Study On The Reasonable Scale Of Brand Extension

Larry Light, a famous expert in marketing, pointed out that "The marketing in future is competition of brand—brand competition in the market share. So it is much more important to hold the market than to own the factory, but the only way to hold the market is to have the competitive and preponderant brand."With the upcoming of globalization of the world economy, the competition in market is becoming more and more fierce. Diversification strategy has been chosen by many companies as a realistic decision. As for the company which own a huge brand resource if its brand is extended to other fields, it will be much easier to get a good result than the one doesn't own brand resource during the carrying out of diversification strategy. Meanwhile, if brand is extended excessively and the scale of brand extension is out of endurable scope, it will fall into the trap of brand extension and bring a huge damage to the original brand. The cases of success or failure in brand extension are too many to illustrate during the practice. Thus, it has significant meaning in both theory and practice to study the theory of brand extension to help enterprises avoid risk during the process of brand extension.The research in this thesis combines some principles of ecology and theory of brand extension, which is a new attempt. On the one hand, it is hoped that the research can facilitate the decision making when the company is decided to tap new product into the market using the way of brand extension. On the other hand, it is hoped that the research can provide a new vision and thought in the study of brand extension.Literature method is adopted in the thesis to analyze the development situation of brand extension based on both foreign and domestic research in the recent ten years. It is discovered that few scholar has been engaged in the study of the scale of brand extension. So I get the direction of following research. The thesis gives the clear definition of brand, brand equity, brand ecological management brand extension, and brand extension scale. The theory of brand ecology and behavior ecology are applied as the basic basis. The correlation index model of animal community from behavior ecology is adopted to make a correlation index model in brand community. Based on the study of correlation index model in brand community, it is found that three main factors affect the brand extension scale: correlation in brand community,brand equity,cost in brand extension. AHP method is used to analyze the impact extent of the three main factors for the brand extension scale. The thesis applies comprehensive evaluation to make an evaluation model of brand extension scale in a case. Then we have evaluated and compared the brand extension scale between the case of Haier and Philip via graded approach used by some experts. From the analysis of the two cases' comparison, a result is discovered that the brand extension scale of Haier is unreasonable compared with Philip. Some countermeasures and proposals have been put forward to adjust the brand extension scale to a more reasonable extent. Finally, an overall conclusion has been made in the thesis to sum up some innovative work and bring forward prospect for further study in the future.