Success factors of line extensions of fast‐moving consumer goods

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 fast‐moving 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.