BUFFALO, N.Y. — Companies should use existing brand names
and add new, sub-brand names to maximize revenue when introducing
new products to market, according to a new study from the
University at Buffalo School of Management.
Forthcoming in Management Science, the study notes a
proliferation of new products in the consumer packaged-goods market
each year. For example, U.S. manufacturers introduced more than
150,000 new products in 2010 alone. Of these, more than 90 percent
were extensions of existing brand-name products.
“These new products can be line extensions, like when
Pepsi introduces another type of soda, such as Pepsi Lime, or brand
extensions, like when a toothpaste brand such as Crest introduces a
mouthwash product,” says study co-author Debabrata Talukdar,
PhD, professor of marketing in the UB School of Management.
“Given the significant investment and high failure rates
of product-extension launches, deeper insight into the impact of
these brand-development strategies can be very valuable,”
The study analyzed 155 new product extensions introduced to 20
markets across the U.S. Researchers investigated the market
performance of the new products and the effects that introducing
them to the market had on their parent brands.
“We found that brand extensions generate positive overall
revenues,” says study co-author Ram Bezawada, PhD, associate
professor of marketing in the UB School of Management. “In
addition, sub-branding, where a new brand name is used to help
consumers distinguish from the parent brand, such as Gillette
Mach3, generates greater revenues for a typical brand
Past studies have investigated the effects of introducing new
product extensions, but have not evaluated the aggregate market
impact of these effects across different brand-development
strategies or accounted for the strategic decision to introduce the
extension. The scope and analysis approach of this study provide
more general insights for manufacturers to better introduce and
manage new product extensions.
Bezawada and Talukdar collaborated on the study with Vijay
Ganesh Hariharan, assistant professor of marketing in the
Department of Business Economics at the Erasmus School of
The UB School of Management is recognized for its emphasis on
real-world learning, community and economic impact, and the global
perspective of its faculty, students and alumni. The school also
has been ranked by Bloomberg Businessweek, the Financial Times,
Forbes and U.S. News and World Report for the quality of its
programs and the return on investment it provides its graduates.
For more information about the UB School of Management, visit http://mgt.buffalo.edu.