + b2Multiple-Brand-ExtensionWoodward .

Multiple R 0.51
R Square 0.26
Standard Error 0.63
Observations 700.00

Regression 2.00 97.95 48.98 125.36 0.00
Residual 697.00 272.30 0.39
Total 699.00 370.25

Error 95% 95%
Intercept 2.49 0.07 36.70 0.00 2.36 2.63
Sufi 0.04 0.02 1.81 0.07 (0.00) 0.07
Woodward 0.27 0.02 13.95 0.00 0.23 0.31
57
Graph 10: Scattered Chart, Distance Extension
6.00
Mult-suf
Brand Evaluation
5.00
4.00
Mult-woodward
3.00
2.00
Overall
1.00 Evaluation
-
0 5 10 15
Distance Extension
significant. Moreover the P value for Sufi is more than five and for Woodward
it is less than .o5. This indicates that Woodward validates the model where as
Suif does not. It also means that consumers’ evaluation for sufi extension
would not increase with the multiple brand extension. The R2 is 0.26, which
indicates that the combined effect of the independent variables will cause
dependent variable to move by 26% which is a very weak relationship.
Firms must not go for all kind of extensions as it would have adverse affect on
parent brand and would also adversely affect reputation of the parent brand.
58
CHAPTER 6
CONCLUSIONS
This chapter of thesis aims to conclude the paper with a conclusion,

suggestion and further research aspects. The conclusions are drawn from the
literature survey and analyzing of the data. It ends with directions for future
research.
The objectives of the study were to, (1) identify the factors that affect the
consumer evaluation of brand extensions, (2) develop empirical model on of
the variable associated with how consumer evaluates brand extension, (3)
test the validity of the empirical model.
While reviewing the literature, several variables were found to have

relationships on how consumers evaluate the brand extensions. The variables
used in the empirical models are, (1) similarity (2) reputation (3)
innovativeness (4) perceived risk (5) multiple extensions (6) parent brand
characteristics (7) concept and consistency (8) brand extension fit
The conceptual definitions of different authors were used for identifying the
determinants of the above variables. Based on these variables, a
questionnaire was developed that contained seventeen questions. Nine
questions were related to the personal data and the rest were related to the
subject study.
The sample size for the study was 700. Stratified proportionate non-random
sampling was used for drawing samples from the 18 UDC of Karachi.
Based on the focus group discussions, the following four different brand
extensions were finalized each representing different level of closeness
among: (1) Tapal Tea Viz. Tapal Tea Bag., (2)Life Buoy Soap Viz. Lifebuoy
Shampoo. (3) Sufi Vegetable Oil and Sufi Washing Soap. (4) Woodward
Gripe Water and Wood ward Toothpaste.
59
The major findings fare disused below:
a) The hypothesis that at least one of the variables amongst these, (1)
stronger reputation (b) similarity (c) strong association has relationship
with “consumer evaluation” brand was accepted.
• In case of close extensions, the R2 was 0.92 indicating a very

strong relationship. All the P values are less than .05 except
“association”. This indicates that all the coefficients are relevant
to the model except “Association-Tapal” and “Association-
Lifebuoy”. The coefficient of determination for Similarity Lifeuoy,
and Reputation lifebuoy are 0.42 and 0.31 respectively, indicating

that in overall consumer evaluation relationship these two
predictor variables/stimuli have comparatively stronger influence
on the dependent variable as compared to other
variables/stimuli.
• In case of distance extension the e R2 is 0.58, which indicates

that the combined effect of the independent variables will cause
the dependent variable consumer evaluation of brand extension
to move by 58%, which is an indication of a strong relationship.
The coefficient of determinations for RepuatationSufi, and
ReputationWoodward are 0.26 and 0.37, respectively indicating that
in the relationship of consumer evaluation of brand extension
these two predictor variables/stimuli have comparatively
stronger influence on the dependent variable as compared to
other variables. From the above, it could be inferred that in case
the parent’s brand is extended to similar category, then the
similarity of the brand extension would be vital for the
respondents’ evaluation of the brand extensions. In case, the
extension is of distance nature (not in similar category) than the
reputation of the parent brand would be used by the
respondents for evaluation brand extension. It may also be
observed from the above that the predicator variable “reputation”
60
is comparatively stronger in case of close and distance
extensions.
b) The hypothesis that at least one of the consumers traits that is (1)
perceived risk (2) level of innovativeness was accepted
• In case of close extension the R2 is 0.14, which indicates that

the combined effect of the independent variable will cause the
dependent variable to move by 14% which is a very weak
relationship. The innovative consumers tend to evaluate the
close brand extension more positively (coefficient of
determination being 0.15) as compared with consumer
perceived risk (coefficient of determination being 0.05).
• In case of close extension, the R2 is 0.18, which is a very weak

relationship. The overall level of innovativeness and perceived
risk of the respondents were high, but their relationships to the
distance brand extensions were weak. The coefficients for
perceived risk and innovativeness are 0.36 and -0.14,
respectively indicating that the consumers with high level of
innovativeness would tend to evaluate distance brand
extensions lowly and negative. The consumers with high level of
perceived risk have evaluated distance extensions
comparatively more positively with coefficient being 0.36
c) The hypothesis that brand evaluation would be positive for those

brands that have more concept consistency was accepted
• In case of close extension the R2 is 0.67, which an indication of

strong relationship. Moreover, all the P values except design of
lifebuoy are less than .05. This indicates that except the design
of lifebuoy others validate the model. The coefficients for design
and price of Tapal tea is 0.55, and -0.04, respectively indicating
61
that the consumers while evaluating Tapal tea were more
influenced with the design of tea as compared to the price of
Tapal tea. In case of Lifebuoy, the coefficients for design and
prices were 0.01, and 0.20 indicating that while evaluating the
Lifebuoy, the consumer appears to be more influenced with the
price, as compared to the design of the Lifebuoy soap.
• In case of distance extension the R2 is 0.32, which indicates a

weaker relationship. Moreover, all the P values except the
design of Woodward gripe water are less than .05. This
indicates that the design of Woodward has no relationship with
the dependent variable “consumer evaluation of brand
extension.” The coefficient of determinations for Sufi’ design
and price are 0.19 and 0.14, respectively indicating that in case
of Sufi the design is comparatively, stronger predictor than price.
Comparatively, price of Woodward was stronger predictor and
design has no relationship with consumer evaluation of distance
brand.
d) The hypothesis that those brands would be evaluated positively that

has high level of fitness in terms of (1) complimentary, (2)
supplementary (3) transferability (4) difficulty was accepted.
• In case of close extension the R2 is 0.71, which indicates a very

strong relationship. Moreover all the P values except Tapal-
difficulty and Tapal tea-compliment are less than .05. This
indicates tapal-tea difficulty, and tapal tea-compliment has no
relationship with the dependent variable that is consumer
evaluation of brand.
Comparatively, stronger predictors in this relationship were

Tapal(substitute), Tapal (Transferability), and Lifebuoy
(Transferability) with coefficient of determinations being, 0.24,
62
0.23 an 0.18 respectively. Indicating that these variables are
stronger predictors for the dependent variable perceived fitness.
The rest of the variables are weak predictors for the perceived
fitness with all the coefficients of determination being less than
0.18.
• In case of distance extension the R2 is 0.15, which is a very

weak relationship. Moreover all the P values are less than .05
except Sufi-complimentary, Sufi-substitute, and Woodward
complimentary, indicating that these mentioned variables have
no relationship with the dependent variable. The entire
coefficients were weak. It was as high as 0.08 for Sufi-
transferability, and as low as 0.01 for Woodward complimentary.
Almost no relationships were found in cases of Sufi-
complimentary, Sufi-substitute, and Woodward-complimentary.
e) The hypothesis that the consumer evaluation would be positive for

those brands that have strong reputation of introducing multiple brands
was accepted, but had very weak relationship.
• In case of close extension the R2 is 0.12, which is an indication

of a very weak relationship. The coefficients of Tapal tea and
Lifebuoy in reference to multiple extension is o.14 and 0.10,
respectively indicating that the consumers while evaluating
Tapal tea and Lifebuoy soap were not influenced with the
reputation of multiple extensions. In fact, it has diluted the brand
reputation.
• In case of distance extension, R2 is 0.26, which is an indication
of very weak relationship. Moreover the P value for Sufi is
more than five and for Woodward it is less than .05. This
indicates that Woodward validates the model where as Sufi
does not. It also means that consumers’ evaluation for Sufi
extension would not increase with the multiple brand extension.
63
CHAPTER 7
RECOMMENDATIONS
This chapter deals with the recommendations that have been derived from the
analysis and conclusions and literature survey
The major recommendations are as follows:
1) The firms whose brands have strong reputation could afford the luxury
of venturing into distance brand extension. The firms with weaker
brand reputation should focus on enhancing the brand reputation, and
if they have to extend their brand it should be in the same category
(Close distance)
2) The firms that are extending their brands to similar category (Close
brands), should target the consumer that have high level of
innovativeness. Comparatively, the companies that are extending their
brand into non-similar category (distance extension) must target those
customers that have high level of perceived risk.
3). In case of close extensions such as tea and tea bag, the firm must
concentrate on the design, which Tapal was found to be doing.
However, in case of distance extension, no relationship was found with
the design of Woodward gripe water. Woodward needs to improve the
design of the gripe water packaging in order to remain competitive.
4) In case of distance extension, the firms must not extend their brands to
the category that consumer would hate to assume it as substitute or
complement. The owners of Sufi and Woodward despite knowing this
has dared to extend in these categories assuming that while evaluating
their extension, the customers will take cues from the reputation of the
company.
64
5) The firms must not go for all kind of extensions (multi-branding) as it
would have adverse affect on the parent brand and would also
adversely affect the reputation of the parent brand.
65
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73
APPNEDIX-1 QUESTIONNAIRE
SIMILARITY
Q1 Rate the “similarity” of the following brand extensions on the scale of 1-5.
Five being “very similar” and one being “not similar” at all
PARENT BRAND EXTENDED BRAND
1.1 Tapal tea Tapal tea bag 5 4 3 2 1
1.2 Lifebuoy soap Lifebuoy shampoo 5 4 3 2 1
1.3 Sufi vegetable oil Sufi soap 5 4 3 2 1
1.4 Woodward grip water Woodward tooth paste 5 4 3 2 1
REPUTATION
Q2 Rate the “reputations” of the following Parent brands on the scale of 1-5.
Five being “very high reputation” and one being “very low reputation”.
PARENT BRAND
2.1 Tapal tea 5 4 3 2
2.2 Life buoy soap 5 4 3 2
2.3 Sufi vegetable oil 5 4 3 2
2.4 Woodward grip water 5 4 3 2
PERCEIVED RISK
Q3 Rate the following statements related to “perceived risk”. Five showing
“very strong agreement” and one showing “very strong disagreement”
3.1 When I am in front of __section I always feel unsure what to pick 5 4 3 2 1
3.2 When I buy an ___ it is easy to make wrong choice. 5 4 3 2 1
INNOVATIVENESS
Q4 Rate the following statements related to “innovativeness”. Five showing
“very strong agreement” and one showing “very strong disagreement”
3.1 I am continuously seeking new ideas and experience 5 4 3 2 1
3.2 When things get boring I like to find some new experience 5 4 3 2 1
74
MULTIPLE BRANDS
Q5 Rate which of the core brands have a strong history of introducing
“multiple brands”. Five being “very high” and one being “very low”.
PARENT BRAND
1.1 Tapal tea 5 4 3 2 1
1.2 Lifebuoy soap 5 4 3 2 1
1.3 Sufi Vegetable Oil 5 4 3 2 1
1.4 Woodward Grip water 5 4 3 2 1
PARENT BRAND CHARACTERISTICS
Q6 Rate which of the core brands have strong “association”. Five being “strong
association” and one being “low association”.
Strong association is brand like “Sony” that can be used for multiple products.
Products.
PARENT BRAND
1.1 Tapal tea 5 4 3 2 1
1.2 Life buoy soap 5 4 3 2 1
1.3 Sufi vegetable oil 5 4 3 2 1
BRAND CONCEPT CONSISTENCY
Q7.1 Rate your “price perception” about the following core brands. Five being
very high and one being very low
PARENT BRAND
1.1 Tapal tea 5 4 3 2 1
1.2 Lifebuoy soap 5 4 3 2 1
1.4 Woodward Gripe water 5 4 3 2 1
BRAND CONCEPT CONSISTENCY
Q7.2 Rate your “design perception” about the following core brands. Five being
“very expensive” and one being “not expensive at all”.
PARENT BRAND
1.1 Tapal tea 5 4 3 2 1
1.2 Life buoy soap 5 4 3 2 1
75
PARENT BRAND EXTENSION BRAND COMPLEMENT
Q8.a Rate how much the following core brands and extended brand “compliment” each
Other. Five being “very highly complimentary” and one being “very low
complimentary” (Complimentary: tea and milk)
1.2 Life buoy soap Life buoy shampoo 5 4 3 2 1
1.3 Sufi Vegetable Oil Sufi Soap 5 4 3 2 1
1.4 Woodward Grip water Woodward tooth paste 5 4 3 2 1
PARENT BRAND EXTENSION BRAND SUBSTITUTE
Q8.b Rate how much the following core brand and parent brand “substitute” each
Other. Five being “highly substitute” and one being “low substitute”
(substitute:: tea and coffee)
TRANSFERABILITY
Q8.c Rate the level of “transferability” between core brand and parent brand.
Five being “ very highly transferability” and one being “very low transferability”
(Transferability mean closeness in the manufacturing process of two products
1.3 Sufi vegetable Oil Sufi Soap 5 4 3 2 1
PERCEIVED DIFFICULTY
Q8.d Rate the level of “perceived difficulty” between core brand and extended brand.
Five being highly “Perceived difficulty” and one being low level of difficulty
(Difficulty means: how difficult it is to make the product.
1.4 Woodward gripe water Woodward tooth paste 5 4 3 2 1
76
OVERALL CONSUMER EVALUATION OF THE BRAND
Q9 Over all I am very positive to the following extensions. Five being very
Positive and one being not very positive
1.3 Sufi vegetable oil Sufi Soap 5 4 3 2 1
Q10. Age
{ 21 – 30 { 31 – 40 { 41 – 50 { 50 and Above
Q11. Qualification
{ Graduation { Post { Masters { Doctoral

Graduation
Q12 Gender
{ Male { Female
Q13. Income
{ 10,000 – { 21,000 – { 31,000 – 40,000 { 41,000 & Above

20,000 30,000
Q14. Household Size
{ 2–5 { 6 – 10 { 11 and Above
Q15. Area of residence?
{ DHA { Clifton { P.E.C.H.S { Gulshan-e-Iqbal
{ F.B. Area { North { Saddar { Others

Nazimabad
Q16. Profession
{ Marketing { Banking { Engineering { Doctor
{ Teacher { Others
77
78
79

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BRAND EXTENSIONS OF

Growth is necessary for companies to stay competitive, and for achieving

Popularity of brand extensions as a growth strategy has opened various

1.1 PURPOSE OF THE STUDY

1.3 CONTRIBUTION OF THIS STUDY

Researchers have made significant contributions in the last few decades

1.3 PROBLEM STATEMENT

This chapter intends to set a theoretical framework of the thesis by introducing

The evolution of brands continued in early twentieth century. There were

Researchers are of the opinion that branding is beyond creating unique

2.2 BRAND EQUITY

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

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

Some of the brand equity definitions are based on strategic marketing

2.3 BRAND MANAGEMENT STRATEGY

The concept of brand management is not entirely new in the marketing of

Four brand strategies are available for a company: multi-brands, to introduce

Multi-branding is introducing additional brands in the same product category in

2.4 BRAND EXTENSION

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

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

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

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

However, launching a new or modified product in a new category but using

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

2.5 RISK IN BRAND EXTENSIONS

Using equity of a brand to leverage into different product category may be

2.6 RATIONAL AND BENEFIT OF BRAND EXTENSION

Brand extension growth strategy has several economic advantages.

Whether a new product is launched with a new brand or is extended with an

The environment is constantly changing, and according to Kapferer (2001),

The company, at times, possesses certain technologies and expertise. This

2.7 CATEGORIZATION THEORY

Categorization theories state that consumer attitude would be positive for

How consumer makes judgment depends on structural congruity between

EMPIRICAL MODEL VIZ. HYPOTHESES

This chapter illustrates an empirical model showing relationships of variables

3.1 EMPIRICAL MODEL

The relationships of different variables with the dependent variables have

PARENT BRAN. CHARACTERISTIC

PERCEIVED RISK EVALUATION

MULTIPLE EXTENSION H3 EXTENSION

CONCEPT AND CONSISTENCY H4

BRAND EXTENSION FIT H5

In the above empirical model, the dependent variable is consumer evaluation

Based on the literature survey and variables discussed in the previous

H2: There is a positive relationship between (a) how consumer perceived

H3: Consumer evaluation would be positive for those brand extensions

The research methodology chapter explains the author’s research position,

4.1 STIMULI SELECTION

There are more than 30 brand extensions associated to FMCGs, in Pakistan.

a) Tapal Tea and Tapal Tea Bag.

The dependent variables and independent variables of this study are

4.2.1.1 CONSUMER EVALUATION OF BRAND

4.2.2 INDEPENDENT VARIABLES

4.2.2.2 REPUTATION OF PARENT BRAND

a) “When I am in front of the___ section, I always feel unsure about what

Heims (2001) has used five different sub-variables for measuring

4.2.2.5 MULTIPLE BRAND EXTENSIONS

4.2.2.6 PARENTS BRAND CHARACTERISTICS

Smith (1994) has defined parents’ characteristics in reference to “broad

The independent variable parent brand consistency has been defined by

4.2.2.8 BRAND EXTENSIONS FIT