Competitive differentiation through brand extensions in the era of hyper competition

Abstract

In the era of hyper competition, competitive differentiation has become increasingly important. Brand extensions are used by companies across various industries for competitive differentiation. But in the era of hyper competition, a successful differentiation strategy requires that a brand emphasizes on uniqueness rather than commoditization. In this article, we make a case for creating a meaningful differentiation strategy. We emphasize the role of brand extensions for competitive differentiation and highlight the main perils of using brand extensions as a primary differentiation strategy. By using qualitative research, we identify primary objectives for brand extensions in practice. This investigation uses in-depth interviews with 14 senior brand managers across various industries to highlight brand portfolio strategies in relation to the brand differentiation strategy. Findings reveal that for business at the base of the pyramid, in markets such as Romania, brand managers are using brand extensions to increase sales or to boost short-term revenue rather than to implement a coherent differentiation strategy. We conclude with multiple recommendations for improving brand extension usage as a strategic instrument for creating meaningful differentiation in the era of hyper competition.

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