A strong brand can be successful in new product areas. Even with products dissimilar to those the brand is known for, a doctorate study at BI Norwegian Business School shows.
RESEARCH @ BI: Brands in Marketing
New products are being launched all the time. Competition for consumer favour is hard. Between 80 and 90 per cent of all new products are extensions of already existing brands into new product categories.
This means that almost all new products come with a brand name we already know, but used in a different context.
Brand owners have typically looked for product areas that match products consumers already know. Toothpaste manufacturer Colgate has for instance extended their range of products and launched Colgate mouthwash.
The idea of a good match has been a mantra when it comes to expanding into new product categories.
In his doctorate study at BI Norwegian Business School, researcher Radu-Mihai Dimitriu has researched whether it is possible for a brand owner to break into product areas far removed from what the brand has previously been known for.
He thereby challenges brand experts’ mantra of a good match of brand and product category.
According to Dimitriu, how a consumer receives a new brand on the shelf at the supermarket will depend on his/her perception of the product category in question.
- Within some product categories, consumers perceive little difference between different products in the category. This applies to for instance milk.
- In other areas, for instance ice cream, consumers perceive large differences between different product variants.
Dimitriu shows through experiments that brand owners can succeed in new, unrelated product areas if consumers perceive large differences between different products within the category.
If consumers perceive small differences between different products, they will likely turn up their noses at a new brand that doesn’t fit into the category.
A consumer would for instance be more sceptical to a new type of milk produced by a cookie manufacturer than by a yoghurt manufacturer.
Dimitriu conducted three experiments to show that consumers’ perception of variation in the product category affects how a new brand is received.
In the first experiment he introduced two new imagined e-book readers, one by Panasonic and one by domestic appliance manufacturer Electrolux. On the face of it, the best match is between the brand Panasonic and the product category e-book reader.
Because e-book readers are a new, unfamiliar product, the researcher could manipulate one group of participants in the experiment to believe that e-book readers were mostly the same, while the other group was given the impression that there were big differences between different types of e-book readers.
Those who understood the category of e-book readers to be uniform, preferred a new e-book reader from Panasonic to an e-book reader by Electrolux. Those under the impression there were big differences between different products, could just as easily go for Electrolux as Panasonic.
The second experiment was conducted in the same way, but with a new product category – an electric Segway vehicle. Here, Dimitriu let Honda and Electrolux launch new imagined vehicles of the Segway type. The results from the first experiment were repeated.
Those who perceived the vehicles to be largely the same, basically liked Honda better than Electrolux. Honda lost its edge when it came to the group under the impression there were big differences between products in the category.
Smart communication works
In the third experiment, the researcher shows that clever use of communication could help Electrolux into new product areas even when consumers think products are the same from brand to brand.
Electrolux must emphasise what they can bring to a new product category in their communcation.
“If Electrolux were to launch a new Segway vehicle, the company could highlight that they’ve developed a whole new transport solution ideal for flexible urban transport,” Dimitriu states.
He thinks Electrolux should tone down any negative associations to kitchen and household appliances when branching out into new, unrelated product areas.
Radu-Mihai Dimitriu presented his doctoral thesis "Extending where? How consumers’ perception of the extension category affects brand extension evaluation" on 17 September 2010 at BI Norwegian Business School.
- Radu-Mihai Dimitriu completed his doctorate study at the Department of Marketing at BI Norwegian Business School.
- His first opponent is Associate Professor Joann Peck at the Wisconsin School of Business. His second opponent is Professor Luk Warlop at Katholieke Universiteit Leuven. Professor Kenneth Wathne at BI Norwegian Business School is Committee Chairman.
- Professor Fred Selnes at BI Norwegian Business School has been the main supervisor, and Assistant Professor Bendik Samuelsen at BI Norwegian School of Marketing has been second supervisor.
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Text: Audun Farbrot, Head of Science Communication at BI Norwegian Business School (E-mail: firstname.lastname@example.org)