¶ … extension products under a brand name dilutes not only the identity of the brand itself, but also of the flagship product of the brand. To determine whether flagship products are diluted by the introduction of an extension, the authors studied situations in which a well-known brand introduced a product inconsistent in at least one way with the brand's image, and then measured whether the flagship product's image was also affected. They proposed the hypothesis that consumer beliefs about flagship products are stronger and more resistant to change than consumer beliefs about brand names, and therefore the introduction of an inconsistent extension product would be less likely to impact the flagship product's image than the brand's image. After an examination of three studies about Johnson & Johnson, the authors' hypothesis was confirmed except in the case of inconsistent extensions of the flagship product's line. There were several key concepts in this article. The four concepts most central to the study were consumer belief, extension, flagship product, and dilution. Consumer belief includes the associations most strongly made by consumers about a brand or a product. In the authors' examination of Johnson & Johnson, one of the most widely-held consumer beliefs about the brand was "gentleness." Because it is one of the strongest consumer beliefs about Johnson & Johnson,...
The researchers introduced a hypothetical Johnson & Johnson product rated low for gentleness, and then tested the sample group's subsequent beliefs about the brand. As they suspected, the brand image had suffered from dilution, or the weakening of previously held beliefs about the brand. However, beliefs about the Johnson & Johnson flagship product, baby shampoo, had not been diluted by the low gentleness rating of the new product.
Mergers and acquisitions (M&A) and corporate restructuring are a big part of the corporate finance world. Every day, Wall Street investment bankers arrange M&A transactions, which bring separate companies together to form larger ones. When they're not creating big companies from smaller ones, corporate finance deals do the reverse and break up companies through spinoffs, carve-outs or tracking stocks. Not surprisingly, these actions often make the news. Deals can be worth
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now