Introduction

Several multinationals are entering into new markets, and they are leveraging their existing equity by practicing brand extension. Hence, it is important to study the factors which affect brand extension (Kaur & Pandit, 2015). Although extensions take advantage from parent brand’s existing brand equity, the extensions also impact the equity of parent brand which is termed as reciprocal effects (Ahluwalia & Gurhan-Canli, 2000; Dwivedi & Merrilees, 2013). Successful brands are the assets of the company. They help in creating value for the company. Firms have different strategies for extending brands. The first strategy is to employ individual brand names to different products without any association to the parent company, for example, Procter & Gamble and its various brands. The second strategy is to use an umbrella brand name for every product, for example, Tata Tea, Tata Steel, etc. The third strategy is to use the combination of both, a sub-brand category which has parent brand and the individual brand names, such as Cadbury Oreo and Cadbury Dairy Milk (Pitta & Katsanis, 1995). The need for brand extensions was explained by Tauber (1988). According to Tauber, way back in the 1960s it was believed that to grow a company has to market new products otherwise the company will eventually die. Product life cycle concept was believed by most marketers. By 1980s, a study by Tauber for 7,000 items in 10-year period resulted in the success of only 93 items; hence, new product development was questionable. In 1980s, brand leverage was the strategy where an existing brand name was used for new product category so as to minimize the risk. Also, brand leverage or extension helped in improving the sales of the parent brand. Brand extensions are identified along with another category of extensions called line extensions although there is a slight difference between the two. Brand extension is the use of well-known brand name to penetrate a new product class (Aaker & Keller, 1990). And a line extension is the use of a recognized brand name for a new offering in the same product class (Reddy, Holak, & Bhat, 1994). Brand extension has been studied extensively from the last few years. The brand extension studies can be divided into two broad categories: the first category refers to the studies related to the factors affecting brand extension. And the second category refers to the studies which evaluate the effect of brand extension on parent brand which is called as feedback effects on parent brand (Dwivedi & Merrilees, 2013). The current study is the combination of both the categories. It is an attempt to investigate the factors which affect brand extension and the impact of brand extension on parent brand equity. The framework is formulated keeping in view both the aspects of the research carried out till now. So that a new approach to study extensions and branding can be presented. An extensive literature review has shown that the previous studies were focused on hypothetical brand extensions. Many brand extension studies use fictitious brands (Dens & Pelsmacker, 2010). Therefore, the actual behaviour of customers is not revealed. Also, the Indian context of brand extension has not been studied rigorously. The models and framework proposed in developed markets cannot be replicated in the Indian context. The study is an attempt to reduce the shortcomings and research gaps in the existing literature. The current study is underlining the feedback effects of brand extension on parent brand equity along with the effect of various factors on brand extension are being analyzed simultaneously. The study has identified the importance of brand extension and its feedback effects in the context of Indian brands and Indian population. The study is divided into four parts: first part comprises the literature review followed by research methodology in the second part. In the third segment of study, analysis and hypothesis testing are carried out. In the last part of the study, discussion and the implications of study along with its limitations and future research are covered.