Brand Extension

Process
A Qualitative case study on Husqvarna and H&M

BACHELOR THESIS WITHIN: Business Administration

NUMBER OF CREDITS: 15 ECTS
PROGRAMME OF STUDY: International Management
AUTHOR: Pakize Sevova, Ksenia Dmitrijenko, Dzhakhonbonu Ishonova
TUTOR: Thomas Cyron
JÖNKÖPING May 2016
 Acknowledgments

We would like to express our sincere gratitude to our interviewees: Johan

Milling, Hanna Nordquist, Alexander Fornell from Husqvarna; Maria
Lindblom and Mrs. Ana from H&M, thanks to their help were able to
perform this study.

We would also want to thank our tutor Thomas Cyron, for his guidance and
valuable feedback throughout the entire process of thesis writing.

Additionally, we would like to thank nearest and dearest people in our lives
that helped us with their useful feedback and support

______________________________ __________________________________
Pakize Sevova, Jönköping, May 2016 Ksenia Dmitrijenko, Jönköping, May, 2016

_______________________________________
Dzhakhonbonu Ishonova, Jönköping, May 2016

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Abstract

Bachelor thesis within Business Administration

Title: Brand extension process: A Qualitative case study on

Husqvarna and H&M

Authors: Pakize Sevova, Ksenia Dmitrijenko & Dzhakhonbonu Ishonova

Tutor: Thomas Cyron

Date: 2016-05-23

Background: The role of brands in our everyday lives is becoming more and more
significant. In fact, after some time we start to associate them with
certain products and services. Meanwhile companies are aware of the
fact that strong brand is a valuable asset. They use this asset in order to
distinguish themselves among competitors as well as to expand their
market share. One way of achieving that is through brand extension
which is a strategy to expand a well-known brand into new product
categories.

Problem: There is an extensive research that has been done on brand extensions
from the perspective of the customers, however, the research on the
company side of this phenomenon is relatively small.

Purpose: The purpose of this thesis is to investigate the process of brand

extension from the perspective of firms from two different industries in
order to fill the gap in the existing literature and expand the knowledge
in this area.

Method: Multiple case study with semi-structured interviews with two companies
from different industries in Sweden, Husqvarna and H&M, that have
already existing well-established brand extension were conducted to
collect empirical data on this topic. The analysis of the collected data
was performed with the use of existing literature on brand extension.

Conclusions: The study has found that there are two drivers for extending the product
offerings into new categories, the demand from the customer and the
opportunity to expand the company’s market share. Moreover,
companies decide to launch their new products under the already
existing brand name for two main reasons: to make use of the strong
brand image that the customer’s have in their minds and to save
promotional costs. On the other hand, there are some challenges that the
companies meet during the process of brand extension. One of them is
creating awareness and demand among the customers. Finding the right
supplier is also one of the challenges. There are several ways to deal
with them that this study has discovered such as celebrity endorsement
and training and education of the parties involved in this process.

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Key words: Brand Extension, Brand image, Diversification
Table of Contents

1 Introduction ......................................................................... 1
1.1 Background ............................................................................................1
1.2 Problem discussion ................................................................................2
1.3 Purpose ..................................................................................................3
1.4 Research questions ................................................................................3
2 Frame of Reference ............................................................ 5
2.1 Diversification .........................................................................................5
2.1.1 Types of diversification ...........................................................................5
2.1.2 Marketing strategies for new product introduction ..................................6
2.1.2.1 Push strategy ..................................................................................................................6
2.1.2.2 Pull strategy ....................................................................................................................6
2.1.3 Advantages and sources of diversification .............................................7
2.2 Brand ......................................................................................................7
2.2.1 Brand image and brand associations .....................................................8
2.3 Brand extension ................................................................................... 10
2.3.1 Types of extensions.............................................................................. 11
2.3.2 Advantages of brand extension ............................................................ 12
2.3.3 Disadvantages of brand extension ....................................................... 14
2.3.4 Customer evaluations of brand extensions........................................... 14
2.4 Summary of the constituted frame of reference .................................... 16
3 Methodology ..................................................................... 18
3.1 Research philosophy ............................................................................ 18
3.2 Research approach .............................................................................. 19
3.3 Research purpose ................................................................................ 20
3.4 Research method ................................................................................. 20
3.5 Research strategy ................................................................................ 21
3.6 Case selection ...................................................................................... 22
3.7 Methods for data collection ................................................................... 23
3.7.1 Literature review ................................................................................... 23
3.7.2 Primary data ......................................................................................... 24
3.7.3 Secondary data .................................................................................... 26
3.8 Research Trustworthiness .................................................................... 26
3.8.1 Reliability .............................................................................................. 27
3.8.2 Validity .................................................................................................. 28
3.9 Method of analyzing data ..................................................................... 29
4 Empirical findings ............................................................. 31
4.1 Husqvarna ............................................................................................ 31
4.1.1 Background .......................................................................................... 31
4.1.2 Husqvarna brand extension- protective equipment and clothes ........... 32
4.1.3 Interviewees’ background ..................................................................... 32
4.1.4 Drivers of brand extension .................................................................... 33
4.1.5 Husqvarna brand attributes .................................................................. 34

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4.1.6 Reasons behind extending protective equipment category
under Husqvarna brand .................................................................................... 35
4.1.7 Target market ....................................................................................... 36
4.1.8 Challenges of brand extension ............................................................. 36
4.1.8.1 Creating the demand and cultural differences ............................................................. 38
4.1.8.2 Challenges connected to supply chain and logistics ................................................... 38
4.1.9 Additional information on how Husqvarna penetrates the market
with its new product categories ......................................................................... 39
4.2 H&M ..................................................................................................... 40
4.2.1 Background .......................................................................................... 40
4.2.2 H&M brand extension- H&M Home ...................................................... 40
4.2.3 Interviewees’ Background .................................................................... 41
4.2.4 Drivers of brand extension .................................................................... 41
4.2.5 Reasons behind extending home accessories and decorations
under H&M brand .............................................................................................. 41
4.2.6 Challenges of brand extension ............................................................. 43
4.2.7 Ways to deal with challenges ............................................................... 43
5 Analysis ............................................................................. 45
5.1 Drivers for brand extension .................................................................. 45
5.1.1 Pull drivers ............................................................................................ 45
5.1.2 Growth driver and push strategy .......................................................... 46
5.2 Reasons behind keeping the same brand for a new product ................ 46
5.2.1 Brand image and brand associations ................................................... 46
5.2.2 Saving costs ......................................................................................... 47
5.3 Challenges of brand extension ............................................................. 48
5.3.1 Creating awareness and demand ......................................................... 48
5.3.2 Choosing the right supplier ................................................................... 49
5.4 The way of overcoming challenges ...................................................... 49
5.4.1 Creating awareness and demand ......................................................... 50
6 Conclusion ........................................................................ 51
7 Discussion ........................................................................ 54
7.1 Contribution .......................................................................................... 54
7.2 Limitations ............................................................................................ 55
7.3 Suggestions for future research ........................................................... 55
8 References ........................................................................ 57

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Figures
Figure 1 Push strategy ..................................................................................... 6
Figure 2 Pull strategy ....................................................................................... 7
Figure 3 Brand image structure ....................................................................... 10
Figure 4 The impact of brand extension on the consumer adoption process ........ 13
Figure 5 Rate of success of new brands vs brand extensions ............................ 13
Figure 6 Basic Model of the Extension Evaluation Process ................................ 16
Figure 7 Summary of Frame of reference ........................................................ 16
Figure 8 Outline of the method........................................................................ 18
Figure 9 Conceptual model of brand extension ................................................. 53
Tables
Table 1 ........................................................................................................ 25
Table 2 ........................................................................................................ 27

Appendix
Appendix 1 .................................................................................................. 62
Appendix 2………………………………………………………………………….64
Appendix 3……………………………………………………………………….…65
Appendix 4………………………………………………………………………….66
Appendix 5………………………………………………………………………….68

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1 Introduction

This section introduces the reader to the topic of this research. The background and the
problem of the study are discussed and presented in addition to the purpose and
research questions.

1.1 Background
We are exposed to various brands on a daily basis in our lives. After some time we start
to associate them with certain products. For instance, Jeep, there is a great chance that
the first association a person has in their mind when they hear this name is a car.
However it’s a fact that the company offers other products such as baby strollers under
the same brand name. For a moment, many people might associate certain brands with
only particular types of products but as companies create and develop a brand, they
usually come to the point where they want to grow and expand their business by
offering something new and unusual.

In order to be successful in the market place companies have to distinguish themselves

from the competitors, one way of doing that is through the practice of branding where
the word brand originates from. According Kapferer (2008) brand can be described as a
name which has an influence on buyers by directing people’s attention because they
encompass elements of saliency, differentiability, intensity and trust. According to
Aaker and Keller (1990) brands are the most important asset that a business has. Since
the importance and the roles of brands in our everyday lives started to increase some
companies began to exploit that asset by employing it in their growth strategies.

One such strategy is the diversification. The term "diversification" is usually associated
with a change in the characteristics of the company's product line and/or market
(Ansoff, 1957). In other words, diversification is the most radical and demanding out of
all expansion strategies. Moreover, there are multiple ways to implement diversification
strategy.Horizontal diversification refers to the development of new products or
extension of current product lines to realize additional business from current customers
(Liu & Hsu, 2011).

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In order to perform implementation of horizontal diversification successfully, it is
crucial for companies keep in mind such a valuable asset as brand is. Therefore,
sometimes companies decide to introduce new products to the market using the same
brand names. One of those strategies is brand extension which Keller and Aaker (1992)
define as “use of established brand names to enter new product categories or classes” (p.
27). Extending brands beyond the original product category is considered to be
beneficial for the companies in general because the expenses such as advertising, trade
deals or price promotions for introduction of new products to the market are lower for
already known and recognized brand name (Collins-Dodd and Louviere 1999; Tauber
1988). Many companies find this benefit attractive hence, up to 95% of all new product
offerings that appear in the market are some form of extension (Lye et al., 2001).
Another reason behind this extensive utilization of the extension strategies by the
businesses is the belief that they establish and convey strong positioning for the brand,
develop and increase the awareness, quality associations and ultimately augment the
prospect of trial (Chen and Liu, 2004).

Moreover, since developing new offerings require investment many firms are trying to
find ways to decrease the risks and costs that the new product introduction hold by
marketing them as a brand extension, that is, by using the name of a well-known brand
(Bhat & Reddy, 2001). As using established brand names could save cost to introduce a
new product and reduce risk of new product failure (Hem et al., 2003). Moreover, there
is a belief from the side of the marketers that brand extensions are evaluated favorably
by consumers because they transfer positive attitudes or affect toward the parent brand
to its extension (Bhat & Reddy, 2001).

1.2 Problem discussion

Extensive utilization of the brand extension as a tool to implement a diversification
strategy from numerous companies in the last decades has grabbed the attention of
many scholars. Most of the researchers made an emphasis on the relationship between
the parent brand and brand extension (Keller & Lehmann, 2006; Park et al., 1991;
Aaker & Keller, 1990). Additionally, other researchers investigate the effects of brand
concept on customer attitudes towards the extension and the parent brand

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(Thorbjørnsen, 2005) and also on the benefits and the impact of parent the perceived fit
between the parent brand and extension (Bhat & Reddy, 2001).

The customer perspective of brand extensions has been studied so extensively, in fact,
Czellar (2003) developed an integrative model of consumer behavior toward brand
extensions based on a review of published literature between 1987 and 2001. The model
puts emphasis on the knowledge and attitude development toward the extensions of the
parent brand.

As mentioned above, there is a great deal of research done on the topic of brand
extension from the customer side. However, after reviewing the literature on that topic
we can say that only few studies have focused on the perspective of the companies.
Therefore, some scholars have made a suggestion for further expansion of research on
brand extension from a management perspective (Nijssen & Agustin, 2005; Czellar,
2003). In order to develop and increase the knowledge in the research area of brand
extension in a broader perspective it is of a high importance to investigate the company
side of this strategy.

1.3 Purpose
The research on brand extension concerning the company side is limited. Therefore, the
main objective of this thesis is to investigate the process of brand extension from the
perspective of firms. This investigation aims at filling a gap in the existing literature by
contributing to broaden the knowledge on the entire process of extension of a brand into
different product categories and by creating a better understanding of how companies
deal with it.

1.4 Research questions

In order to carry out the objective of this paper the following research questions will
provide boundary and direction:
1. What are the main drivers for brand extension?
2. What are the reasons behind creating the new product categories under already
existing brand name?

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3. What challenges does a company face while extending their brand and possible ways
of overcoming them?

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2 Frame of Reference

This section will present the theoretical framework that will provide a guideline for this
thesis. The topics such as diversification, brand image, and brand extensions and its
types along with customer evaluations of brand extensions will be put together in order
to give a better understanding of brand extension.

2.1 Diversification
Nowadays every successful business in order to remain profitable has to maintain and
increase its market share. As it is described in the Ansoff’s matrix there are four types
of expansion strategies: product development, market development, market penetration
and diversification. Our field of research is focused around the diversification strategy,
which requires giving up on existing patterns and finding new approaches and
undiscovered methods (Ansoff, 1957). Diversification “calls for a simultaneous
departure from the present product line and the present market structure” (Ansoff, 1957,
p.114).

2.1.1 Types of diversification

There are three main types of diversification horizontal, vertical and lateral (Brockhoff,
1999). Vertical diversification refers to the moves up or down the supply chain and start
with production of components or materials (Ansoff, 1957). Therefore, our research
does not touch upon this area. Lateral diversification refers to creation of an absolutely
new market for a new product and expand beyond company’s core industry (Ansoff,
1957). The most important aspect of this definition for our research is that this type of
diversification intends to serve new customer segment and our research is limited to
targeting already existing customer segment. Last but not least, horizontal
diversification refers to the launching of a new product category in order to realize
additional income from existing customers (Liu & Hsu, 2011). This type of
diversification is build upon the recognition of the importance of existing resources
(Teece, 1982). Therefore, this type of diversification complies with our research field.

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2.1.2 Marketing strategies for new product introduction
While applying diversification and expanding its market share, companies often use
different marketing strategies such as pull and push strategies.In the next section these
two strategies will be explained in detail.

2.1.2.1 Push strategy

According to Bax and Woodhouse (2013) a push strategy is a marketing strategy that
companies use in order to “push” products or services through dealers or retailers to end
customers. Companies use push strategy in order to create demand among its customers
(Bax & Woodhouse, 2013). In order to apply push strategy manufacturer of the product
has to offer it to distributors and retailers then it has to reach the end customer (see
Figure 1). Push strategy is used in cases when relatively new product is launched and
purchase is unplanned (Bax & Woodhouse, 2013).

Figure 1

Source: Push strategy (Bax & Woodhouse, 2013, p. 85)

2.1.2.2 Pull strategy

A pull strategy deals with direct interaction with end users in order to introduce product
to them and “pull” to distributer to buy a product (Bax & Woodhouse, 2013). Bax &
Woodhouse (2013), mention that it is possible to apply this strategy under
circumstances when brand obtains the loyal customer base that is emotionally attached
to the brand.

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Figure 2

Source: Pull strategy (Bax & Woodhouse, 2013, p. 86)

2.1.3 Advantages and sources of diversification

It is essential to understand possible advantages and drivers behind application of
diversification strategies by the companies. First of all, companies often make a
decision to implement diversification strategy when they want to increase overall sales
and market coverage (Ansoff, 1957). Moreover, diversification is a way to obtain
overall power on the marketplace as it gives opportunity to use different mechanisms,
such as predatory pricing behavior or the establishment of reciprocal arrangements with
suppliers and customers (Caves, 1981; Palich et al., 2000; Scherer, 1980).

The most common approach to implement diversification strategy is to make use of

resources that company already retains. Resource-based view (RBV) suggests that a
company can use diversification strategy that is dependent on specific set of resources
and capabilities that company possesses (Benito-Osorio et al., 2012).

2.2 Brand
By definition brand is "a name, term, sign, symbol, or design, or combination of them
which is intended to identify the goods and services of one seller or group of sellers and
to differentiate them from those of competitors" (Kotler, 1991, p. 442). However, Keller
(2003) taking into consideration the above mentioned definition argues that “whenever
a marketer creates a new name, logo, or symbol for a new product, he or she has created
a brand” (p.3), and he adds an explanation that creating brand is more complex, and for
many managers a brand is something that has actually created a certain amount of
awareness, reputation and prominence in the market (Keller, 2003). Nowadays, brands

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are valuable assets for the companies and managers, because unlike the products and
services, it’s hard for the competitors to copy customer’s trust, attitudes and behavior
towards the brand. According to Keller (2003) the thing that differentiates branded and
an unbranded good “is the sum of total consumers’ perceptions and feelings about the
product’s attributes and how they perform, about the brand name and what it stands for,
and about the company associated with the brand” (Keller, 2003, p.4). The firms’ profits
can be affected positively by distinguishing their offerings in the market on the basis of
differences that are perceived through brands.

2.2.1 Brand image and brand associations

Since the early 1950s, brand image has grabbed the attention of many consumer
behavior researchers and it has long been recognized as an important concept in
marketing (Keller, 1993), as it is the first consumer brand perception that was identified
in the marketing literature (Gardner & Levy, 1955). According to Keller (1993) brand
image can be defined as perceptions that a brand has, reflected by the brand associations
held in consumer’s memory. Additionally, Aaker (1991) explains brand image as “—a
set of associations, usually organized in some meaningful way” (p. 109). Namely, the
brand image is the perceptions of the customers about a given brand.

These perceptions are developed as a result of the associations that are created in the
consumer’s memory. According to Aaker (1991) brand associations are the category of
a brand's assets and liabilities that include anything “linked” in memory to a brand.
Brand associations play significant role for marketers because of the fact that these
associations are used to “differentiate, position and extend brands, to create positive
feelings and attitudes towards brands, and to suggest attributes or benefits of purchasing
or using a specific brand” (Low & Lamb, 2000).

Keller (1993) has created a conceptual model in order to help the marketers better
understand the customer side of the brand. According to his model, as shown in Figure
3 the brand image emerges from uniqueness, strength, favorability and types of brand
associations which customers possess. According to the model there are three types of
brand associations: attributes, benefits and attitudes.

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Attributes are related to the descriptive features that assist to characterize a brand, for
instance, what a consumer thinks the brand is or has and what is involved with its
purchase or consumption (Del Rio et al., 2001). Attributes can be segregated into
different categories such as product related attributes, non-product related attributes.
“Product-related attributes are defined as the ingredients necessary for performing the
product function sought by consumers. Non-product related attributes are external
aspects of the product that relate to its purchase or consumption" (Keller, 1993, p.4).
For example, in the case of Bugatti shoes the product related attributes would be, the
unique quality of the leather or the sole, and non-product related attributes would be the
price and packaging (gray box). Moreover, Keller (1993) identifies four types of non-
product related attributes: information about price, information related to the appearance
of a product and packaging, user imagery (i.e., what type of person would use the
product or service), and usage imagery (i.e., where and in what kind of situations the
product or service would be used).

On the other hand, benefits are the personal value consumers attach to the product or
service attributes (Keller, 1993). In other words, benefits are what the users or the
consumers think they can get from the utilization of a specific product and service.
According to the model there are three types of benefits, these being functional,
experiential and symbolic. Functional benefits are related to the benefits that occur from
the consumption of a product or a service that create value for the customers.
Experiential benefits appertain to the feelings that the product or service evoke while a
customer is using it. For instance, driving Mercedes can make customers feel classy and
driving Volvo can make them feel safe. Symbolic benefits are linked to underlying
needs for social approval or personal expression and outer-directed self-esteem (Keller,
1993). For example, using luxury products such as Louis Vuitton bags and Gucci
clothes that are associated with being part of the upper social class.

The final category, are defined as the consumer’s overall evaluations of a brand (Wilkie,
1986). According to Keller (1993) brand attitudes play a significant role because they
form basis for consumer behavior and brand choice. Although there were different
models of brand attitudes that have been proposed, one widely accepted approach is

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based on a multi-attribute formulation in which brand attitudes are a function of the
associated attributes and benefits that are salient for the brand (Keller, 1993). The
model explains attitudes as the sum of all the salient beliefs a consumer holds about a
product or service, multiplied by the strength of evaluation of each of those beliefs as
good or bad (Pita & Katsanis, 1995).

Figure 3

Source: Brand image structure by Keller (1993). Adjusted by the authors.

2.3 Brand extension

Great deals of investments are made by companies in order to create and develop a
brand. It is a well-known fact that it is a very costly process, but if it is successfully
conducted it has a great return for the businesses in a long term. Often, companies have
neither financial resources nor time to create a new brand every time they develop new
products. In 1990, the cost of introducing a new brand was estimated to be somewhere
from $50 million to $100 million (Aaker & Keller, 1990). By 2004, the cost of
introducing a new brand had climbed to as high as $200 million (Kotler & Armstrong,

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2004). Therefore, instead of creating a new brand name for the new product category,
companies utilize more feasible practices such as extending an existing well known and
successful brand name into the new product category; in other words, brand extension is
used (Doust & Esfahlan, 2011). This approach reduces the risk associated with
marketing a new product by allowing customers to rely on established brand
associations when evaluating the new product (Aaker & Keller, 1990).

2.3.1 Types of extensions

There are different types of brand extension. Aaker and Keller (1990) make distinction
between two types of brand extensions: line and brand extension. Brand extension is
defined by Keller and Aaker (1992) as “use of established brand names to enter new
product categories or classes” (p. 35), while line extension refers to new product
introduced within a certain product line (Arslan & Altuna, 2010). In order to straighten
out, line extensions are new (versions of the) products introduced within the same
product category (for example, Diet Coke as an extension of Regular Coke), whereas
category/brand extensions are introduced in a different category from the existing
business (for example, Harley-Davidson offering clothes and accessories)( Pelsmacker
et al., 2007).

Furthermore, Pita and Katsanis (1995) distinguish between horizontal and vertical brand
extension. Horizontal brand extension occurs when the organization “apply or extend an
existing product’s name to a new product in the same product class or to a product
category new to the company” (Pita & Katsanis, 1995, p.). On the other hand, vertical
brand extension is introducing a similar brand to the same product category while being
different in prices and quality (Keller & Aaker, 1992). Kim and Lavack (1996) further
make distinction between downscale and upscale vertical extensions.Namely, vertical
brand extension might take place either by developing a new brand with higher price
and higher quality (upscale) or by having lower price with a lower quality (downscale).

Although, there are many different types of brand extension the focus of this thesis will
be on the type of brand extension where companies use existing brand names in order to
go into new product categories.

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2.3.2 Advantages of brand extension
Managed correctly the brand extension strategy creates numerous benefits for the
companies. When a new product is combined with an existing brand that gives birth to a
brand extension, the existing brand is called a parent/original brand (Liu & Choi, 2009).
A parent brand is an established brand that dominates the consumer’s mind to such a
degree that the brand owns specific associations (Aaker & Keller, 1990). In other
words, there is a probability of an established opinion about the brand and the
consumers therefore also associate the same thoughts and feelings towards the new
extension (Keller & Aaker, 1992). A parent brand can benefit from its extension in
several ways: reduced promotional costs (Sullivan, 1992), increase the efficiency of
promotional efforts, improve access to distribution channels, and reduce consumers'
perceived risk of purchasing a product or service (Keller, 2003), because consumers
attempt to relate a brand extension to other products affiliated with the parent brand
(Aaker & Keller, 1990; Farquhar et al., 1989).

According to Pita and Katsanis (1995) a great advantage of brand extension is the
instant communication of a salient image, because of the fact that a strong parent brand
usually holds a well-defined brand image that can contribute to the creation of
recognition and many positive brand associations of the new extension. Brand
extensions, can also be advantageous for the enhancement of the parent brand image
since consumers can make inferences and form expectations as to the likely composition
and performance of a new product based on what they already know about the brand
itself and the extent to which they feel this information is relevant to the new product
(Kim & Sullivan, 1998). These inferences may improve the strength, favorability, and
uniqueness of the extension's brand associations (Keller, 2003).

According to Kapferer (2008) the practice of brand extension can help to increase the
chances of success of a new product as it reduces the risk perceived by the customer and
lower its cost of launching. Hence, familiarity with the parent brand and already
existing strong and favorable associations connected with it enhances initial consumer
reaction, interest, and trial (Pita & Katsanis, 1995). As it can be seen from Figure 4, the
rate of trial, conversion and repeat-purchase, are higher in the cases of brand extension
than the development of a new brand for new products. As a result, shown in Figure 5,

12
the rate of survival longer than four years applies to only 30 per cent of new brands,
whereas the rate is over 50 per cent for brand extensions. (Kapferer, 2008)

Figure 4

Source: The impact of brand extension on the consumer adoption process (Kapferer, 2008,
p.313)

Figure 5

Source: Rate of success of new brands vs brand extensions (Kapferer, 2008, p.313)

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2.3.3 Disadvantages of brand extension
Although there are many advantages that the brand extensions strategy creates, there are
also some disadvantages that are linked to such strategy. While benefiting from parent
brand leverage seems appealing for many companies, the failure rate of extensions is
high, and can amount to 84% (Tait, 2001). Ries and Trout (1981) claim that if a
company makes a not right extension, the damages created on the parent brand
associations and image might be costly or even impossible to repair. The study of Loken
and John (1993) found empirical support on the claim that unsuccessful extensions
could harm the core brand image by by creating undesirable associations.

Another problem that might arise while extending the brand is the cannibalization
which Aaker (1990) explains as a situation where the new product is getting a higher
sales volume while the sales of the core product of the company decrease. This kind of
risk occurs more often in the situations involving close brand extensions (e.g. line
extension). The risk of cannibalization is less in brand extensions vs. line extensions
because the firm is entering new product categories instead of offering variant within
the same product line (Romeo, 1991; Sullivan, 1992; Tauber, 1981).

Just like unsuccessful brand extensions, successful ones can also have a negative effect
on the parent brand image as a result of the dilution effect that the new extension will
create. This result occurs when consumers start mixing or even lose the original
perception of the brand and stop associating the brand with a certain product (Loken &
John, 1993). In other words, there is deterioration of the brand image

2.3.4 Customer evaluations of brand extensions

Extensive usage of the brand extension strategy and its execution by the companies, has
grabbed the interest of many scholars in the past decades. Therefore a lot of research is
done on that topic and special emphasis is put on the customer side: attitudes and
evaluations towards brand extensions. For example, Czellar’s Basic Model of the
Extension Evaluation Process (Figure 6) is one of these researches and it is a practical
tool in order to gain a deeper insight on that matter (Czellar, 2003).

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According to Czellar’s (2003) before the appearance of the brand extension in a given
product category, consumers already possessed established attitudes both toward the
parent brand and the target extension product category. These attitudes are composed by
two components: knowledge and affect. As mentioned previously, brand or category
knowledge can be defined in terms of the product-related and non-product-related
associations linked to a brand/category in long-term consumer memory (Keller, 1993).

Secondly, the affective component can be described as the feelings associated with a
brand name or a product category (Boush & Barbara, 1991; Loken & John, 1993). After
the launch of a new extension the evaluation of the consumers is based on their previous
attitudes towards the parent brand (Czellar, 2003). In the cases where the consumers
don’t possess any knowledge or familiarity with the parent brand and its products, the
evaluation is solely based on their experience with the extension category (Sheinin,
1998).

On the other hand, if the extension product category is new to the consumer, an attitude
toward the extension will be formed only on the basis of her attitude toward the parent
brand (Czellar, 2003). In cases where the consumer has familiarity for both with the
parent brand and the extension itself, a third effect emerges that is the perception of fit
between extension category and the parent brand. After the attitude towards the brand
extension is formed, it gives rise to rigorous consumer behavior on the basis of
intentions, choice and repeat purchase.

The changes in extension attitude based on the experiences of the customers create
reciprocal effects at different stages. For example, the parent brand attitude might be
affected by the consumers’ attitude toward the new extension attitude in terms of
knowledge structure and affect. This reciprocal effect may be moderated by perceived
fit. (Czellar, 2003)

15
Figure 6

Source: Basic Model of the Extension Evaluation Process (Czellar, 2003)

2.4 Summary of the constituted frame of reference

In order to show the interconnections of the chosen theory that constitutes our Frame of
reference and make it clear for the reader we have created a model (see Figure 7):

Figure 7

Source: Summary of Frame of reference (self-designed)

Our Frame of reference starts with diversification which is a type of expansion/growth

strategy that requires a simultaneous change of the product line along with the market

16
or industry that the company operates in (Ansoff, 1957). There are three different types
of diversification, however our focus will be on one of them called horizontal
diversification. It involves launching a new product category that differs from the
current products that the company offers but might be appealing for the current
customers of the organization (Liu & Hsu, 2011).

One suggestion for implementation of a diversification strategy is exploit the already

existing resources of the company. One such resource is the brand, which according to
Aaker and Keller (1990) is the most valuable asset of the company. Therefore, in order
to make use of that asset the companies decide to launch a new product under the same
brand name, which according to Keller and Aaker (1992) is called brand extension.

17
3 Methodology

This section will present the research methodologies that will guide our study and the
reasons for selecting it. Moreover, the methods for data collection and analysis will be
discussed.

The figure below represents an outline of the method used for this thesis:

Figure 8

Source: Outline of the method (Self-designed)

3.1 Research philosophy

Research philosophy is a crucial part and starting point of our methodology, as
researchers conduct their study in line with their values and beliefs. For business and
management researchers it is crucial to understand the philosophical background of
research methods they apply as it has a significant impact on research findings (Johnson
& Clark, 2006). Taking into consideration our research purpose and questions, we
decided to choose intepretivism theory as our guiding philosophy for a number of
reasons that the following paragraphs will elaborate more on.

Braa and Vidgen (1999) created a methodological model which contains several
epistemological orientations, in particular, research whose primary goal is to explore

18
and predict and research which strives to interpret and understand. Braa and Vidgen
(1999) refer the first approach to positivism theory and the second to interpretivism
theory. Choosing between this two main alternatives, it is essential to remember that our
primary goal is to explore brand extension process from the company point of view,
which means that we conduct research that deals more with an understanding and
interpreting. Therefore, interpretivism theory is more applicable for us.

In order to analyze in detail specific cases, we find it more suitable to use qualitative
research, which will be discussed in later sections. Goldkuhl (2012) points out that the
difference between positivism and interpretivism is that the interpretivism is more
adapted and elaborated research philosophy for a qualitative type of study.

Furthermore, our research findings are closely connected to the environment and the
context in which companies operate. According to Saunders, Lewis and Thornhill
(2009) “it is crucial to the interpretivist philosophy that the researcher has to adopt an
empathetic stance and enter the social world of research subjects and understand their
world from their point of view” (p. 116). Moreover, our research is highly dependent
on humans, their beliefs, opinions and interpretations. Interpretivism highlights that it is
necessary for the researcher to understand the differences of human interpretations as
research is conducted among people rather than objects (Saunders et. al, 2009).

As it was mentioned earlier, research philosophy is our starting point and it will guide
us though our choice of research approach, purpose and a method in next sections.

3.2 Research approach

There are two main alternatives when it comes to choosing research approach,
deductive and inductive. According to Saunders et al. (2009) the deductive approach can
be defined as an approach which requires the development of a theory or hypothesis and
creation of research strategy design in order to test the hypothesis. Whereas, inductive
approach involves data collection in order to develop a theory through the data analysis
(Saunders et al, 2009).

19
This thesis is conducted in line with inductive approach, as it is aligning with the
interpretivist theory, which was chosen as a guiding philosophy for this research.

Alvesson and Sandberg (2011) discuss that many qualitative research conducted in area
of gap - filling use inductive approach. This fact is important in our case as we aim to
understand and explore the field of brand extension in company’s interpretation, which
is not wholly explored area. Moreover, inductive approach involves development of a
theory on a basis of empirical data (Saunders et al., 2009). Therefore, this approach is
applicable for us as we are going to gather essential data and draw conclusions
according to it. One more reason behind our choice of inductive approach is that it is
essential for our research to identify the understandings, beliefs and interpretations
behind company’s decision to extend their brand and developing such understandings is
one of the strengths of an inductive approach (Saunders et al., 2009).

3.3 Research purpose

Research purpose is an essential part of our methodology as it clarifies the direction of
our research. There are three possible types of the research purpose: exploratory,
descriptive and explanatory. We believe that research questions that we aim to answer
in this study will result in exploratory types of answers. This is due to the fact that our
primary goal is to investigate brand extension process from the company perspective
that is investigated moderately in the existing literature. An exploratory sturdy aims to
investigate certain topic from new perspectives, identify new insights and explain what
is happening (Robson, 2002).

3.4 Research method

According to Bryman (2007) there is a number of factors that influence researchers and
one of the most important is the dedication to specific methods. In order to be able to
choose the right method for our thesis, it is essential to define existing methods and
understand the differences between them. Two main methods, that are used to conduct
research, are quantitative and qualitative. One way to differentiate these two methods is
to consider numeric and non-numeric data (Saunders et. al, 2009). According to
Saunders et al. (2009) quantitative method involves any data collection or data analysis

20
procedure, which uses numerical data. Data collection in this type of research consists
of questionnaire and data analysis procedures that are done through graphs or statistics
(Saunders et al., 2009). On the other hand, qualitative study is conducted by using non-
numerical data and involves data collection methods such as interviews and data
analysis procedures that are done through categorizing data (Saunders et al., 2009).

This thesis is going to be focused on the qualitative method. There are several reasons
for this choice, and one of the most important is that this method is in line with our
chosen philosophy, purpose and inductive approach. Moreover, as we concentrate more
on researching the process of the brand extension, non- numeric data, such as human
interpretations and beliefs, play a significant role for our research. Kalra, Pathak and
Jena (2013) claim that qualitative method is utilized in order to gain insight on people’s
experience, attitude, and behavior and this method allows the participants to share their
significant experiences within the field of interest.

It is essential to understand possible drawbacks of chosen method in order to avoid

them. As Bryman & Bell (2007) mentioned that qualitative method can be considered to
be general approach, meaning that the qualitative findings can become way too far
generalized. Secondly, during the data analysis, the interpretations of results might
include the presence of subjectivity (Choy, 2014).

To summarise, qualitative method is used for studies that are conducted within a real
world case, where context and human interpretations play significant role and therefore
this method is chosen to guide our research.

3.5 Research strategy

Research strategy part describes the way in which research will be designed and
conducted. In choosing the research strategy we were guided by our research questions,
the accessibility of resources and our philosophical understandings (Saunders et al,
2009).

First of all, we took into consideration that our research is conducted using qualitative
method and one of the research strategy that favors this method is a case study (Bryman
& Bell, 2007). Moreover, interpretivism that we have chosen to be our guiding research

21
philosophy deals with deeper understanding of context and interpretations of research
subject. Therefore, the case study method, which is more suitable when “research
questions require an extensive and in - depth description of some social phenomenon”,
is suitable for us (Yin, 2014, p.4). In other words, we use case study strategy because
we aim to investigate a real world case and and understand that contextual conditions
are part of this process (Yin & Davis, 2007).

While applying case study strategy, we understand that we have to avoid following non-
systematic procedures or allowing equivocal evidence to influence conclusions and
judgments (Yin, 2014). This is why we are focusing on multiple cases in order to
provide a base for comparison and make our judgments more reliable. Due to the reason
that conclusions from multiple case study are often considered more reliable (Herriott &
Firestone, 1983) and findings that were identified in two cases will be more trustworthy
than a single case conclusion (Yin, 2014). Moreover, the reason for using multiple cases
in our research is the need to discover if the findings of the first case present in other
cases and to compare these findings (Saunders et al., 2009).

As a method of data collection we find semi – structured interviews the most suitable
for our purpose. Interviews are an important source of data as most frequently case
studies consist of human beliefs and actions (Yin, 2014).

3.6 Case selection

There are several reasons behind our choice of company selection for the case studies.
Our general idea was to focus on a specific location and to conduct research in the
context of Swedish companies.

Sweden has a lot of well – developed industries with several big players on the market.
For the purpose of reliability of our findings we aim to conduct research on
multinational companies that have already established brand extension with specific
target market. These companies also possess worldwide experience, which can be
relevant in the light of brand extension topic.

The reasons behind choosing outdoor power products industry was its large target
market consisting of both consumer and business customers, which provides us with a
larger scale of research data. Company that is the leader of this industry in Sweden and

22
also a key player worldwide is Husqvarna. Their accessories and protective equipment
line was chosen to be our research subject as it is an already established brand
extension. While conducting interviews we were trying to discover how the company
manages its brand extension, how it was created and the reasons behind having it under
the same brand name.

In order to have a base of comparison as a second case study we decided to focus on a

company from different and not closely related to previous one industry. H&M is one of
the key players of fashion industry and has already established brand extension called
H&M Home which is focused on home and interior accessories and decorations. While
conducting research on our second case we were trying to identify points of parity and
difference with our first case.

3.7 Methods for data collection

3.7.1 Literature review

The demonstration of how the data comprising the Frame of reference will be the focus
of this section. The topics presented in the Frame of reference consist of the secondary
data collected through academic journals, text books and internet sources.

Before proceeding to the academic journals for a more broad understanding, the
textbooks were used in the early stage of the research in order to obtain an initial
knowledge of the aspects of the topics covered in the Frame of reference section.
Additionally, this type of literature was utilized in order to acquire a broader knowledge
on various research methods. However, text books were not used broadly used in this
study since the information included in them is very trivial.

Therefore, in order to gain a deeper knowledge on the topic of this study the academic
articles were utilized. The primary sources for obtaining academic articles were
university library’s search engine Primo, Google Scholar and Scopus. The articles were
acquired through specific search words such as “brand extension”, “brand image and
brand associations” and “diversification”. The academic articles were chosen not only
with respect to relevance, but also the quality. Thus, the utilized articles for the research

23
are highly cited and from peer reviewed journals. However, the relevance of the articles
to the topic played the most significant role for the selection criteria. There is an
extensive research that is done on the brand extension however most of them are
focused on the customer side of it. Hence, not many articles on the precise were found.
Nonetheless, the most relevant ones were selected in order to construct the Frame of
reference.

3.7.2 Primary data

The main source of primary data that was gathered for our investigation was through
interviews. According to Kahn and Cannell (1957) an interview is a purposeful
discussion between two or more people and this method of discussion was chosen due
to the main objective of this research that intends to gain a deeper knowledge about the
interviewee’s opinion and point of view.

For our qualitative research we have utilized the semi-structured type of interviewing
for this purpose an interview guide with a list of questions was created (see Appendix
1). The reason behind the decision of using this structure of interviews is that it gives
flexibility to the researchers to modify their questions according to the flow of
discussion as well as a plethora of freedom to the interviewee while answering them
(Bryman& Bell, 2007).

Since the main emphasis of this research is put on interviewees’ composition and
understanding of the events instead of “right” or “wrong”, our interview guide served us
as a reminder of the significant aspects of the research and helped us ensure a logical
flow of the discussion. However, it didn’t limit us to ask questions that were not
included in the guide which have aroused from interviewee’s replies. On the other hand,
it doesn’t mean that completely different questions were asked in each interview. The
main questions in our interview guide were answered by each participant, however
according to their expertise and position in the company we had the opportunity to seek
more details about particular aspects.

While formulating the script of the interview guide, we chose to begin with general
questions about the interviewee, such as their background and experience in the
company. Doing this was useful for conceptualizing the answers of the participants
(Bryman & Bell, 2007). Moreover, most of the questions were intentionally open-ended

24
 because of the reason that they enabled us and researchers in general to have a
meaningful discussion based on the objective thoughts and opinions of the interviewee
instead of leading them to the “expected” answer. Nevertheless, we kept in mind that
there might be cases of unfamiliarity with the terminology used in our questions,
therefore we have created a short introductory presentation, where we included brief
information about ourselves, our thesis and explanation of some of the terminology.
This way advocated clarification and better understanding from the side of the
participants.

Additionally, before taking a further step to conduct actual interviews several test
discussions had been arranged with colleagues and friends which were very useful for
optimizing our interview questions. Moreover, it also helped us to have a first-hand
experience and develop new ideas on what to do and what not to do during the real
interviews. It was also beneficial for estimating the time span of the interviews and for
examination of the equipment for recording.

We have reached the interviewees through their emails in order to arrange the
interviews, as soon as they have agreed to help us we have suggested them face-to-face,
phone or video interview. Most of them have preferred a phone interview however there
were cases where we conducted face-to-face and a video interview. All of the interviews
were digitally recorded with the permission from the participants and the date and time
were arranged according to each interviewee’s availability. You can find brief
information about each of the participants below:

Table 1

Interviewees- Position Type of interview Interview

Husqvarna length

Hanna Nordquist Global brand and Digitally recorded 20:17

marketing manager Phone interview

Johan Milling Forestry product Digitally recorded 39:48

manager Phone interview

Alexander Fornell Product portfolio Digitally recorded 23:48

developer Skype interview

25
Interviewees-H&M Position Type of Interview
Interview length

Maria Lindblom Brand manager- H&M Digitally recorded 15:57

Home Phone interview

Mrs. Ana (granted H&M Home store Digitally recorded 09:26

anonymity upon manager in Stockholm, Face-to-face
request) Sweden interview in one of
the H&M home
stores in
Stockholm, Sweden

3.7.3 Secondary data

Secondary data was gathered in addition to the primary one. It was collected through
different means such as websites of the chosen companies, annual reports, newspaper
articles and brochures. The purpose of using this kind of method for data collection was
(1) to expand our knowledge about the organizations that are subject of our research (2)
have a triangulation of the data. This method was auspicious in the process of sampling
as well as in the process of creating our list of interview questions because it
ameliorated our knowledge and understanding of each organization. Moreover, the
information gathered from the secondary sources was utilized to triangulate the
collected data from the interviews in order to establish validity of our research.
Additionally, since the H&M website provides a great deal of information for the
readers we have read all of the annual reports from the time of launching their extension
and we have created a table that shows the development of this product line throughout
the years (See Appendix 2). All the sources for secondary data collection are included in
the appendix and reference list.

3.8 Research Trustworthiness

In order for a research to be trustworthy it is of high importance to keep two aspects in
mind: reliability and validity (Eriksson & Kovalainen, 2008).

26
 3.8.1 Reliability
In qualitative research, reliability can be described as consistency (Eriksson&
Kovalainen, 2008). In other words, if another person investigates the work, he/she
should be able to draw similar conclusions. Three questions might be useful for
evaluation: Will the measures yield the same results on other occasions? Will similar
observations be reached by other observers? And, is there transparency in how sense
was made from the raw data (Easterby-Smith et al., 2008).
According to Robson (2002) there are four threats to reliability, subject or participant
error, subject or participant bias, observer error, and observer bias. The table below
represents how these threats have been minimized in this study:

Table 2

Threats Solutions
Observer error might occur when different The interviews were conducted by the same
interviewers ask questions in their own way interviewers in order to reduce the observer
and therefore different answers from the error.
study participants might be gathered
(Saunders et al., 2009).

Observer bias- there is a possibility that The digital recordings of the interviews
observers might face misinterpretation of served as a useful tool in order to avoid this
the participants’ answers which can lead to bias and have the most accurate
bias (Saunders et al., 2009) interpretation of the participant responses.

Participant error- arises when interviewees The interview date and times were set by the
are examined in unusual situations that interviewees. Instead of calling them at an
affect their normal behavior patterns, available for us time, participant told us
resulting in inaccurate responses, situations when is the most suitable for them time this
such as busy period of the working day ensured us that their responses are
(Saunders et al., 2009) meticulous.

Participant bias could take place in cases This kind of bias can be minimized by
where the interviewees respond to the ensuring anonymity of the participants

27
questions in a way that their bosses want, (Saunders et al., 2009). Keeping in mind this
instead of giving their own opinion which suggestion, all the participants of our
might affect the result of the study research had the option to remain
(Saunders et al., 2009). anonymous if they requested so. According
to Saunders et al. (2009), the participant
error can be reduced also by interviewing
several employees within the same business.
Therefore, we conducted interviews with
people in different positions in Husqvarna
and H&M, in order to get the most reliable
results.

3.8.2 Validity
Validity is concerned with ensuring that study measures what it actually intended to
measure (Shenton, 2004). Moreover, in order to consider a research as valid, accurate
findings together with evidence should be provided. In order to maximize the validity of
a qualitative study Shenton (2004) suggests some techniques.

One of them is, developing familiarity with participating organizations, their structure
and culture before the real interviews (Shenton, 2004). Before formulating our interview
questions and the actual interviews, we have made and extensive research on our
participating companies, Husqvarna and H&M. We have checked their annual reports,
visited the headquarters and dealer shops of Husqvarna, and visited the H&M home
showrooms in Stockholm in order to gain a deeper understanding of the organizations
and their extensions. All these actions that have been taken in order to achieve
familiarity were also helpful in order to triangulate the data that we have collected later
on. Triangulation can be defined as mixing of data and methods in order to obtain
information on the same topic from diverse viewpoints (Shenton, 2004). Which
according to (Shenton, 2004) is one of the methods for increasing the validity of the
research.

All these actions that were taken in order to ensure reliability and validity of this paper,
were also useful to increase the credibility, transferability, dependability and

28
confirmability of our research, which according to Shenton (2004) are major
determinants of trustworthiness of qualitative research (Shenton, 2004).

3.9 Method of analyzing data

According to (Lennie, Tacchi, Koirala, Wilmore, & Skuse, 2011) qualitative data
analysis can be described as a process of turning written data collected from an
interview into findings. One universal formula, recipe or rule for this process is non-
existent (Lennie et. al., 2011). Therefore, there are many ways for analyzing qualitative
data in a research and choosing an approach might be difficult for students (Wilson,
2010). For our analysis of the data that we have collected we have chosen to adopt
Wilson’s (2010) four-step approach of qualitative data analysis. These steps include:
transcribing the collected data; reading and generating categories, themes, and patterns;
interpreting the findings and, finally, reporting the findings.

Wilson (2010) put an emphasis on the importance of transcribing the verbatim data that
has been collected from the semi-structured interviews in order to keep the clarity of the
participants’ answers. Keeping this in mind, all of the electronically recorded semi-
structured interviews that have been conducted were transcribed digitally word-for-
word. In order to decrease the chance of misinterpretation of information, we have
decided to do the transcription ourselves. This decision was very helpful, because it
enabled us to eliminate the possible misconceptions and have a better understanding of
the overall information.

The second step in our analysis was generating categories and patterns, we have
categorized the data between the two selected companies and we have tried to identify
the patterns according to interviewees’ answers from each organization which are
supportive or contradictory to one another. Together with some of the theoretical
concepts included in the frame of reference, the categories and patterns that were
identified where used in the third step, the interpretation of findings. On this step of data
interpretation, it is very essential to look for connections between the cases (Wilson,
2010). Furthermore, it is significant to understand what importance these connections
between the categories have, the consistency with previous research, and what the

29
reasons are for the possible differences and similarities between the cases (Wilson,
2010). These steps are followed while analyzing the data in this thesis.

30
4 Empirical findings

In the following sections interviews conducted with managers of both cases will be
presented. The section is divided into two separate cases. Cases are divided into
relevant for our research categories and interviews are combined in accordance to that.

4.1 Husqvarna

4.1.1 Background
Husqvarna Group is a global leading producer of outdoor power products including
chainsaws, trimmers and robotic lawn mowers. It is also a leader in producing of
watering products, cutting equipment and diamond tools for the construction industry
(Husqvarna Group, 2016a).

The company owns several well-known brands and divide them into two groups: core
and supporting brands. Core brand category includes Husqvarna and Gardena brands.
Whereas, supporting brands include McCULLOCH, Poulan PRO, Jonsered, ZENOAH,
DIAMANT BOART, WEEDEATER and Flymo (Husqvarna Group, 2016b).

Seven different brand names that belong to one group can be considered as a relatively
large branding system and can be explained by company products and target customer’s
division.

Company divides its products and target customers into 4 large groups. The largest
group is Husqvarna, which takes 49% of group sales. It is followed by Consumer
Brands with 27% of Group Sales. The third large group is Gardena as it embraces 13%
of Group Sales. The rest 11% of Group Sales holds Construction division (Husqvarna
Group, 2016b).

For each division Husqvarna group uses different brands. Two divisions of our
particular interest are Husqvarna and Construction divisions, as Husqvarna brand is
used primarily in these two areas. Professional forest, park and garden products such as
chainsaws, trimmers, robotic lawn mowers and accessories can be found within
Husqvarna division. Husqvarna division aims at professional customer segment and

31
sales of products are mainly done through dealers. Brands that are used for this division
are Husqvarna, ZENOAH and JONSERED (Husqvarna Group, 2016c)

The second important division for our research is Construction. Under this division
Husqvarna sells to professionals construction products such as cutting equipment and
diamond tools for construction works (Husqvarna Group, 2016c). Husqvarna brand is
used for infrastructure projects such as road and bridge constructions. The DIAMANT
BOART brand is used to market stone cutting products (Husqvarna Group, 2016c).
Husqvarna brand is not used under Gardena and Consumer brands divisions and
therefore they are out of the scope of our research.

4.1.2 Husqvarna brand extension- protective equipment and clothes

Apart from core products, Husqvarna Group has a product category of protective
equipment and clothes. The range includes safety trousers, jackets, helmets, boots and
gloves. Customers of both Construction and Husqvarna divisions have a variety of
choice between the basic functional safety equipment and clothes up until the
specialized products.

By looking at the Husqvarna Construction division website, a potential customer may

see that the company mostly makes an accent on safety and comfort of the protective
equipment. This particular division ensures that product assortment contains three
important elements such as safety, comfort and efficiency in all working conditions. At
the same time, Husqvarna division puts an emphasis on quality and durability of the
product. Under the product description on its website this division explains that the
equipment should retain its quality after usage. Therefore, only high-quality materials
are used to produce such protective equipments.

4.1.3 Interviewees’ background

In order to gain a deeper insight on the process of brand extension in the case of
Husqvarna Group and its protective equipment extension we conducted interviews with
three managers from different departments.

The first interviewee, Hanna Nordquist, takes up the position of the Global Brand and
Marketing Manager at Husqvarna Group. She has been working for Husqvarna for

32
several years and nowadays her area of expertise is mainly focused on protective
equipment and accessories. The second interviewee, Johan Milling, has been working
for Husqvarna Group for already 30 years and now takes the position of Forestry
Equipment Manager. Last, but not least, Alexander Fornell is a Product Portfolio
Developer at Husqvarna Group and involved within product management and product
quality areas.

4.1.4 Drivers of brand extension

Drivers behind the decision to extend Husqvarna brand are one of the central topics that
were discussed during the interviews conducted with three Husqvarna managers.

When we asked Hanna about the reasons behind initial extension of a brand into
protective equipment category manager mentioned several reasons. Firstly, the need to
have such a product category came from regulations that were implemented several
years ago for companies working with outdoor cutting equipmeny in the forestry
industry. “[…] due to regulation. That is how the product has come alive”. Secondly,
Husqvarna Group had identified a need among its target customers to have a line of
products that would increase level of safety while using company’s products. “We talk
to our customers, we do a lot of investigation and try to understand what is the need out
on the market”.

Johan explained that creation of protective equipment product category is closely

connected to events that occurred in the forestry industry 30 years ago. At that time
forestry workers in Sweden were performing their job primarily by using chainsaws
instead of machinery. Husqvarna identified a need for safety equipment in the market as
more and more professional forestry companies started to pay attention to safety issues.
The reasons behind this interest were connected to the safety regulations that Swedish
government implemented for these kinds of companies. “The reason it started with
protective clothing was mainly due to regulations”. Moreover, since Sweden was one of
the first countries that implemented safety regulations for forestry workers, Husqvarna
launched its protective equipment brand extension in the country 30 years ago.

Johan clarified that the reasons behind extending Husqvarna brand with its protective
equipment line can be considered as both pull and push strategies. “You can say, it was

33
sort of a combination of push and pull strategies”. From the one hand, the chainsaws
were becoming faster and lighter and therefore more dangerous in use. More and more
accidents occurred in the forests, so workers needed equipment to be protected and
efficient. “To prevent these kinds of accidents, the regulations have been implemented”.
When Swedish governments implemented these standards demand for safety equipment
appeared. On the other hand, Husqvarna needed to increase its sales and market share
and this is more of a push reason behind brand extension. “So it was a combination, it
was a demand from the customers but also something that Husqvarna saw that this is
something that we need to create or to implement to the market, increase our sales and
earn more profit which is not a secret”.

When we first time asked Alexander about safety equipment line he highlighted that
safety is important while working with companies’ core products and this is why
Husqvarna has such an extension. Alexander explained some of the reasons behind
launching new product category and put emphasis on cultural and climate differences
across the countries of operations. He mentioned that in Scandinavian people are
concerned about safety and it is part of their culture. “As we are a Swedish company,
self-equipment was initially launched in Sweden”. Moreover, according to Alexander
Husqvarna used more of a pull strategy, as protective equipment was demanded from
the market. However, when it comes to other markets such as Asia, Husqvarna has to
push its products into the market. The reason behind it is that people in these regions
have different mindset and also work in different conditions in terms of climate. “It’s
both culture and climate in the region that decide how much is the value of the safety
equipment”.

4.1.5 Husqvarna brand attributes

During our interview Hanna mentioned that protective equipment and accessories have
similar attributes as core products. “We are suppliers of several products, so we need to
take that into consideration that we also deliver the quality of the product”.

Johan also highlighted that protective equipment and clothes have the same attributes as
the core products of Husqvarna. A special attention is given to the quality of the
product. “Husqvarna as you say a well-known high quality brand and we couldn’t come
up with something that was of a low quality”.

34
Alexander commented that “It is very similar how we market our products. If we are
producing professional chainsaw, then we need to have professional protective
equipment as well”. He also compared protective equipment of two brands that belong
to Husqvarna Group but serve different customer segments. These two brands are,
Husqvarna brand equipment that is primarily meant for professional customers and
McCulloch equipment that is sold to mass market. He highlighted that on the mass
market prices have different roles comparing to the role they play in professional
market. Products that are sold under Husqvarna brand are distributed through dealers
and “customers know that they are buying a product for a long term therefore, they are
ready to pay much higher price as they wish to get the best”. Alexander mentioned that
protective equipment is sold in all countries of operations as Husqvarna “try to sell it
along with the core product”.

4.1.6 Reasons behind extending protective equipment category under

Husqvarna brand
As Hanna explained there were several reasons why company used Husqvarna brand
name for its protective equipment and accessories line. One of the main reasons was
already existing awareness of Husqvarna brand, which means that customers will
associate protective equipment with company’s core products and its attributes. As
Hanna told: “the customer already knows that they are buying a chainsaw from the
Husqvarna brand and then they think to get the clothing as well under the same brand
name”. Second reason was saving companies resources since for the creation of a new
brand, the company would need to spend a lot of resources such as time, investments
and educate customers about it. “And to get that brand known the company needs to add
in a lot of investment to make people to understand what kind of brand that is”.

When we asked Johan about the reasons why protective equipment and accessories were
created under the Husqvarna brand, Johan told us a story behind this decision. Initially,
a neutral brand was used for accessories and protective equipment. The reason behind it
was that Husqvarna group has several brands as for example McCulloch in the United
States and in order for a new product category to comply with all of them the neutral
brand was chosen. However, after some time managers realized that the neural brand
required a lot of promotion, while Husqvarna was already a well-known brand with

35
high degree of awareness among the customers in different markets. Johan explained
that “we have to take advantage of the Husqvarna name. So that’s why we put
Husqvarna name in all our clothing and accessories. It is easier for customers to
recognize the new product under the existing brand name.”

Alexander assumed that “it’s a channel strategy depending on where we use the brand”.
Since Husqvarna brand is used to primarily target professional customer segment, this
brand creates right associations, which are needed for marketing the protective
equipment and accessories.

4.1.7 Target market

When it comes to customer segments, Husqvarna targets both professionals and mass
customer segments. As Johan highlighted when extension was just created its primary
customers were professional forestry companies, but now it also serves mass market
such as farmers, gardeners and users of most of Husqvarna core products.

We have private people owning some land that use our products, we have
farmers that work half a year on the land and then half a year in the winter
they work in the forest, we have everything from churches to cities, parks
etc. that have trees that have to be taken care of.

Moreover, Husqvarna has a wide range of protective equipment configurations to serve

all customer segments. “So if you look on the products we have today only talking
about the protective trousers, I think we have 6 or 7 different versions that have more or
less the same protective level”.

4.1.8 Challenges of brand extension

When we asked Hanna about challenges that Husqvarna Group faced while expanding
its brand into protective equipment product category, she explained that it takes time to
inform and educate everyone who is involved in this process about their responsibilities
and tasks. “We had to make sure that everyone, employees, dealers, and other people
understand in all level what they need to do. We had to make sure everyone understands
products and its usage”. Hanna also highlighted the importance of relationships with
dealers. She explained that dealers have to follow Husqvarna's guidelines on how to

36
place and market their products. “For the selling part, we educate our dealers through
meetings, presentations and explain about our new products that are coming out the next
year”.

Johan elaborated on this topic more and explained that when it comes to distribution of
the protective equipment, Husqvarna applies the same strategy as they use for their core
products. Products are sold to dealers and then distributed to the end customers. He
mentioned the term “servicing dealer”, meaning that the dealers also carry out the
service. “In these shops most of the cases they also sell our range of accessories
including the protective equipment and clothing and trousers”. Some of the large dealers
also offer Husqvarna products through their websites, but choice of the distribution is
up to dealers. Johan highlighted that it is important for Husqvarna to educate the
dealers about products. It is done through several meetings/ conferences per year where
new products and their way of usage are explained in order for dealers to understand
and meet better the needs of a customer. “So they know when the customer comes in,
what they should have”.

In connection with Husqvarna current expansion of protective equipment line into the
Brazilian market, Johan also mentioned that it is essential to create catalogues and
educate dealers about the product.

You have to explain that now Husqvarna has protective clothing and it is
specially made for Brazilian market within their field, indicate date of
release and etc. Essentially we make special ads for the local dealer that
he/she can put it in local newspapers or also that he/she can use on his/her
own homepage, explain that we have a new product.

Moreover, Johan mentioned that before the introduction of a new product Husqvarna
creates a big conference for each country, which involves trainings and explanations of
a new products. “We try to teach them as much as we can so they can go home and
show this to their own salespeople and their own dealers to educate them and they do
the same to the end users”. In total it takes one and a half year to implement a new
product into the market.

Alexander also explained that it is of high importance for Husqvarna to make sure that a
dealer delivers the accurate and the true information to end-users. He highlighted that

37
“Every time we advertise our products, we make sure the information is applicable.
That is why we have continuous trainings, regular advertisements and meetings with
dealers”.

4.1.8.1 Creating the demand and cultural differences

Johan told that it can be challenging to adjust product to different markets. Protective
equipment extension has a wide product range with different prices for different
customer segments. He explained that it is easier to operate in European countries since
most of them have similar safety standards. However, when it comes to other countries
such as Russia a lot of adjustments in terms of safety requirements and pricing are
needed. This is one of the challenges of the brand extension that he mentioned. Going a
bit deeper into the topic of markets of operation, Johan explained that differences in
cultural background, climate and most importantly safety regulations play an important
role. When it comes to European market, it is easier to offer the protective equipment as
it is demanded from the customers due to safety regulations. Other countries like North
America require a little bit of adjustment to their local standards. First of all, due to
lack of regulations companies do not provide their workers with protective equipment
and it is a personal responsibility of a worker to buy it or not. Secondly, because of the
hot climate and cultural background workers are not used to wear protective equipment
and Husqvarna has to push its product to the market and explain why it is useful to have
it. “You have to continue working and explaining that chainsaw is a dangerous tool and
you should use this type of equipment when you work with chainsaw”. Alexander also
mentioned that protective equipment is demanded the most in Scandinavia “[...] as this
region has a safety culture. And strict safety standards and that’s why it is also a good
market”.

4.1.8.2 Challenges connected to supply chain and logistics

Johan emphasized that “it is very important for a new product to be in line with core
product attributes such as high quality in order to to remain the brand association in
customers’ minds”. In connection with that company faced challenges during the
production process suppliers have to be chosen very carefully and Johan underlines that
“You can’t go to every type of factory. You have to find a factory that is strict and has a
quality control”. It is also hard to organize production in a way that it will convey with a
pricing strategy. “We have to take this product on market, sell them and make some

38
money”. Another challenge Johan mentioned is connected to logistics. Most of the
products are produced in Vietnam, China, Mexico, Canada and also in Portugal. “We
have a long delivery time that takes 3 months to fill up our stocks”. The right supplier is
one of the main factors for Husqvarna production process. Johan concluded “I guess
that sort of a challenge to make sure you have the right supplier, the quality, plan all the
ordering, costs and logistic side”.

4.1.9 Additional information on how Husqvarna penetrates the market

with its new product categories
Johan has noticed two ways of introducing a product to the market. As Husqvarna sells
its products through dealers, therefore new products are introduced through dealers’
stores and catalogues. “Here in Scandinavia or European countries we offer a big
catalogue with everything from the smallest chainsaws to the biggest lawnmowers and
in between you have the accessories, including the protective equipment and clothing”.
In other words, this is the way of introduction of a new product to the existing market.
“But, of course if you have a completely new country you maybe have to start in a
different way”. First, market research is an essential part of expansion and it includes
finding the potential customers, suitable material fitting the weather and protection
standards of the local country. Johan highlighted that first study is conducted with an
aim to find professional customers and than private ones. When it comes to protective
equipment it is important to discover local safety standards. Moreover, company has to
adjust to local environment. In case of Brazil it is hard to import there as country has a
low level of safety standards. What is more in Brazil governments try to protect local
business and therefore “we are setting up the line of protective clothing that is locally
produced so it is produced in Brazil”. When it comes to product design part, Husqvarna
has to take into consideration a lot of factors such as suitable pricing, designs and
materials. Before mass production starts, the company has to create samples and test it.
Afterwards marketing department works on developing a strategy to introduce offer to
the market. “We have to also work with the marketing department. So they know that
the new product should be in the catalogue, what page, or the packaging you have to
take photos”.

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4.2 H&M
4.2.1 Background
Hennes & Mauritz (H&M) is a Swedish global fashion retail company that was
established in Västerås, Sweden in 1947 by Erling Persson. Today, in 2016, the
company operates in 61 markets with 4000 stores and employs more than 132,000
people worldwide (H&M Group, 2016). The main objective of the company is to offer
an extensive range of fashionable products with good quality for affordable prices in a
sustainable way to its customers.

Therefore, H&M deliberately puts effort into the development of its product offerings
and collections in order to provide each customer with something appealing to their
taste and need every time they pay a visit to an H&M store. The new products and
collections are designed centrally from the headquarters in Stockholm, Sweden by more
than 100 designers, buyers and pattern makers. The company offers wide range of
products including women’s, men’s, teenagers’ and children’s apparel, accessories,
cosmetics and footwear. Apart from this, H&M has also extended their offerings into
the interior design collection (H&M Group, 2016). Moreover, H&M group owns other
six independent brands such as H&M, COS, Monki, Weekday, Cheap Monday and &
Other Stories (H&M Group, 2016).

4.2.2 H&M brand extension- H&M Home

H&M home is a brand extension of H&M that was launched in 2009. The collection
offers products such as towels, bed linen, curtains and other home textiles, as well as
home decoration items made of glass, metal and wood for every room in the home. The
company kept the fashion in mind while creating this line. H&M home offers fashion
for living through home decor products in both enduring and fashionable patterns and
colors that bring about an easy and rapid makeover for each home (H&M Group, 2016).

Today H&M Home is available in 218 H&M stores in 42 markets and online. And the
company is planning to expand this line further with around 60 new H&M Home
departments this year ( H&M Group, 2016).

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4.2.3 Interviewees’ Background
We have conducted interviews with the brand manager that is responsible for H&M
Home and also a store manager in one of the stores where H&M Home product line is
displayed. Maria Lindblom is a brand manager and head of H&M Home since 2008 and
Mrs. Ana who has been working for H&M and H&M Home for a long time.

4.2.4 Drivers of brand extension

According to Maria the main driver behind the decision of the company to extend their
brand into a new product category is the fierce interest from the side of the customers.
She thinks that this interest is a result of the increasing concern of people about “interior
design and homes in general”. The company responded to customers’ request with the
thought of “we create fashion for people why not to do the same for homes”.
Furthermore, she also points out that, another reason behind this decision is the
“possibility to expand our brand into new product categories which is attractive for the
existing as well as new customers”.

The store manager also agrees that the idea of extending the products to accessories and
decorations for home was initiated by the customers’ demand.

I could always meet someone who was demanding and asking me why
there is no line for home accessories, because you know H&M offers
wide range of products, yes it is known for clothes, but we have many
other categories, why not to offer something for homes.

Moreover, she believes that the main reason behind having H&M Home is “meeting
and serving the existing customers’ needs as much as possible”

4.2.5 Reasons behind extending home accessories and decorations

under H&M brand
H&M group consists of six independent brands. According to Maria the motive behind
having H&M Home under the same brand name, instead of creating a new one was
mainly a strategy to make use of the already existing brand image in customers’ minds.
“H&M is a very famous brand, when customers purchase something from H&M they
already know what to expect and this is one of the reasons for this decision. “ Moreover
she also mentions that keeping the same target market was one of the other reasons for
this decision. “[…] the other brands that you have mentioned that H&M group owns

41
have different target market. […] with H&M Home we created something close to the
initial brand, the products are not targeting different income customers”.

Ana is also in the same opinion as the brand manager on the topic of having this
extension under the same brand name. She thinks that it is mainly to make use of the
strong brand name and image that the company’s customers have. “Having the same
brand name is kind of a guarantee for the customers and for the company that they will
be interested”. She also adds that:

We have many visitors in our shop everyday, and this products under the
same name can be put in the same shop, and customers directly will be
interested while visiting H&M store, to see what is in the new home section,
if it will be different brand name you cannot put them in the same shop and
you cannot guarantee that this new shop with new brand name will have as
much customers as usual H&M shop.

The introduction of the new product extension in 2009 to the target customers has
started in without a physical store, but rather online sales through the company’s
website. Furthermore, there were also catalogue sales in the Nordic countries and the
Netherlands, Germany and Austria. “Initially, we launched on our online, hm.com for
the first time. Moreover, we included this product range in our catalogues that’s been
sent out to our customers”. By the autumn of 2009, when sales and interest started to
increase, the company made a decision to offer these products also in the United
Kingdom and the first investment on a physical store was made.

In the autumn of 2009, the H&M Home Showroom was launched in

Stockholm. It is a 200-square-meter store on the second floor of a regular
H&M shop which reminds of a gallery where the interiors collection items
are displayed and regular updates and changes to them are made.

Moreover, both of the interviewees agreed that the extension shares the same attributes
as the core products. Maria mentions that “a high fashion level in terms of design, price
and quality was kept in mind while launching this product line”. The shop manager adds
that “H&M Home products are mostly things like towels, curtains, sheets, pillow cases.
The fabrics have similar quality and prices doesn’t differ from normal H&M prices”.

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4.2.6 Challenges of brand extension
One of the main challenges for the brand extension according to Maria Lindblom was
making customer aware of it. “The awareness is the most challenging for a new brand or
product category”.

According to Ana the reason behind having H&M Home in only specific stores and
locations is the area that the extension requires.

H&M home is a quite big extension, there are many products it needs a lot
of space in a store like one whole floor, this means the amount of clothes
that can be put in a store has to be decreased.

She also mentions that getting the attention of the customers in to the new products, is
the main challenge with any new extension. However, she does her best to follow the
instructions from the head office, concerning the display of the new products in the
shop.

4.2.7 Ways to deal with challenges

The company has dealt with the challenge of awareness and space in an interesting and
innovative way. It is the concept of “magnetic shopping”. At the entrance of each H&M
home store, customers have an opportunity to pick up a house shaped metal plate. Each
product in the range is represented by a miniature magnet with the picture and
information about the item and which can also be attached to the metal house (see the
Appendix 3). After the customers finish their selection of products they hand in their
plate at the checkout, then the real products are brought to them by the shop assistant.
“The idea for magnetic shopping came from the way we shop on the internet,” says
Mrs. Lindblom. This way of shopping has grabbed the attention of many journalists and
bloggers. As a result of that, more and more customers were aware and interested in the
new bran extension of H&M.

In 2011, one of the alluring collaborations of H&M with the famous designer Donatella
Versace was another strategy of the company to increase the awareness and interest of

43
the customers about the extension. The designer has created a clothing collection which
also offered selected home interior items in an Italian style, and grabbed a lot of
attention from the customers when it was launched in 300 H&M stores and online.

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5 Analysis

This section of the thesis aims at analyzing empirical findings along with the theories
introduced in frame of reference

5.1 Drivers for brand extension

While analysing the data gathered from the interviews, we can conclude that the drivers
behind extension of the brands can be divided into pull and push factors.

5.1.1 Pull drivers

As it was mentioned previously in the frame of reference section, pull strategy deals
with direct interaction with end users in order to introduce a new product and “pull”
them to a distributer to buy it (Bax & Woodhouse, 2013). However in our case, pull
strategy can be revised as an inspiration of the company by customers and external
factors to create a product.

When comparing both of the cases it can be seen there are similarities in terms of pull
factors that influenced the drivers of brand extension. The decision to extend their
product offerings for both of the companies was initiated by the external factors. In
Husqvarna case at the time when safety standards were introduced in Sweden,
Husqvarna was supplying forestry companies with professional products and quickly
identified the need for protective equipment that appeared in the market. It is also
explained that improvement of a core product also played an important role, as
customers started to demand a higher level of protection. It was also identified, that the
culture is an essential factor, as Scandinavian people are more interested in safety and
this factor creates a strong demand for protective equipment in this market. This is how
the market pulled the idea of creation of protective equipment line in case of Husqvarna.
We can clearly see similarities between two cases as in case of H&M customer interest
and demand were also the main drivers of brand extension. It can be said that it was an
opportunity for the company to meet the needs of their existing and potential customers
as changing perceptions of the people about home style and décor have created this

45
demand. It can be concluded that for the company it was more of a pull factor that
influenced the decision of extending the brand in this category.

5.1.2 Growth driver and push strategy

One of the reasons of expansion for company is the desire to enlarge its markets share
and increase sales. When Husqvarna started to expand to overseas markets they
discovered that some of them such as Russia and South America can be “problematic”
in terms their low safety regulations and different culture of usage of protective
equipment. Therefore, Husqvarna has to put a lot of efforts into promotions of their
protective equipment in order to create a demand from the side of the customers.
According to the previous research a push strategy is a marketing strategy that
companies use in order to “push” products to the customers in order to create demand
(Bax & Woodhouse, 2013). In other words, this strategy is used in cases when creation
of demand requires a lot of promotional efforts. However, there are no base for
comparisons for push factors since there is a lack of information from the side of H&M.

5.2 Reasons behind keeping the same brand for a new product

The theory from the frame of reference suggests several reasons for launching new
products under the same brand name. These are the following: low introduction and
promotional costs (Bhat & Reddy, 2011), high cost of developing a new brand for new
products (Aaker & Keller, 1990), and the opportunity to make use of the existing brand
image in the customers minds because consumers are more likely to relate a brand
extension to other products affiliated with the parent brand (Aaker & Keller, 1990;
Farquhar et al., 1989). Additionally, our findings suggest that the first and most
important reason for the companies to use their established brand name for their new
offerings is the possibility to make use of the existing strong brand image in customer’s
minds and saving costs in terms of promotion and distribution as a secondary driver.
The next sections present more detailed information about that topic.

5.2.1 Brand image and brand associations

Analysing the data collected from both of the companies we can say that the most
important reason for having the brand extension under the well-known brand names was
the opportunity to exploit the strong brand image and associations that both Husqvarna

46
and H&M have in their customers’ minds. According to Pita and Katsanis (1995) the
already existing strong associations of the parent brand enhance the customer
willingness to buy and try the new products.

The interviewees from both companies pointed out that keeping the same name for the
new product category is guiding their customers through their purchase decision since
they already know what to expect from the brand. As mentioned in the frame of
reference brand image is formed thanks to the associations and these associations are a
result of attributes, benefits and attitudes towards the product or service (Keller, 1993).

Moreover, Pita and Katsanis (1995) mention that well-defined brand image contributes
to create a recognition and many positive brand associations of the new extension
among the customers. However, our findings suggest that while extending their brands,
managers didn’t solely rely on the already existing associations to be transferred directly
to the new extension instead they have created the new product category to have the
same attributes as the core product. Husqvarna mostly focused to keep the product
related attributes which is the quality of the material that is used for the products,
whereas H&M’s focus was on the combination of non-product (price) and product
related attributes. Moreover, after the visit that we have paid to the H&M store where
the home accessories were displayed we could clearly see that some decoration items
share the same patterns and colors as the clothing (see Appendix 4). This is how the
company keeps the same associations for its new product category.

5.2.2 Saving costs

Introducing new brands to the market can be very costly for the companies, especially,
in terms of promotional activities (Sullivan, 1992). Since creating awareness and
demand for a new product with a new brand would require much more resources than
doing it for the already existing strong brand with a new product. Moreover, according
to Keller (2003) the efficiency of the promotional efforts is higher with a brand
extension since it reduces the risk of purchasing a new product or service perceived by
the customers. Additionaly, one of the interviewees mentioned that in the very
beginning Husqvarna Group used a neutral brand for its new protective equipment line.

47
However, when the company saw that great deal of investment had to be made for its
promotion they have re-launched this product line under the Husqvarna brand.

When it comes to H&M, the managers didn’t directly mention that saving costs were
their main objective of this extension. However, the store manager clarified that having
the extension under the H&M name enables them to display the new product category
in the same store. This serves as a guarantee that the extension will reach many people
since the H&M stores are visited by numerous customers on a daily basis. Moreover,
the opportunity to display the new extension in an already existing store can also be
considered as cost- saving since it creates awareness even without any promotion.
Additionally, the company doesn’t have to lease or buy new stores in attractive
locations and hire new people for them.

5.3 Challenges of brand extension

5.3.1 Creating awareness and demand

Even though, one might suggest that companies do not face a challenge to create an
awareness and demand, since they launch their products under the well-established and
well-known among the customer’s brand name. Our findings, suggest, that this
challenge is still applicable for brand extension. As mentioned, earlier the brand
extension decreases the cost of that challenge, but it doesn’t eliminate it completely. In
other words, even if the demand for a certain product in the market exists the companies
need to create awareness among the customers that the demanded product can be found
within their offerings.

As Husqvarna distributes its products through dealers it is essential to make sure that
the dealers have complete knowledge and right information about a new product
category. Challenges may arise, as dealers are independent companies that are involved
in business not only with Husqvarna but also with its competitors. Moreover, dealers
have their own ways to market and place product and therefore the message that
Husqvarna wants to send to its end customers can be interpreted not correctly. This
challenge becomes even more serious in case of creating the demand in overseas

48
markets such as Asia and South America. In those markets for the reasons that were
mentioned earlier, Husqvarna has to push its product to the market through dealers and
it makes relationships with them even more important.

Additionally, for H&M creating awareness was the main challenge for their new brand
extension. Even though the idea and demand for this range of products came from the
customers, H&M had to put effort in order to make them aware that the company
responded to their request positively and created home decoration products, which are
available in specific locations.

5.3.2 Choosing the right supplier

According to Aaker and Keller (1990) the extended products that lack innovation or
very simple to manifacture may experience rejection by the customers. Therefore, even
if the demand was existing to a product in the first place if the real product doesn’t meet
the customer’s expectations the demand and interest might be affected negatively. As
mentioned earlier, after the stage where the decision is made to keep the same brand
name for a new product category, in order to maintain the existing associations with the
parent brand, companies are trying to keep the same attributes in terms of price and
quality for the new extension. In the case of, Husqvarna, it was challenging to find a
right supplier, that has a good quality control and that is convenient in terms of logistics.
Since the company didn’t have these kind of products before. The companies face the
challenge in order not to have one of the negative effects of the brand extension,
deterioration of the brand image (Loken & John, 1993). This effect arises when the
extension creates new asoosciations in the customer’s minds and confuses the current
beliefs and feelings about the brand (Ries and Trout, 1981). Therefore, the right supplier
is one of the key factors to keep the same associations for the brand extension as for the
core product.

5.4 The way of overcoming challenges

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5.4.1 Creating awareness and demand
Husqvarna managers mentioned that company has meetings several times a year with
dealers in order to inform them about new products and regulations. This action can be
considered as a way for creating awareness among the dealers of the company and
demand among the customers. Since these meetings prepare the dealers to give detailed
information about the offerings in cases where customers who visit dealer shops are not
aware of what kind of products are meeting their needs. This is how Husqvarna creates
demand among its customers through dealers by putting emphasis on regulations of the
specific country and its product features. Moreover, in order to create an extensive
awareness before launching a new product, Husqvarna has a big conference where the
dealers and suppliers from all of the countries of operations are gathered in the
headquarters. This action is taken in order to have an equal distribution of information
among the all of the parties that are involved, since the company is familiar of the fact
that the awareness and demand can be created with the constant flow of information
from the company to the dealers and from the dealers to the customers. Furthermore, the
dealers have to follow special guidelines created by Husqvarna with explanation on how
to market and advertise their products correctly to the end users.

One action taken from H&M to overcome the challenge of the creating awareness for
the new extension is the collaboration of H&M with the famous designer Versace two
years after the launch of the extension. Along with a usual clothing collection, the
designer also created special accessories for home (see Appendix 5), which grabbed the
attention of the media and many customers. This action can also be seen as a celebrity
endorsement which according to Martin Roll (2014) is a communication channel for a
brand where the celebrity verifies a brand’s position and claim by extending his or her
popularity, personality, expertise in the field or stature in the society to the brand.
Moreover, according to Erdogan (1999) a well-known celebrity creates stronger
purchase intentions and more positive attitudes towards an advertisement in comparison
to the non-famous spokespersons. Therefore, we can conclude that celebrity endorsment
is a strategy for increasing the awareness about the new brand extension.

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6 Conclusion

In this part the purpose and the research questions of the thesis will be restated and
connect them to the findings made in the analysis part. In order to demonstrate the
inteconnections between our findings the model will be presented.

The purpose of this thesis was to investigate the process of brand extension from the
perspective of companies in order to contribute and broaden the knowledge on the entire
process of extension of a brand. The purpose has been fulfilled by finding the following
answers to the research questions.

1. What are the main drivers for brand extension?

After our analysis it was discovered that the main driver for the decision to expand the
product offering into new for the company categories, is related to demand that appears
on the marketplace. This demand can be created by several external factors such as
regulations, cultural preferences and trends. Another driver that we identified is
connected to companies’ desire to increase its sales and enlarge market share.

2. What are the reasons behind creating the new product categories under already
existing brand name?

The analyses of findings have clarified that the main reason for keeping the same brand
name for a new product category is to take advantage of the already existing strong
brand image in customers’ minds. The well established brand image creates strong
brand associations that are very beneficial for introducing new product category.
However, companies do not solely rely on the direct transfer of brand associations.
Therefore, they are trying to keep extension products’ and core products attributes’ in
line with each other.

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 3. What challenges does a company face while extending their brand and possible
ways of overcoming them?

The main challenge that was identified, is creating demand and awareness among the
target customers. However, the scope of the challenge can depend on the channel that a
company uses for distribution of the products. In case of distributing the products
through dealers or retailers, the the problems with delivering the right product
information to end customers may arise. This challenge can be overcome by using
different guidelines, trainings and educational conferences that give right information
about the product to the dealers. In the cases where the products of a company are
distributed directly to the end customers without involvement of the third parties, the
challenge becomes less complicated and easier to overcome through the utilization of
marketing communication tools such as celebrity endorsement.

Another challenge that was identified is connected to finding the right supplier. This
challenge is, particularly, applicable in the cases where the company wants to keep the
same attributes as core products for the brand extension. However, this research wasn’t
able to find an answer for the ways to deal with that challenge. Since the participants in
the interviews were not dealing with this problem personally, they did not have the
expertise in this area. Therefore, they were unable to give an answer to this question.

In order to demonstrate interconnections between our findings the following Figure 9

has been created:

52
Figure 9

Source: Conceptual model of brand extension (self-designed)

53
7 Discussion

In the following section the findings will be connected to the existing research.
Limitations and boundaries of the thesis will be presented as well as suggestions for
future research.

7.1 Contribution
The theory suggests that the reason for creating new products for the companies is the
opportunity for growth (Ansoff, 1957). However, our research has found that along with
the market expansion that comes as a secondary driver the customer demand is the
primary driver for the decision to create a new product different than the core one.
Moreover, previous studies pointed out that perceived fit between the parent brand and
the extension affects the evaluation of extensions positively (Aaker and Keller, 1990;
Boush and Loken, 1991). Our analysis shows that in the cases where the fit between the
products from the extension is low the companies try to have high level of “fit” between
the core product’s characteristics and the extension product’s characteristics. High “fit”
is achieved by keeping the same attributes as the core product in terms of price and
quality for the extension in order to make use of the existing strong brand image. This
result is consistent with the results from the research of Nijssen and Augustin (2005),
that managers consider the “fit” in terms of product or/ and characteristics as the first
indicator of ideal brand extension. This study also contributes to the challenges that the
brand extension strategy creates and possible ways of overcoming them which previous
research didn’t shed a light on.

Brand extension has been studied extensively by the researches. However, the main
emphasis was put on the customer side of this phenomenon. Little attention has been
paid to the other side of the happening, namely the company. A study conducted by
Nijssen and Augustin (2005), has tested what managers’ interpretation of an ideal brand
extension is. However, the topic of how companies extend their brands overall was still
unclear. This research has tried to further understand the company side of the brand
extension by providing in-depth analysis of the empirical findings from two

54
multinational companies with already existing brand extension. These analyses helped
us to develop a conceptual model of brand extension which might be a useful tool for
the managers who are planning to extend their product offerings in order to understand
better the steps that this action requires to take.

7.2 Limitations
Our research is bounded by several limitations that will be presented in the following
section. When it comes to choice of the research questions, we want to emphasize that
that our thesis is not focusing on success or end result of the brand extension as selected
case studies contain already established brand extensions. In other words, this paper
aims at exploring the process of brand extension and its aspects.

Due to lack of time and busy schedule, most of the interviewees had restricted amount
of time and we had to adjust our interview process to that issue. This especially
concerns the managers from H&M, as we were able to conduct only 2 interviews and
therefore support lack of primary data with secondary. Moreover, the solutions for one
of the challenges that this thesis identified has not been fully explored due to the lack
availability of interviewees from this area of expertise.

Due to lack of time and resources our research was restricted solely on two case studies.
Two case studies might be considered as relatively small for having an accurate and
meaningful conclusion. However, the limitations mentioned above did not desist us
from conducting research and contributing to the brand extension research field.

7.3 Suggestions for future research

Since the company side of the brand extension is not fully explored, there is an
extensive area for exploration. It can be suggested that limitations of our research create
opportunities for future research. First of all, in order to generalise conclusions,
quantitative studies using bigger samples size can be conducted. This would eliminate
single method bias in terms of reliability and validity since the study can contribute to
more accurate outcomes.

55
Moreover, interesting topics have emerged after the analysis of our findings. For
instance, both of the companies have responded to the demand from the customers from
their biggest markets of operations. It would be beneficial to investigate to what extend
the size of the market matter for the decision of companies to expand their product
offerings.

Finally, since our study has found that the challenges of brand extension and the ways
to deal with them might differ from industry to industry, we were not able to fully
investigate all of the challenges and their solutions. Therefore we suggest that the future
research might be focused on that topic. Moreover, our research didn’t measure what is
the success rate of the company’s way of dealing with the brand extension challenges.
Consequently, the future research might also focus on that aspect. This would create a
better understanding of which solutions of challenges create the best outcomes for the
brand extension success.

56
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Appendix 1

Interview guide for Husqvarna

1. Could you tell us more about yourself, your position at Husqvarna, how long
have you been working and what are your main responsibilities?

2. We found out that Husqvarna not only producing chainsaws, trimmers, robotic
lawn mowers and garden tractors but also has a line of safety equipment and
clothing. Can you tell us more about it?

3. When did you launch this product line?

4. How did you come up with this idea

5. Can you please tell us more how product development process overall looks?

6. Which customer segment is it primary serving?

7. Does the Husqvarna accessories products have the same attributes as your core
business products?

8. Do you offer Husqvarna accessories in all countries of your operations? Is there

are some countries that Husqvarna accessories sold more than in another ones?

9. Do you distribute Husqvarna accessories the same way as your core product?
Which forms are they: online or store?

10. How did you introduce Husqvarna accessories to the target market?

62
 11. What was the reason behind having created accessories line under Husqvarna
brand?

12. Did you have any concerns if Husqvarna accessories would not meet customer
expectations thus it would damage the brand image?

13. As you know when you say Husqvarna it is mostly associated with high quality
engineering equipment, what kind of brand management tools did you use in
order to create association with accessories in the customers’ minds?

14. Did you meet any challenges in your way to create these brand associations and
how did you overcome them?

Interview guide for H&M

1. Could you tell us more about yourself, your position at H&M, how long have
you been working for H&M and H&M Home?

2. We have read in the H&M website that H&M Home was launched in 2009. Can
you tell us more how did you come up with idea of launching H&M home?

3. What was the reason behind having H&M Home?

4. Did you have any concerns if H&M Home would not be successful thus it would
damage the brand image?

5. According to the information from the website there are 6 other brands such as
Monki, & other stories etc., but H&M Home was launched under the same brand
(H&M) name, what was the reason behind choosing this kind of strategy to
expand your product offerings instead of having a new brand name?

6. How did you introduce H&M Home to the target market? What were your
advertising strategies and tools?

7. Does the H&M Home products have the same attributes as your core business
products?

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 8. We have also read that the first H&M Home showroom was in Stockholm and
catalogue sales were also possible, and then it expanded to some countries like
UK and Germany, how many countries today have H&M Home?

9. Which forms are they: online or store?

10. In Sweden, for example, a person cannot find H&M Home in every store, what
is the reason behind having H&M Home in specific locations?

11. As you know when you say H&M it is mostly associated with clothes and
fashion by the customers, what kind of brand management tools did you use in
order to create association with home decorations in the customers’ minds?

12. Did you meet any challenges in your way to create these brand associations and
how did you overcome them?

13. Is the whole H&M Home controlled from the headquarters or does the countries
that have this section have different brand managers?

Appendix 2

Timeline of H&M brand extension development

2008 The idea of extending brand into this category is mentioned in the report.
And the aim of this line remains was the same as for every product and
extension of H&M: “to enable everybody to find something that fits their
lifestyle at a good price”.

2009 H&M is launched in February; the sales were done via the internet and
catalogue in Sweden, Norway, Denmark, Finland, the Netherlands,
Germany and Austria; 4 collections were presented during this year; 25
September H&M Home Showroom opened in Stockholm

2010 H&M Home launched in one of the biggest markets of H&M UK through
online sales and physical store in the upper floor of H&M store on Oxford
Street in London; store openings in cities like in Copenhagen and Helsinki
and in a former bank at Dam Square in Amsterdam

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2011 Donatella Versace- collection for H&M and H&M home in 2011

2012 From July, the H&M Home interior textiles collection expanded to include a
range of products for children and babies from organic cotton. Number of
H&M Home stores increased and customers can find them in Stockholm,
Norrköping, Helsinki, Copenhagen, Oslo, London, Amsterdam and
Frankfurt.

2013 H&M Home expanded to ten new markets including the US, Poland, the
Czech Republic and Spain

2014 H&M Home opened in a further 63 H&M stores in 14 markets and plans for
expansion continue

2015 H&M Home is in 218 H&M stores in a total of 42 markets. H&M’s product
range is also available to buy online in 23 countries: Sweden, Norway,
Denmark, Finland, the Netherlands, Germany, Austria, the UK, the US,
France, Italy, Spain, China, Portugal, Poland, the Czech Republic, Romania,
Slovakia, Hungary, Bulgaria, Belgium, Switzerland and Russia. Expansion
will continue with 60 new departments in 2016.

Appendix 3

The concept of “Magnetic shopping”

65
The house shaped iron plate. Source: David Report, 2016

The magnets that can be attached to the metal plate. Source: David Report, 2016

Appendix 4

H&M similar attributes

Source: H&M website

66
Source: Own, from H&M store Stockholm, Sweden

The similarities in terms of price

67
Source: Own, from H&M store, Stockholm, Sweden

68
Appendix 5
Collaboration with Versace

Source: Nitrolicious, 2016

69