Impact Of Brand Extension On Customer Loyalty: A Case Study Of Apple And Ponds

“Brand extension and the impact on customer loyalty”

Working initially from their research proposals, students will be given access to individual and group support from specialist supervisors located within their various fields of independent research study, with a view to facilitating the design and implementation of their research projects and their writing up in conceptual, applied and work-related dissertation. 

Brand extension is one of the strategies that are very popular in the market. This is the strategy that allows the companies to diverse the market with the similar brand name. The companies think that launching the new products with the brand name that is already popular in the market gain better response from the customers. There can be many reasons for this response such as familiarity of the brand to the customers, positive attitude of the customers towards the parent brand of the products, the people or the policies associated with the brand, the marketing techniques of the brand or the good experience of other products of the same brand by the customers. When it is compared to the new products that are launched by the new brand, it has been analysed that it is risky in terms of market acceptance. The new brand or the company has to be make great efforts to penetrate the market first and then to withstand in the market competition by attracting those customers who are not raw and are already linked with some other brands. Prior studies have been conducted in order to find out the factors that drives brand extension and its impact on the sales of the products and the brand image of the company. Customer loyalty is also one of the consequences that is being judged or analysed. It is required to study the link between the brand extension strategy and the impact of the same on customer loyalty. It has been analysed that customers response positively towards the new products only when they find a fit between the new products and the parent brand. Suppose, a brand like Nike that is famous and popular for shoes diversify their business in any of the food products then it becomes very difficult for the brand to convince the customers. It may also results in negative response of the customers towards the brand and can affect the customer loyalty. This is the report that focuses on analysing the impact of brand extension strategy on the customer’s loyalty or the way customer’s response towards the brand after extension. It is required to study the response of the customers of the brand extension strategy. In this study, two of the companies have been studied are Apple and Ponds. Both of these companies have extended their brands but on were a great hit while other was a flop. It is required to analyse the impact of the brand extension on the customer’s loyalty and response of the customers and the reasons bringing the failure and success of the brands. Study 1 focuses on the company called Apple in which the secondary data is being extracted by analysing the customer’s response or the sales of the new product. Another study that is being conducted on Ponds analyse the factors that has resulted in failure of the brand extension strategy of the company and the negative response of the customers towards the new products.

Problem statement

Apple Inc.: Apple is the company that operates on hardware and software industry. It is the company that has started its operations in the year of 1977 and is headquartered at US. It is the very well-known and popular company today because of its products such as laptops, phones, iOS etc. this suggests that the company is not only selling the products but also providing services in the form of software. It is one of those firms that are expanding with high pace by launching new products now and then. They started their business by launching computers bit later on extended their brand by selling mp3 or iPods, ipads and iPhones. The company is still thinking of selling their own Mac apps. It is known that the company is experiencing great success in selling all his profits especially its phones and the customers are giving great response. Now the question rises, where the products are line extension or not. As per the analysis of the products, it has been analysed that all the products that are being launched by the company are line extension because every products are related to the similar line of hardware and software products. The brand extension of Apple was found  to be very successful as the number of customers that Apple is experiencing is continuously increasing. This suggests that the customers of Apple are very loyal to the brand and thus have decided to adopt the changes that the brand is developing and also accepting the products that this brand is launching.

Ponds is the brand that operates in beauty and wellness industry and is owned by the MNC firm called Unilever. Ponds have started its business by launching face cream in 1846. Later on the company has extended its brand by launching ponds vanishing cream and powder. The firm then later entered into facial foams, cleansers, powders etc. all the business or the products of the company was doing good in the market but the company has launched toothpaste which is found to be different from the earlier products of the company. The brand experience a failure in this product of toothpaste and thus it affected the image of the company. It has been analysed that toothpaste of the brand was hardly attain any kind of appearance in the market because the customers have not accepted the beauty brand to sell the products that is very unrelated to its prior products. For people, ponds are the brand of beauty that allows them to buy the products that are in cosmetic range and they have not imagined the company selling the toothpaste. Pond’s experienced a great failure in its brand extension strategy. There are various reasons that has been analysed which can act as the cause of brand extension failure. The first and the major reason is the unrelated product launch. Toothpaste and cosmetics are the much unrelated products which is hard to be accepted by the market. As far as the story is considered, it has been analysed that Ponds earlier tries to expand its brand by launching more products in skin care by launching soap which was a logical step to be taken. When the company tried to expand its brand in oral care, it results in a big failure because of the degree of differences between the category of the products and another reason is that the customers found it difficult to detect the different between the Colgate and the pond’s toothpaste. Thus, it is not only the non-relatedness of the products but also the failed innovation.

Research aim

This is the study that deals with analysing the customer response and the customer loyalty of the people towards the brand when the brand implements any of the brand extension strategy by launching a new product. The problem is that why some of the brands are experiencing success because of brand extension and some of the companies is experiencing failure because of similar strategy. It is required to analyse the factors that cause failure and success of the brand strategy in terms of customer response and loyalty. There are factors that affect the success and failure of the brand extension strategy which needs to be analysed in this research.

The aim of the research provides the idea of why the research is conducted by the researcher. As far as this research is considered, it aims at analysing the factors that cause the failure and success of the brand extension strategy of the company and the impact of the same on brand loyalty of the customers. The aim of the research suggests that the research requires analysing the customer’s response towards the brand as and when the company has implemented any of the brand extension strategy. Analysing the response of the customers regarding the brand will help in evaluating the thinking of the customers and the various reasons that why some brands succeed and some fails in implementing brand extension strategy.

This is the research that involves the terms such as brand extension, customer response, customer loyalty etc. the objective of the research revolves around the aim of the research. Some of the objectives are as follows:

• To identify the factors that drives brand extension.
• To identify the factors that results in brand extension success md failure.
• To identify the response of the customer on brand extension.
• To analyse the impact of brand extension of customer loyalty.

Research question are the questions that needs to be answered after the study of the related aspects of the topic (Mackey & Gass, 2015). In this research, following are some of the question:

1. What are the drivers that cause brand extension?
2. What is the cause or the reasons that results in successful brand extension?
3. What are the reasons or causes those results in failure of brand extension strategy of the company?
4. How customer loyalty is gets impacted by the brand extension strategy?

Brand extension is the strategy that is used to develop and launch new products with the name of the established brand. Extending the brand related to the product or may be unrelated to the product but it brings profit for the company in any of the ways (Blut, Beatty, Evanschitzky & Brock, 2014). It is the assumption of the marketers that if the brand is already known and have the image in the market than it becomes easy for the firm to launch a new products and caters the market as compared to the new brand which is not linked or associated with any of the established and known brand (Cha, Yi & Bagozzi, 2016). The expenses of the established firm also reduces in terms of advertising, introductory promotions, price promotion etc. However, the success of brand extension is not certain in nature. It has been analysed that most of the fast moving consumer good companies are facing failure in brand extension strategies. Thus, it is required that in depth research should be conducted in this area of brand extension success and failure factors (Peppers & Rogers, 2016). This can be determined only by the getting and analysing the response of the customers towards the new products that has been launch by the company and the effect of that launch on the brand image of the company.

Research objective

There are many strategies that are being used by the companies in order to enhance the business and increase the range of the market to be served by the brand (Kim, Vogt & Knutson, 2015). The most important strategy that the company use is brand extension.it is the strategy in which the new products is launched by the company that may or may not be related to the parent product of the company. Brand extension has been defined in many ways. Brand extension is the strategy in which a brand name that is established is used by the company to launch a new product. Some of the authors suggest that launching products in the name of the brand that already exists in the market and known for its products is brand extension (Lee, Monroe & Rosa, 2015).  According to the research any of the successful brand acts as the power hours that have the owner to illuminates everything. This suggests that the brand has the power to pull the customers and thus any of the products that link with the name of that luminous brand can attain success in the market (Ferguson, Ferguson, Lau, Lau, Phau & Phau, 2016). So, launching products by linking it with the established brand helps is required to attain the guaranteed success of the products launch. It has also been argued that if the customers or the consumers are aware about the brand then it becomes easy for the products to be accepted by the customres.it also helps the customers to accept the products easily as they already have the idea about the quality of the brand (Hayran & Gürhan-Canli, 2016). Thus, brand extension helps reducing the risk that is associated with the launching of the new products. Furthermore, any of the brands that are already established in the market have some kind of image and positioning in the minds of the customers. When that brand launches any of the new products that image or positioning of the brand gets automatically associated with the new products as well thus the marketers should be cautious at the time of positioning the products and the brand in the minds of the customers. One of the most important benefits of brand extension is that it does not require a large amount of advertising (MacInnis, Park & Priester, 2014). This is because the customers likes the advertising that has been done before by the brand for the older products again with the new products of the ocmpay.it is the brand that needs to be remembered and not the product because the image that frames in the minds of the customers is related to the brand and not related to the particular products of the brand (Sichtmann & Diamantopoulos, 2013). Brand visibility is the concept that is also linked with brad extension. When any of the brands extends and launch any of the products in other categories, it increases the brand visibility of the brand.

There are different types of brand extension. The brand extension is categorized into related and unrelated products. This is because either the brand can launch the new products in the related category of the parent products or any of the unrelated categories of the parent products (Huang, Jia & Wyer, 2017). As far as related products or the type of extension is considered, it has been analysed that the relations can be of the category of the products or of the image of the brand (Hem, Iversen & Olsen, 2014). When the new products is related to the parent products, it is assumed to be the variant of the old products that means the brand  has made some of the modifications in the products that was already in the market from the same brand name (Albrecht, Backhaus, Gurzki & Woisetschläger, 2013). As far as the image related brand extension is considered, it has been analysed that in this the new products has been launched by the company that carries the similar image as before. The new products in both the above categories are very much related to the products and the brand of the company (Reast, 2005).  there category of brand extensions called as unrelated category.in this category, the brand that was earlier established ,launch the products that is very different from the image if the brand an also from the products categories that the brand was dealing with in older days (Völckner & Sattler, 2006). This may somehow require the brand to make more efforts in attracting the customers as they have to change their mind-set regarding the brand which was very different earlier and now the brand has launched a different type of product (Tauber, 1981).

In spite of having popularity and significance of brand extensions as a marketing strategy for launching new products, very less is known about how consumers react to them (Monga & John, 2010). The reaction of consumer to the brand extensions involve a the process of categorization in which the new product is examined on its appropriateness as a member to that category (perceived “fit”) which already contains a product or a set of products and that has a brand name as its recognisable label (Pitta & Prevel Katsanis, 1995). The views and sentiments associated with this brand category may transfer to an extension when consumers perceive the extension fitting into that brand category. Author studied how consumers form their attitudes toward brand extensions. According to them consumers identified various bases of perceived fit between the original and extension product classes (Aaker & Keller, 1990). These bases were

(1) Complementarity: It is defined as the degree till which the parent and the new products share the similarity and the differences.

(2) Substitutability: it’s the concept that deals with the degree to which the new products replace the old one in the market in terms of usage.

(3) Transferability:  it is the degree to which the manufacturing skills and the process of production of the old products is transferred to the skills and process that are required to produce the new product.

According to some researchers brand extension is a marketing strategy for presenting new products in relation to a recognized successful brand (Milberg, Sinn & Goodstein, 2010). A study was conducted to recognize the factors which have their impact on the consumer’s perception of these products’ fit with the remaining parent brand’s product lines (Schmitt, 1999). The results of the studies also suggests that the consumers usually evaluate brand extensions in terms of the similar features that the parent and the new products have and brand concept consistency; however the effects of these two factors vary according to the brand-name concept (Collins-Dodd & Louviere, 1999). The results also suggests that to detect brand extensions, the two measures that the consumers usually consider are the similarity features among the old and the nr products of the brand and the consistency of the concept between the products and the brand.

Master brand is the term that has been given to some of the brands who are very much particular about the category of the products they deal with (Müge Arslan & Korkut Altuna, 2010). This suggests that brand extension strategy may be beneficial for the brands but may affect the brands in negative way if the brands like master brands extend the brand in new products category or unrelated category. It has been suggested that the brand extension is productive only when it is clear that it could enhance the success of a new product launch along with the existing brand equity.

Cost is also one of the factors that have been considered when brand extension is studied. This is because it has reduced the cost of launching the new products in market which was not possible in earlier times when this strategy was not used by the companies. It has been advised that a vertical brand extension generally results in a negative impact on the core brand by weakening the core brand image. It has been suggested that to reduce such weakening of the core brand image, it is required to reduce the distance between the new products and the core brand image (Kapoor & Heslop, 2009). It is suggested that the effects of extending brands differing in their dominancy level was much complex than actually considered. It has been concluded from the discussion and the studies that a brand’s association to its original product category got diluted if extension failed. Three approaches were suggested while practicing brand extension:

1) Determination of consumer response with regards to the brand

2) Assessment of brand’s expectations with regards to leverage power

3) Consideration and analysis of various alternatives.

Consumer reactions towards new products have been examined and it has been analysed that there are four different branding scenarios (Ghodeswar, 2008). The results of various studies suggested that when there is great degree of similarity between the new and the old products of the brand, all the products have equal preference in the eyes of the customers (Völckner & Sattler, 2006). But when consumers find little fit, the new brand name was preferred most, followed in the order of nested brands, sub-brands, and brand extensions. It has been argued that when any of the brands takes the decision to launch new products, it is required to be considered that whether the brand should focus on line extension or should launch a new product with a different brand name (Bottomley & Doyle, 1996). It has been analysed that the managers of the company should explore the opportunities available to them and should select the option that is best suited for their firm and as per the situation of the market (Czellar, 2003). Some of the factors that affect the success of the line extension have been studied. These factors are intensity of the competition prevailing in the market, power of the retailer and the behaviour and response of the consumers towards the brand and the new product (Barret, Lye & Venkateswarlu, 1999). The results revealed that line extensions had very little value addition over existing products, and cannibalization was related to a line extension’s success. Only those line extensions, where new flavours and new packaging/sizes were involved proved successful while extensions that improved product quality were found unsuccessful (Keller & Lehmann, 2006).

It is argued that good fit between the new and the existing products of the brand was necessary for the success of extension (Salinas & Pérez, 2009). The results of the study revealed that there is decrease in the consumer’s positive attitude toward the brand if the fit between the new and the existing products decreases (Shukla, Banerjee & Singh, 2016). It has been depicted that customers are not aware about the techniques in which the new products that have been launched by the companies can be evaluated (Chiu, Huang, Weng & Chen, 2017). Thus, price of the product is considered as the factor that determines the quality of the products. It has been studied that high price of the products affects the quality that has been perceived by the customers. It has also been argued that launching the product at high price perceived as the high quality products It has been found in the research that brand extension dilutes the effect of brand’s image (Opare & Blankson, 2017).

This discussion results in generating a concept that is the relation between the brand extension and the customer’s response and loyalty. It has been analysed that response of the customers is very important for evaluating the success of the brand extension of any of the company (Zhang, Guo, Hu & Liu, 2017). Thus, it is required to learn about the relation between the customer’s response and the type of brand extension.

Brand loyalty:

Brand loyalty is argued as the degree of the truthfulness of consumers to a particular brand, expressed through their frequent purchases, irrespective of the marketing pressure generated by the competing brands. When a consumer behaves loyal, he or she used to purchase the products from that brand only (Hapsari, Hapsari, Clemes, Clemes, Dean & Dean, 2017). It may be possible that the customers purchase every category products from the particular brand in order to show the loyalty towards the brand. Loyalty of the customers towards ye brand can be judged only by the behaviour and the response of the customers on the actions of the brand (Oh, Oh, Kim & Kim, 2017). It has been analysed that if the customers is loyal it supports the brand in every situation and also remain updated with each and every action of the brand. Price is another factor that needs to be considered in this context. Customers who are loyal buy the products from the brands they like irrespective of their price and the quality. On the other hand, the companies also favour the loyal customers by giving and offering extra benefits to them. Companies that want to generate new loyal customers have to link their brand with some of the human factor. This is because it is the most important strategy to generate loyal customers (Müge Arslan & Korkut Altuna, 2010). This is because of any of the human figure associate with the brand; the image of the human figure also reflects on the image of the brand and thus position different opinions in the minds of the customers. Thus, linking the relevant figure is also very important and crucial task to be done by the companies.

There are three major dimensions of loyalty. The first one is the attitude of the customers. It is the attitude of the customers that matters a lot when loyalty comes into picture. The next one is the behaviour of the customers at the time of making the purchase. It also deals with the tendency of the person to buy the products from that brand (Cha, Yi & Bagozzi, 2016). Price is the last factor that needs to be considered if the customers find it easy to afford the products of the brand then he or she may easily stick to the brand and may not switch but if the prices of the new products that the brand launch or raise the prices of the old products the it may be possible that some of the loyal customers switch from that brand (MacInnis, Park & Priester, 2014). The measurement of behaviour and the attitude of the people regarding the brand help in analysing the actual loyalty of the brand that is present in the market and the price sensitivity amongst the loyal customers of the brand helps in analysing the intensity of the power that how much a customers can pay for the brand (Hem, Iversen & Olsen, 2014). The brands or the companies have to make some strategies that do not allow the customers to switch the brand. This requires the brad to adapt some of the standardized strategies such as cost differentiation, quality of the products etc. maintenance of the standard quality and price only allow the company to be stable in the market and to be stable in the minds of the customers (Albrecht, Backhaus, Gurzki & Woisetschläger, 2013). However, in today’s dynamic market, it is required to cater the market with innovation. Thus, modifying the products is also a necessary step to be taken by the firm along with maintaining the image of the brand that should be standard.

Customer response and loyalty:

When any of the company launches any of the products or makes any of the changes in the brand then it leads to several changes in the consumer market. The first change that may occur is the change in the number of customers. If the change that occurred is favourable for the market then the company enjoys addition if new number of customers and if the change is not favourable for the market than the opposite may happen. This will let the company know that who are not loyal customers and who are not because loyal customers cannot easily switch the brand in fact they trust the brand and their actions and accept them. Thus, this suggests that response of the customers directly shows the level and intensity of loyal behaviour of the customers for the company.

There are different theories of customer’s loyalty that has been postulated by analysing the market scenarios.

Attraction theory is the theory that suggests everyone feels attracted only because of the personality of the other person. As per this theory, if the relationship between the people provides benefits to one another then it becomes easy for the person to get attracted. This suggests that attraction helps the customers to be loyal to the brand if the brand gets successful in attracting the customers with its products and continue to maintain the same (Sichtmann & Diamantopoulos, 2013).

Social exchange theory suggests that cost benefit analysis is the basis of developing relationships. In case, when the cost is increased and the benefits that has been achieved are reduced then people prefers to dissolve the relationships. (Monga & John, 2010). The theory of relationship marketing deals with engaging the customers into the relationship with the companies in which both have benefits.

Equity theory is the theory that deals with development and maintenance of the relationship that is based upon equal ratio division of cost and benefits. The time when the share of rewards reduces as compared to the share that has been demanded then a feeling of dissatisfaction develops which results in ceased relationship.

The brand extension strategy is used by the companies because it is the strategy that reduces the risk of the market and also reduces the expenses. This economics results in pushing the companies to extend the products in the market rather than building and developing new brands. This requires the companies to focus on research and development. Due to these benefits, more and more of the companies these days are using the strategies of brand extension instead of releasing and launching new brands. It has been analysed that it is required for the companies to make the people aware about the products and promoting a new products with already existing brand is easier than promoting the products that is very new. This is because the association with the old brand helps the company to only make the people aware about the features of the new products that has been launched and does not require putting efforts in marketing the brand. Customer trust is also one of the important factors that need to be considered. When an existing brand release or launch products, the customers already have some image regarding those products because of the brand that is linked to it. Trust of the customers on that brand automatically develops trust on the new products. thus, it can be concluded from the discussion that if the response of the customers towards the brand is positive then the new extension of that brand also receives the positive response. As far as the cost is considered, it has been examined that launching a new brand is fairly very cheap as compared to extension of the brand. In terms of advertising budget as well, it has been analysed that it is quite cheaper than the budget of advertising the new brand. In addition to all the above benefits, it has been realised that when a company extends in brand, it also results in development of more visibility of the brand in the market. Brand visibility refers to the degree of visibility of the brand in the market. In simple words, it can be defined as the intensity of the brand presence in the market. Whenever a company launch a new product in the different category, it allows the brand to show its wider existence in the market. In context of brand loyalty, it has been suggested that enhancing the brand visibility develops the trust and loyalty amongst the customers for the brand. Every brand follows a life cycle. At the end, the brand has to face the period of maturity and then decline stage. On this stage, brand extension strategy helps the company to energize the brand again and to come back in the market with something innovative that can help the brand to gear up and serve the market. Brand extension also acts as the defensive strategy for the brand. This is because it helps the brand to reduce the competition in the market and also to divide the risk in different products categories. If the market situation for on products category is not favourable then the company can depends on other products category for profits and revenues.

It is not the case that brand extension only provides benefits to the company. There are cases where bard extension strategies provide to be very disastrous for the companies. The first disadvantage of adopting the brand extension strategy is that it leads to dilution of the existing brand image. The step of brand extension uses the most important and the essential asset of the company that is its name and image. Thus, it suggests that extension strategy actions affect the brand image. It is not necessary that the effects always turn to be positive. It can be negative in some or the other case which affects the brand image of the company and dilute the same. The dilution of the and image can be done by releasing un-associated products. Any wrong impression of the new products can vanish the old image of the company thus releasing a product by linking the brand name with it is very risky. Cannibalization is the term that is used when the new products of the brand itself eats the sales of the old products. This situation occurs in the case when the new products are very much closely related with the old products of the brand. In such case, the sales of the extended products increased but the sales curve of the old products of that brand experience opposite direction. The only reason that has been analysed for cannibalization is the brand extension in which the brand clones are used as the new products. Releasing the products that id closely and very much similar to the old products with few improvement can affect the sales of the old products and in turn affect the revenue of the company as a whole. It has been analysed that, more the brand extends itself, more it becomes susceptible to the risk of the market and damage to the brand image. This is because, it is not possible that each and very products of the brand results in successful sales. If customers like one product of the brand then it may reject the other products. Completing with different market is very difficult in this dynamic environment.

It has been analysed from the above discussion that brand extension is not the strategy that an help the brands to attain and cover the new market but also brings so many risks with it that needs to be faced. Thus, it is required by the brands to plan the things properly. Research and development is the area where the companies should focus so that an intelligent decision can be made in the area of brand extension. Extending the brand is not always a good option to cater the market and enhance the brand visibility. It is also required to extend the brand is the right direction. The above discussion suggests that extending the in unrelated category is not a good option but launching the products that act as the clone of the old products is also not a good decision to be taken by any of the brand.

The above figure suggests that there are various elements that are included the conceptual framework that has been framed after analysing so many literatures. The first that has been included in the framework is customer response and customer loyalty. It has been analysed that examining both these things helps in evaluating the brand extension strategy (Monga & John, 2010). As per this model, the major factor that affects the success and failure of the brand extension strategy of any of the company is the closeness and the differences of the parent product and the new product that has been launched by the companies. This may be because when any of the unrelated products has been launched by the company than the company has to develop its image in a new way. This may confuse the customers and also results in non-acceptance of the new product. When the company release the products that are very much related to the company’s core brand and the image then it becomes easier for the brand to convince the customers to but that new product.

Research methods

Research methods are described as various procedures that are used in the research. It has been analysed that conducting the research in a standardized process is very important (Creswell & Clark, 2007). This part of the research includes the methods that are being used for collecting the data, processing the data, analysing the results, examining the research part, methods to find the solution, methods to differentiate the sample out of the population etc. it is ultimately systematic manner or way to resolve the issue or to conduct the research so that the solution can be analysed or identified in an effective and efficient manner.

Research philosophy: it is one of the most important parts of research methodology. The philosophy of the research is being analysed by its research questions. Different types of philosophies are available from which one of the philosophies is being selected as per the research that has been conducted by the researcher. Some of the philosophies are:

It is the philosophical approach that is related to the social entity of the research of the natural scientist (Smith, 2015). This is the approach that is based on the data collection of the research and the hypothesis that are made. Highly structured methodology has been used in this type of research philosophy. The results or the analysis of the research is confirmed and can be used for further research.

This is the approach that deals with interpretation as per the data that has been collected. This approach prefers qualitative methods to conduct the research and thus believes in language and social aspects of the topic (Liamputtong, 2013).

As far as this research is considered, it has been analysed that positivism is the approach that has been followed in this research. This is because it is the research that requires standardized process and methods to conduct the research such as to analyse and collect the data and process the same.

Research approaches are the approaches in which the research is farmed or being conducted. There are various types of research approaches that can be used by the researchers (Smith, 2007). Some of the approaches are inductive, deductive etc. the deductive approach helps in validating the assumptions and the hypothesis made while the inductive approach deals with framing and designing new theories related to research topic. In the deductive approach, the data that has been collected is used to prove a particular theory that has already been given while the data that has been collected in the inductive approach is used to formalise a new theory or the conceptual model that can help in conducting further research.

Deductive approach is the approach in which the set of hypothesis is formulated on the basis of the set theory and that it is either confirmed or rejected at the end.

Inductive approach is the approach in which the observation is done, research is conducted and a pattern is drawn that ultimately results in formulation of the new theory (Carter & Little, 2007). The further research can allow the researcher to confirm the theory that has been formulated in the next research.

As far as this research is considered, it has been analysed that inductive research s approach that is fit for this. This is because, in this research, the researcher is focusing on observing the aspect of customer loyalty and beans extension strategy and formulating new theory out of it by showing the relationship between the same. This research is not confirming or rejecting any existing theory but resulting in formulating the new conceptual model.

This is the part of research that involves way in which the research is explained. There are various types of research purpose (Gill, Stewart,  Treasure & Chadwick, 2008). Some of the types of research purpose are exploratory, explanatory, and descriptive.

Explanatory: it is the research that connects the ideas to understand cause and effect of the topic.  This type of research, the researchers try to explain the context behind the topic and also try to convey the theoretical aspects of the topic. This is the research that looks for the process that how things come together and how the things connect with each other.

Exploratory research: it is the research that is done in order to explore something. In this the researcher observes something and then conducts the research in order to understand and explore more about the topic or the subject (Englander, 2012). It is the research that lays the ground or the roots of the subject so that the future research can be conducted on the same. In this research, the researcher just has the hint of something and then it develops a curiosity amongst the research to find out more and more about the topic.

Descriptive research: this is the last step of any of the research. It is conducted when the more information is required to be linked and understand by the researcher. When the groundwork for the research is done and the hypothesis is made, the next level is to describe the additional information and the associated concept of the research. It is basically used to fill the missing parts of the research and to make it more descriptive.

As far as this research is considered, it has been analysed that this research is exploratory in nature. This is because the researcher has the knowledge about the customer loyalty and brand extension strategy by the prior studies that have been conducted by different authors. The researcher has to explore the relationship between the both and also find out the factors that affect the success of brand extension strategy of the company. This research has explored many related concepts such as types of brand extension strategy, customer response, customer loyalty, etc. the conclusion of the research will also aloe the researchers to conduct further research and thus forms the base for  more descriptive research.

Research strategy can be defined as the strategies that are being used for conducting the research or mainly to collect the data that needs to be processes. There are many research strategies such as experiments, case studies, surveys, interviews etc. this is very important to select the appropriate reach strategy to conduct the research. This is because it is mandatory to perform the research in and standardized manner so that the results can be accurate. There are basically two types of research that needs to be conducted that are qualitative and quantitative. the qualitative research is the research in which the  quality that is the theoretical aspects of the topic has been read or studies while in the type of quantitative research, the statistics related to the topic needs to be studies in order to find out the solution or the results. Both of the types of research require different types of strategies to be conducted for example, if the researcher is conducting a qualitative research then he has to follow strategies like observation, interviews, surveys, case studies etc. on the other hand if the quantitative research has to be done than also the research strategies remains the same but the way of analysing the data changes.

In this paper, both types of research need to be conducted. For conducting the qualitative research, questionnaires have been used along with study of lots of literature which has explained the relevant aspects of the topic. For conducting the quantitative part, the secondary data of the company’s sales have been extracted and also the primary data has been generated from the survey forms that have been circulated amongst the customers of the different brands. Observation is also one of the tools that have been used for conduction of the research. Evaluating the literatures helps in analysing the old studied in context with the topic. This helps in detecting the direction of the new research and also helps in developing the research objectives.

Data collection is the process in which the data needs to be collected in order to be process the same to find out the meaningful information out of that. The data needs to be collected so that it can be analysed to solve the problem that is related to the topic or the subject (Creswell & Clark, 2007). The data can be of two types that is primary data and the secondary data. Primary data is the data that needs to be extracted from the primary sources and is extracted first time by the researcher while secondary data is the data that has been extracted from the secondary sources. The secondary data is the extracted data that is already available in some of the sources. Primary data is the data that can be relied upon easily because it is extracted by the researcher only and the sources of primary data are tested by the researcher. In case of secondary data, sources play a very major role. Extracting the data from the secondary sources requires the researcher to select the sources intelligently. Researchers have to put many efforts in collecting the data from both the sources.

As per this research, the primary data is collected from the primary sources like customers, employees of the companies etc. and the secondary data is extracted from the secondary sources such as company data available online or from the annual reports for the firm. This data is known as secondary because it is readily available. It has been analysed that secondary data can be dependent only when the sources of the data are reliable. Trusting any of the sources for extracting the secondary data is not reliable. Primary data is more reliable as it has been extracted the first time by the researcher.

Sample selection is the process in which the sample has been selected out of the population. The sample is the group of people on which the research has been conducted and from which the data has been collected.it is required to select the sample that can represent the overall population.

Target population is the group of people that are intended to be targeted in order to conduct the research. It has been analysed that targeting the population is required to collect the data from the people. The population should be relevant to the research topics and the methods that have been surveyed to collect the data.

As far as this research is considered, the target population in this research is the customers of the company. All the customers who are purchasing the products from the company or the brand are considered as the population. The employees of the company are also falls under the category of population because the data has also been collected from the employees of the brands which are working at different stores.

Sample size is the number of people involves in the sample. The sample size is based on the variation of the people in the population. It has been analysed that high sample size is more reliable because ore number of people are involved in the research but if the number of people in the sample is low then it may affected the accuracy of the data collected. In this research, 200 customers have been selected to collect the data out of which 50 are loyal customers of the company. The data of both the companies have been studied. Marketing managers of the various companies in the similar industry have also been interviewed regarding their views about the brand extension strategies and their success and failure.

It has been analysed that taking the sample size big helps the researcher to take out the results accurate. In this research as well, the sample is around 200 and thus it is enough to take out the accurate and efficient results.

There are different kinds of sampling techniques that has been used by the researchers in order to take out the sample out of the whole population. The major two categories in which the sampling methods are divided are random sampling and non-random sampling. Some of the sampling techniques that are commonly used are:

Simple random sampling: It is the technique that deals with selecting the sample completely at random basis. It has been analysed that random sampling is one of the best technique to select the sample without any biasness but this is not considered as very accurate in nature.

Systematic: it is the sampling technique that follows a pattern to select the sample from the population.it has been analysed that when any of the sample is selected, the probability of getting selected is known and have equal opportunity for all to get selected (Taylor, Bogdan & DeVault, 2015).

Stratified random sampling: it is the most perfect sampling technique that is being used by the researchers because in this a population has been divided into different segments and the random number of groups from the segments can be selected. There is advantage that the researcher can make the groups or the segments as per the characteristics or the feature he wants in the group.

Cluster sampling: Cluster sampling is the sampling in which the population is groups as per the similar characteristics and then a particular cluster is being selected by the researcher. This is not that mush effective because similar or homogenous groups results in biased opinions. Suppose if a country is selected and the research is done in a particular geographical region then that region is called the cluster and it may be possible that every person at that region have the similar opinion regarding the topic. This restricts the research to the same thinking and the same area and thus the researcher cannot get the accurate result.

Convenience sampling: it is the most common and the easy method to select the sample. Only those sample are selected which are easy to reach by the researcher and thus it is not that much effective as it deals with great biasness.

Consecutive sampling: it is the sampling technique that is very similar to the convenience sample. The only difference is that in this sampling, the researcher can include all the relevant subjects of the topic at the time of selecting the sample.

Quota sampling: it is the sampling method in which the samples are selected very systemically. The quota has been made in which every group gets the equal chance of getting into the quota. This is one of the best sampling methods because it results in representing all over the population very easily.

As far as this research is considered, it has been analysed that probability sampling is the method that has been used. Specifically, the method that has been sued for this research is random sampling method because any of the customers can be selected out of all the customers of the company that are buying the products of the company. This sampling is used because there is no pattern that can be followed.

Data analysis tools are required to analyse the data and take out the inference from it. It has been analysed that data analysis requires some of the tools so that the data that has been selected can be sorted down in the meaningful format and then analysed to find out some of the conclusion related to the topic of the research or to answer the questions that the researcher has quoted at the starting of the report (Bryman & Bell, 2015). There are many data analysis tool such as inferential data analysis, descriptive analysis tools, graphical tools etc. the data is not analysed only by the manual methods but it can also be analysed by the software such as Excel, SPSS, R etc.

As far as this research is considered, it has been analysed that graphical representation method has been used to analyse the data and present the same with the use of MS EXCEL. This is the tool that has been used for analysing the data that has been collected by the survey. MS EXCEL is used to draw the graph that helps in understanding the data patterns.

Research instruments are the instruments that are used to conduct the research. It is realised that research instruments should be highly reliable so that the data that has been collected should be accurate enough to conduct the research. It has been analysed that most of the data that has been collected by the various research instruments have some of the validity and this validity depends on the instruments that has been selected to conduct the research.

In this research, the research instrument that has been sued is survey and interviews. The survey of the customers has been done to find out their response on the brand extension strategy of the companies and the employees of the companies have been interviewed to find out the factors that affect the success and failure of the brand extension strategies of the company.

Data analysis and findings:

Customer perspective towards Ponds:

It has been analysed that 60% of the total respondents of the questionnaire suggested that ponds is the brand that they can easily switch. This is because it has very less switching cost and the competition in the market is also very high in the cosmetic industry.

This is the chart that suggests that 120 out of 200 respondents replies that they can easily switch the brand of ponds as the switching cost is very less while 80 of them reply that they cannot switch the brand because of some reasons.

It has been analysed from the above chart that very less number of people have accepted the unrelated brand extension of ponds and thus it affected the sales of the company’s products because the loyal customers of the company have lost trust on the company.

The above bar graph suggests that 90% of the people claimed that they will not switch the brand in any case because of the trust they have amongst the people for the brand. The switching cost in this case is also very high and thus it is difficult for the customers to switch the brand so easily.

It has been analysed from the above chart that all the respondents who have filled the questionnaire claimed that they are very happy with the extension of brand and the new products that the company is launching. This also suggests that the loyalty amongst the people is very high for the brand in case of Apple Inc.

It has been analysed from the questionnaire that most of the respondent customers of Pond’s suggests that they are not very much happy with the extension of brand. This is because they have not expected such an unrelated brand extension from the company. It has been realised that even the loyal customers of the brand suggests that they will not opt for buying the toothpaste from Ponds because they cannot imagine a cosmetic brand releasing toothpaste. This may be because the company does not have that much bond with the customers or may be the company have not been able to create that trust in the minds of the customers. When the switching of the brand is concerned, it has been analyse that switching cost of the brand is very low. There are many be many reasons in this case as there are many brands that are operating in the industry with almost similar products thus switching the brand is not a big deal for the loyal customers of the Ponds. As far as the secondary analysis is considered, articles have been read regarding brand extension failure and success and it has been realised that unrelated brand extension generally fails because of the non-acceptance of the customers and the brand that extends in the related area normally gains success in the brand extension strategy. Apple is one of the examples. The data that has been collected from the Apple customers suggests that the customers will not switch the brand in any case and they love the extension that the brand is bringing for them. It has been realised that the customers of Apple are very much loyal to the brand and thus likes to experience the innovation that the brand is developing n creating for them. This clearly depicts that customer loyalty is very much related to the brand extension strategy. This is because if the customers are not that much loyal to the brands they can switch easily whenever the brand takes any unflavoured decision. Customer loyalty is the aspect that can be evaluated only by the response of the customers in the unflavoured situations. The success of brand extension is not certain in nature. It has been analysed that most of the fast moving consumer good companies are facing failure in brand extension strategies. Thus, it is required that in depth research should be conducted in this area of brand extension success and failure factors. This can be determined only by the getting and analysing the response of the customers towards the new products that has been launch by the company and the effect of that launch on the brand image of the company. Brand loyalty is argued as the degree of the truthfulness of consumers to a particular brand, expressed through their frequent purchases, irrespective of the marketing pressure generated by the competing brands. When a consumer behaves loyal, he or she used to purchase the products from that brand only. It may be possible that the customers purchase every category products from the particular brand in order to show the loyalty towards the brand. Loyalty of the customers towards ye brand can be judged only by the behaviour and the response of the customers on the actions of the brand. It has been analysed that if the customers is loyal it supports the brand in every situation and also remain updated with each and every action of the brand.

Questionnaire is the tool that was used to analyse the market and to evaluate the thinking of the customers. It has been analysed that in case of ponds, most of the customers answer that they are not that much loyal to the brands. This is because the switching cost is low and also there is lot more competition in the market as compared to Apple. The similarity of the products in this category is also one of the reasons that affect the loose bond of the company and the customers. In case of Apple, customers showed a great response towards the loyalty. In case of Ponds, people have suggested many other competitor brands such as L’Oreal, Garnier etc. While in other case, customers of Apple Inc. suggests that they trust the brand and this trust made the brand successful in any case. It has been realised that the customers of Apple are very much loyal to the brand and thus likes to experience the innovation that the brand is developing n creating for them. This clearly depicts that customer loyalty is very much related to the brand extension strategy. This is because if the customers are not that much loyal to the brands they can switch easily whenever the brand takes any unflavoured decision.

Conclusion

Brand expansion is one of the procedures that are extremely well known in the market. This is the technique that enables the organizations to assort the market with the comparable brand name. The organizations believe that starting the new items with the brand name that is as of now well known in the market increase better reaction from the clients. There can be many explanations behind this reaction, for example, nature of the brand to the clients, uplifting state of mind of the clients towards the parent brand of the items, the general population or the strategies related with the brand, the advertising procedures of the brand or the great experience of different results of a similar brand by the clients. When it is contrasted with the new items that are propelled by the new brand, it has been investigated that it is unsafe as far as market acknowledgment. It has been concluded from the study that brand extension is the concept that deals with extending the brand by launching new products with the name of the old brand. This helps the company to reduce its expense that can be spent at the time of launching a new brand itself. It has been analysed that brand extension strategy cannot achieve success always. There are many reasons that can be the factor affecting the failure and success of the brand extension strategy. It has been realised that master brand is the term that has been given to some of the brands who are very much particular about the category of the products they deal with. This suggests that brand extension strategy may be beneficial for the brands but may affect the brands in negative way if the brands like master brands extend the brand in new products category or unrelated category. It has been suggested that the brand extension is productive only when it is clear that it could enhance the success of a new product launch along with the existing brand equity. It has been concluded from the research that Ponds is the company that has failed in getting the customer’s attention because of the less bond amongst the customers and the brand. As compared to this when the extension strategy of the company called Apple is consider, it has been analysed that most of the extension that the company has made are successful because of closeness of the parent and the new product.

As far as the drivers of the brand extension are considered, t has been analysed that catering the larger market and enhancing the brand visibility are the core drivers that supports brand extension in the company. It has been analysed that when the degree of closeness between the new products that has been launched and the parent products of the company is high then the chances of getting success is higher. There are many other reasons of getting success in brand extension and one of them is customer loyalty. As far as the failure of bard extensions is considered, it has been analysed from the research that un-relatedness of the parent and the new products is the major reason of failure of the brand extension strategy. The customer’s loyalty and the brand extension strategy of the company are very much affected by each other. When the customers of the company are very much loyal they do not switch the brand in any of the case and if the customers are not that much loyal then it results in switching the brand. When the other side of the area is considered, t has been analysed that brand extension also have its impact on the loyalty of the customers. If any of the company extends the brand that is related to the parent product then the customers find it easy to accept the products and loyalty of the customers may exceed but of the opposite situation occurs then it may be possible that the customers cannot accept the products. The discussion concludes that extending the brand is not always a good option to cater the market and enhance the brand visibility. It is also required to extend the brand is the right direction. The above discussion suggests that extending the in unrelated category is not a good option but launching the products that act as the clone of the old products is also not a good decision to be taken by any of the brand.

It has been recommended to the brands that they should analyse the market and the customer’s first and then takes the decision on brand extension. Half knowledge of the market may lead to wrong decision and thus failure of the strategy. Pond’s as a brand should focus on launching the products in its category that can be acceptable by the customers and also have to attract more and more customers. In addition to it, it also needs to develop trust amongst the customers about the brand so that the customers will not leave the brand and accept the products that the brand releases. The companies need to focus in the area of research and development so that the company can make better decision in regard to the brand extension strategy.

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