European Journal of Marketing 33,5/6 450
Received October 1996 Revised May 1997 Revised December 1997

Success factors of line extensions of fast-moving consumer goods
Nijmegen Business School, Nijmegen, The Netherlands and Stern School of Business, New York, USA
Keywords Brand extensions, Brands, Consumer behaviour, Marketing strategy, Product variety, Success Abstract Among the range of strategies available to a company, line extensions are an important way to keep a brand alive and to realize incremental financial growth. In order to be successful at introducing new extensions managers should understand line extensions' key success factors. In this study three market-related factors' impact on line extension success were investigated, i.e. the level of competition in the market place; retailer power; and consumers' variety seeking behavior. Data collected from 49 marketing and product managers in the fastmoving consumer goods industry showed that line extensions have very little added value over existing products, and that cannibalization is very much related to a line extension's success. Of all line extensions, those involving new flavors and new packaging/sizes were most successful. Extensions that improved product quality were found to be unsuccessful. The market-variables: level of competition; retailer power; and variety seeking behavior all had a negative influence on line extension success. Dominant brands were hurt more by variety seeking behavior's negative impact than less dominant brands.

Edwin J. Nijssen

Introduction During the past two decades, takeovers and research have proven that brands are among a company's most important assets (Keller, 1993; Rangaswamy et al., 1993). Brands help differentiate and position a company's products (Park et al., 1986). They also help a company establish and/or maintain a stable relationship with its