We analyze brand stretching - the extension of a successful brand label from an initial home market to a different product line - using a model that assumes that brand identity is a complementary feature that enhances consumer willingness to pay. Our analysis implies a pattern of brand-stretching entry in which (1) firms with strong brand identities may prefer to extend their brands to markets that are far from their original product line, and (2) fragmented or unconcentrated markets with no strong incumbent brands are attractive entry targets for brand extension.
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