IMPACT OF PRODUCT LINE EXTENSION ON THE SALES IMAGE

OF A FIRM

By
USMAN SALEEM MOHAMMED

A thesis
submitted in partial fulfillment of the requirements
for the degree of Master of Business Administration
to Office of Research, Innovation & Commercialization
(formerly Iqra University Research Centre - IURC)
at the Iqra University,
main campus, Karachi

Karachi, Pakistan
JUNE, 2015

Acknowledgements
On the completion of this report, I would like pay my sincere thanks to Allah (SWT)
who paved the way for me to conduct this research. Besides, this research would not
have been possible without the guidance and support of my instructors and teachers
who were always there to help me out and guide me about how to conduct a
comprehensive research.
I feel deep gratitude and pleasure to thank my research supervisor Dr. M.A.K. Chishty
for his relentless assistance and selfless guidance on any issue pertaining to the
research. Without his guidance, this research couldnt have been completed on time.
I would also like to express my gratitude to the academic and technical staff of Office
of Research, Innovation & Commercialization (ORIC) that helped in analyzing the
data and guided me a lot in data gathering and analyses. Furthermore I would like to
thank all those employees and consumers who participated in this research and helped
in the collection of data.
Also, I would like to thank my family and friends who assisted me in every possible
manner to complete my thesis.

Abstract
With the cut-throat competition thriving between brands in the industry at its zenith, it
is becoming tough for firms to find inspiration and innovative products to please their
target market. With the consumers dynamic demanding patterns, firm strive hard to
satisfy the consumers with ground-breaking attributes in products and grab the
attention of the buyers towards their brand. Product-line extension is one strategy
used by managers to tout a multi-product tactic for their brand. This research tends to
probe the impact of product line extension on the sales image of the firm. This
research was a descriptive, Likert scale based study. The source of information
collected was primary data, collected from the target audience of the research through
a questionnaire. The data collected was statistically tested via Regression for
quantitative analysis. On the basis of the numerical results, the research formed a
conclusion at the end of the report, suggesting policy implications and the potential
research in the area.

Table of Contents
DESCRIPTION

S.No.

PAGE
NO.

Acknowledgement
1.

...
Abstract...

ii

2.

List of

iii

3.

Tables..
List of

4.
5.

Figure..
Chapter 1:
Introduction..

vi
1

1.1.
Overview.
1.2. Problem statement .
.
1.3 Background, Objectives and Significance of the
study
1.4. Outline of the Study.

1.5. Definitions...
6.

7.

Chapter 2: Literature Review.

2.1 Hypotheses..
..
Chapter 3: Research Methods.

3.1. Method of Data Collection....

..
3.2. Sampling Technique..
.
3.3. Sample size.

3.4. Instrument Of Data Collection.

..
3.4.1. Validity and Reliability
Test.
3.5. Research Model
Developed...
4

14

3.6. Statistical
8.

Technique..
Chapter 4:
Results..

17

4.1. Findings and Interpretation of the result...

..
4.2. Hypotheses Assessment
9.

Summary..
Chapter 5: Discussions, Conclusion, Policy Implications and
Future Research..

5.1. Discussions...
...
5.2. Conclusion .
.
5.3. Policy
Implications..
5.4. Future Research...

21

References..
10.

Appendix..

23

11.

..

25

List of Tables
S.No.
1.
2.
3.
4.
4.

TABLE(S)
3.1. Reliability Statistics.
4.1. Model Summary ..
4.2. ANOVA.........
4.3. Coefficients.........
4.4. Hypotheses Assessment Summary..

PAGE NO.
15
17
17
18
18

List of Figures
S.No.
1.

FIGURE(S)
3.1. Research Model ...

PAGE NO.
16

Impact Of Product Line Extension On The Sales Image of a Firm 1

Chapter 1: Introduction
1.1 Overview
Product line extension is basically launching a new product which is an
extension of a previous or principal product under the familiar brand name and is
slightly different from the original ones. For example Pepsi is a brand and a product
where as diet Pepsi is a product line extension.
The purpose of the product line extension is to grab the attention of more diverse
customers with more added value or benefits with same or more improved quality.
Brand extension is basically expanding the brand itself. For example Coca-Cola is a
brand and Pulpy Orange juice is a brand extension of Coca Cola. Both product line
extension and brand extension increases the profit of a company because they
introduces a new product in the market with reduced costs, more benefits and attracts
more diverse customers geographically.
Introducing a new product line or brand extension can be a risk as well because if the
new product or a brand is a complete failure it could dull down the companys name
and the customers will not support any of the companys products in future.
A line extension plays a vital role in keeping a brand alive and to acknowledge
incremental money related development for an organization. Line extensions have
almost very little esteem over existing products, and that cannibalization is intimately
linked with the success of a product line extension. As per Aaker (1991) launching a
new brand extension have become more difficult because of the rising cost that incurs
in terms of advertising and distribution channels, it is easier to launch a product line
extension as it has less chances of failure then brand extension because of the

Impact Of Product Line Extension On The Sales Image of a Firm 2

familiarity of the brand and mush more economical (Nijssen, 1999). According to
Aaker (1991) 89% of the new products are line extensions where as 6% are the brand
extensions and only 5% launches with a new brand name.
As per the Association of National Advertisers, 27% of new product line extensions
fail and those who even get succeeded not necessarily get to earn extra profit all the
time. Therefore it is necessary to learn key success factors for product line extension
(Nijdden, 1990)
Line extension and brand extension can cause a negative impact on the sales image of
a firm as well, if the new product line is far away from the parent product. It can
dilute the parent product or image of the firm as well (Pina, 2003).
Brands do take advantages from product line extension. Some high value brands take
advantages from innovation (R&D) where as low value brands take advantages by
advertising solely their new product line. Brands with high value can introduce new
product line with the help of innovation and can add additional benefits and points of
differentiation as compare to the previous one where as low value brands can increase
or decrease the brand equity of the parent product by exclusively advertising the new
product line. The new product line gives an opportunity to build the equity of the
brand or parent product (Sisodiya, 2010). Product line extension increases the brand
loyalty of the parent product and inevitably helps in developing parent product
franchises. According to (Quelch & Kenny, 1994) the massive variety in the product
line extension puzzles out the consumers which in terms dilute the brand image of the
firm or parent product.
Creating a line or brand extension associated with a well known brand is a
competitive advantage for a firm. Introducing a new product extension under the same

Impact Of Product Line Extension On The Sales Image of a Firm 3

product category with different price, style, quality and packaging is usually known as
vertical extension (Altuna, 2010). It was investigated that how the variables of a
parent brand effects the sales image of a firm after extension (Martinez & Chernatony,
2004).

1.2 Problem Statement

To study the impact of product line extension on the sales image of a firm

1.3 Background, Objectives and Significance of the study

Now days consumers want variety and choices in terms of packaging, quality
and sizes and thus have increased the demand for product line extension. As per
Altuna (2010) the brand extension influences negatively on the image of the parent
brand but if theres a fit between the parent brand and line extension, it reduces the
negative effect. If the perceived image and quality of the brand is high then there is
higher possibility of the failure of image of the firm or parent product as a result of
extension. Seen nature of the brand, customers' image recognition, fit saw by the
customer, purchasers' behavior towards the expansion have a positive impact on the
item brand picture after the expansion.
As per Dawar & Anderson (1994) and Milewicz & Herbig (1994) the popularity of an
existing brand or product helps new product enter in to the marketplace and helps
capture diverse market rapidly (Lavack, 1996). In vertical line extension a second
product label is introduced in to the market in order to show the relationship between
the line extension and the core product. (e.g Coke, Diet Coke) (Lavack, 1996). There
are quite possibilities that the vertical line extension may impact the sales or image of
the parent brand as well. Companies should not launch vertical line extensions until

Impact Of Product Line Extension On The Sales Image of a Firm 4

and unless they are significant enough to compensate the losses caused by the
extensions to their parent product (Lavack, 1996).
In recent years the success of products shows that managers enjoy line extension as it
has become their favorite strategy. As per Draganska & Jain (2005), firms can have
two types of product line extension. First, a firm introduces a line extension to target
different target segments. (E.g. BMW offers its cars ranging from BMW 3 series to 7
series to cater different target audiences). Whereas the vertical line extension caters
for the audiences who are willing to pay different prices as per quality. In horizontal
line extension products are not differentiated on the basis of price and quality but on
different attributes (e.g. Coke & Diet Coke). Product line extension offers as a
competitive tool for a company.

1.4 Outline of the study

The study tends to research on the concept of product line extension and their
influence on the sales of a brand. It further provides an extensive comparative review
of the perception and knowledge of product line extension, possessed by an ordinary
consumers as wells as the experts of the business field. Past work of notable authors
and researchers on the subject of line extensions, their execution in marketing arena
and their effects on consumer behavior have also been analyzed in order to support
the topic under study. Moreover, the study targets individuals that are influenced by
the line extensions of the products they avidly buy and the marketing professionals to
evaluate their degree of understanding about product line expansion. Based on the
findings, this research also proposes recommendations and further issues of
discussion to pave way for future work in the area.

Impact Of Product Line Extension On The Sales Image of a Firm 5

1.5 Definition
1.5.1

Product Line Extension:

A multi-product strategy used by firms to launch a new, additional item in the

market, in the same product category under the umbrella of a well-established brand
name. Example: new ingredients, flavors, pack sizes.

Impact Of Product Line Extension On The Sales Image of a Firm 6

Chapter 2: Literature Review

For an organization, its vast growth and rapid development in its relevant
industry appears to be the most crucial and supreme concern. It sincerely dedicates all
possible efforts and strategies that will enable and encourage the firm to climb the
ladder of continuous sustainability and massive profits. Whether the firm's main
motive is continuous diversification or incessant expansion of its existing products
and brands in the market, the matter of development of a new product is always the
most imperative of all (Wilson & Norton, 1989).
In times when the cost of unveiling a new product in the market is relatively high
along with the escalating rate of ineffective and failed new products, organizations
then make efforts for one common business strategy. And then they eventually shift
their focus to cash the significance and worth of existing brands in the company's
portfolio (Desai & Hoyer, 1993). Introducing line and brand extensions to such
existing brands is one such product development tool that has become quite a
common growth tactic used to be firms of all sorts. Predominantly, these development
strategies are widely witnessed in the industry of fast moving consumer goods
(FMCGS) (Amber & Styles, 1997). On the other hand, their ever increasing
popularity throughout the ages have led to marketing practitioners and researches in
the area to relate the phenomena of brand and line extensions direct with brand equity
(Amber & Styles, 1997).
Desai & Hoyer (1993) in the research study explain the difference between the brand
extension and the line extension of the product. The brand extension involves the
company developing the potential and power of the brand in various other product

Impact Of Product Line Extension On The Sales Image of a Firm 7

categories. On the other hand, when the company develops the brand in the same
category of the product by introducing its different types of variants is line extension
What is more, drivers and reasons of extensions contrast widely and are many in
number. According to the research by Amber & Styles (1997), one such motivation
for organizations to decide for extension was to fulfill the requirement and consumer
need that the original brand failed to accomplish. In addition, a further reason for
launching an extension can be the cut-throat competition between brands prevailing in
the market while a different motive for the introduction of an extension can be
technology-driven.
On the other hand, the practice of launching a brand or line extension being
widespread in the market is not an assurance that it will be an ultimate hit in the
market. The rate of downfall for extensions have been recorded as quite high and
almost come near to the failure rate of brands that are newly introduced in the market
(Bhat, Holak & Reddy, 1994).
One of the examples reported by Bloomberg Business in 1994 of a massive line
extension failure in the history appears to be the cola variant, Crystal Pepsi.
Dating back to 1993, the beverage giant Pepsi.Co launched a new variant to its brand
Pepsi by the name of Crystal Pepsi, a clear cola product. But the sales did not reach
the rate of success as predicted as it failed to impress the consumers with any
beneficial product attributes other than a pure and crystal clear image.
Focusing on the line extension as per the requirement of the research paper, the
influence cultivated by the introduction of line extension in an organization's product
portfolio is a significant topic for the marketing managers of today (Sinapuelas &

Impact Of Product Line Extension On The Sales Image of a Firm 8

Sisodiya, 2010). Time has proved that organizations who involve themselves in
expanding the line of their products are able to compete more extensively in the
industry.
Throughout time, organizations have moved towards the strategy of launching their
line extensions that are basically innovative variants of their brands. Using the same
name of the brand, they launch an assortment of variation in the same category of the
product (Desai & Hoyer, 1993). Line extensions of a brand not only enables the brand
to thrive and maintain its presence in the market, but also allows it to strengthen,
reinforce and amplify its brand position (Nijssen, 1999). Research reveal that
marketing managers perceive line development of the brand as a cheap and low in risk
strategy to approach diverse needs and segments of customers (Quelch & Kenny,
1994). In 1988, statistics reveal that out of ten thousand new products that were
introduced in the industry of packaged products, around ninety percent of the goods
were line extensions (Desai & Hoyer, 1993). Around eighty-nine of new product
launches in the market are derived from line extension of a brand (Bhat, Holak &
Reddy,1994).
There will be hardly a product category that has not yet widened its product line.
From shampoos to music systems and toothpastes to automobile, almost all industries
are indulged in the practice of extending their product portfolio (Desai & Hoyer,
1993). While they vary only marginally from each from their parent's' brand real
products, it is proposed that line extension's improve the prospects of the rise of the
brand's position in the market (Nijssen, 1999). Research by Nijssen (1999) revealed
that those brands that expand their variants on the basis of flavors and packet sizes
tend to generate more whopping sales and high profits. Meanwhile, those brands were

Impact Of Product Line Extension On The Sales Image of a Firm 9

revealed to be unsuccessful in sales and profit that opt for extensions that offer
improved or low quality as per the standard, original product of the brand.
Line extensions on a general level share most product characteristics with the standard
product of the brand, with the omission of one or a couple of variant features (Lee,
Lee & Kamakura, 1996). If successful, it helps to energize a brand, add more life,
visibility and significance to it.Therefore, it is evident that the extension of products
involves differentiation on a relatively negligible note which makes it quite easy for
the competitors of the brand to act in response and mimic the practice. The intense the
competition in the market, the more powerful and fast will be the comeback from the
competitors of the brand ;eventually leading to a low success probability of the
product's line extension (Desai & Hoyer, 1993).
Similarly, line extension can help to strengthen brand image, cultivate creativity and
foster innovation within a brand. The research conducted by (Bhat et al, 1994)
proposed the determinants of success for introducing line extensions of a brand in the
market. The findings depicted that the line extensions derived from a stronger brand
has a higher rate of success as compared to that generated from a relatively weaker
brand. Symbolic brands have more success rate of extensions rather than nonsymbolic brands. What is more, greater promotion and extensive advertising leads to a
successful result of launching a line extension. In the same way, brands that are more
influential and dominating in the industry will have more resources and standing to
defeat line extension expanded from a weaker brand. In addition, the line extensions
then become an innovative way to satisfy the wants of the consumers who are eager to
try something new and different most of the time, ensuring at the same time that they
remain loyal and dont switch to any other brand (Quelch & Kenny, 1994)

Impact Of Product Line Extension On The Sales Image of a Firm 10

But what could be the optimal time for a brand to launch its line extension in the
market? The research paper by Wilson & Norton (1989) provided a detailed model
defining the most favorable time for introducing line extension in the industry,
keeping certain assumptions of characteristics about the market along with the
products functional and development attributes.
The study further reveals that the most ideal decision is to launch the extension
instantaneously or then not at all in the period of planning. Introducing the
phenomenon of characteristic diffusion time, Wilson & Norton (1989) proposed that
the dynamic analysis may enable marketing managers to make a better decision
compared to an entirely static analysis in this case.
Lee, Lee & Kamukara (1996) identified in their study the evaluations by the
consumers in regard to the line extensions. It was found that an extra feature in the
variant extension may or may not be valued by the target market depending on their
certain factors of behavior. Hence, it is suggested that for the success of a line
extension, marketing managers should ensure that they diversify or add to the product
attributes to a variant brand that corresponds and supports the image of the brand (Lee
et al, 1996)
Additionally, a research by Sinapuelas & Sisodiya (2010) lead to an insight that a
large number of new line extensions under a parent brand eventually result in a higher
equity level of the brand. Those brands that have high brand equity to themselves
ultimately reap high rewards from the launch of creative and innovative product line
extensions.
On the other hand, the research by Sinapuelas & Sisodiya (2010) warned about the
risk of launching a line extension and suggest that extensive attention must be given

Impact Of Product Line Extension On The Sales Image of a Firm 11

while pairing the advantages of innovation to the equity of parent brand and predict
the prospects of a failure in the market on unveiling a novel product.
A study by Kim & Sullivan (1998) lead to a research on how the consumer
experience of a parent brand can positively or negatively impact the trial purchase and
repeat buying process of its line extension. The results from the research revealed that
the experience resulting from the parent brand increases the probability that the
consumer will try its variant (Kim and Sullivan, 1998). What is more, the consumers
who have little or no experience with the parent brand have expected less quality from
the product line extension preceding the trial stage.
Those consumers who are familiar with the standard product of the brand seem to be
more interested in giving its line extension a try. Therefore, it is suggested that firms
can ask those consumer with superior evaluations about its parent brand to receive
trial for its new variants (Kim & Sullivan, 1998).
According to Quelch & Kenny (1994), more evidence with time provides a glimpse
towards the disadvantages for those organizations that are involved in an aggressive
line expansion strategy and fail to maintain it as per the industry requirement. Increase
in hidden costs, feeble image of the brand in the eyes of the consumer along with poor
relationship with the company's retailer and distributors are the most evident pitfalls
of a failed execution of a product-line expansion strategy.
Fashion and luxury brands often participate in step-down line extension of their
products, which is a low priced or a low quality product than the standard product of
the brand.

Impact Of Product Line Extension On The Sales Image of a Firm 12

According to a study led by Lei, Ruyter & Wetzels (2008) , it was revealed that step
down line extension can turn out to be significantly effective if the marketing
managers are seeking to influence the brand equity and expand the profitability of the
brand into diverse segments in the industry. It was noted in a study that buyers of
fashion apparels appreciated the fact that they can buy quality wear at a lesser cost
(Hanslin & Rindell, 2014). Also, step-down line extensions were revealed to be more
valued by the target market when compared to step-up line extensions, which is a
product higher in price and quality (Lei, Ruyter & Wetzels, 2008) It is also revealed
that consumers who are not able to spend a lot on luxury wear prefer to buy their stepdown line extensions (Hanslin & Rindell, 2014).
One challenge that is faced by step-down line extension of a luxury fashion brand is
that it has to put quite an effort to establish dependency and reliance with the
customers (Hanslin & Rindell, 2014).The research on the product line extension of the
brand is very limited. However, in the view of the past literature on line extensions,
the research under study will examine the positive and negative influence of product
line extension on the sales image of organizations. Moreover, the thesis will utilize
relevant method of data collection and take a survey of the professional's point of
view to probe deeper in the research topic. With the assistance of suitable statistical
tools, findings and conclusion will be discussed by the end of the paper.

2.1 Hypotheses
There are several hypothesis developed for this study that would help in
conducting the research in a proper manner. These hypotheses are outline below:
H1: Pack size has a significant effect on the sales image of a firm.

Impact Of Product Line Extension On The Sales Image of a Firm 13

H2: Pack type has a significant effect on the sales image of a firm.
H3: Packaging has a significant effect on the sales image of a firm.
H4: Flavor has a significant effect on the sales image of a firm.
H5: Design has a significant effect on the sales image of a firm.

Impact Of Product Line Extension On The Sales Image of a Firm 14

Chapter 3: Research Methods

3.1 Method of Data Collection
Personal survey method for information gathering is utilized for this research.
Information for the research is gathered through questionnaires. Respondents included
people belonging to different professions along with random consumers of various
brands were approached for this research. Every respondent was approached
personally to fill out the questionnaire and to collect their views on the research topic
through questionnaires.

3.2 Sampling Technique

Unrestricted non-probability sampling, random sampling technique is used in
this research. Through this technique, all the respondents from population had equal
chance to be collected in the sample size for this research.

3.3 Sample Size

280 customers were approached randomly as sample size for this research to
collect their view on the research topic.

3.4 Instrument of Data Collection

Questionnaires are the source of collecting data for this research.
Questionnaires with close ended questions were used as instrument for data
collection. Questionnaire was developed on the basis of Liker scale so that every
respondent can specify their agreement level to the given question.

Impact Of Product Line Extension On The Sales Image of a Firm 15

3.4.1

Validity and Reliability test

Reliability of instrument in this research is tested by

Cronbach`s alpha. It measures the internal consistency of an instrument of data

collection based on scale. According to the rule of thumb, if the Cronbachs alpha is
equal of above 6 then it is in with the acceptable region and the instrument is reliable.
The result table is given below.
Table 3.1: Reliability Statistics
Reliability Statistics
Cronbach's
Alpha

N of Items
.853

31

The table 3.1 identifies that whether the instrument used in the research is reliable or
not. Cronbach`s Alpha is .853 which is acceptable. As Cronbach`s Alpha is within the
acceptable region thus this proves that the instrument used for data collection in this
research is reliable.

3.5 Research Model developed

Figure 3.1: Research Model

Source: Self-made

Impact Of Product Line Extension On The Sales Image of a Firm 16

3.6 Statistical Technique

As the research will judge the impact of product line extensions on the sales
image of the firm with five variables to analyze the impact, regression test has been
used as the statistical technique.

Impact Of Product Line Extension On The Sales Image of a Firm 17

Chapter 4: Results
4.1 Findings and interpretation of the results
Table 4.1: Model Summary
Model Summary
R
Square

Model

.346a

Adjusted R Std. Error of

Square
the Estimate

.119

.103

.38197

a. Predictors: (Constant), Design, Pack Size, Flavor, Pack Type,

Packaging

The table of Model Summary shows the R value as 0.346 and the value of R.
square as 0.119. This means that we can analyze and interpret the model correctly up
to 34.6%. This depicts that the model has ample room for improvement.
Table 4.2: ANOVA
ANOVAb
Sum of
Squares

df

Mean
Square

Sig.

Regression

5.425

1.085

7.437

.000a

Residual

39.976

274

.146

Total

45.401

279

Model

a. Predictors: (Constant), Design, Pack Size, Flavor, Pack Type, Packaging

b. Dependent Variable: Sales Image of a Firm

The table represents ANOVA analyses, exhibiting that F=7.437 and sig. value as 0.000
and is <0.005. This shows that the model is statistically significant and the
independent variables can significantly predict the dependent variable.
Table 4.3: Coefficients

Impact Of Product Line Extension On The Sales Image of a Firm 18

Coefficients
Un standardized
Coefficients
Model

Std. Error

(Constant)

2.981

.149

Pack Size

.059

.029

Pack Type

.039

Packaging

Standardize
d
Coefficients
Beta

Sig.

20.057

.000

.133

2.022

.044

.031

.085

1.272

.204

.063

.031

.143

2.077

.039

Flavor

.034

.026

.080

1.319

.188

Design

.024

.027

.057

.889

.375

a. Dependent Variable: Sales Image of a Firm

Table 4.3 is the Coefficient table and describes the sig. value of independent variables
of Pack Size, Pack Type, Packaging, Flavor and Design.
The sig. value of constant is 0.000.
The sig. value of Pack Size is 0.044 and is less than 0.05, depicting that there is a
significant impact of pack size in product line extension on sales image of a firm.
The sig. value of Pack Type is 0.204 and is greater than 0.05, depicting that there is an
insignificant impact of pack type in product line extension on sales image of a firm.
The sig. value of Packaging is 0.039 and is less than 0.05, depicting that there is a
significant impact of packaging in product line extension on sales image of a firm.
The sig. value of Flavor is 0.204 and is greater than 0.05, depicting that there is an
insignificant impact of flavor in product line extension on sales image of a firm.
The sig. value of Design is 0.24 and is greater than 0.05, depicting that there is an
insignificant impact of design in product line extension on sales image of a firm.

Impact Of Product Line Extension On The Sales Image of a Firm 19

From the above results and interpretation we can draft a model as:
SF= 0.059PS+0.039PT+0.063PC+0.034F+0.024D+2.981
From this equation, we can calculate the value of sales image of the firm.

4.2 Hypotheses Assessment Summary

Table 4.4: Hypotheses Assessment Summary Table
S.no
1

Hypotheses

Sig. Value

Empirical
Evidence

Pack size has a significant

effect on the sales image of a
firm.

.044

Accept

Pack type has a significant

effect on the sales image of a
firm.

.204

Reject

Packaging has a significant

effect on the sales image of a
firm.

.039

Accept

Flavors have a significant

effect on the sales image of a
firm.

.188

Reject

Design has a significant effect

on the sales image of a firm.

.375

Reject

Impact Of Product Line Extension On The Sales Image of a Firm 20

Chapter 5: Discussions, Conclusion, Policy Implications and

Future Research
5.1 Discussions
The primary goal of this research study is to examine the relationship between
the line extension of a product and its impact on the sales image of a firm.
The research focused on the packaging, pack size, pack type, flavor and design when
it comes to line extensions of a product.
These features of the product are avidly adopted by firms for line extension of the
products. A sample size of around 300 people from various parts of Karachi
participated in the research, via responding to the questionnaires. With a statistical test
of Regression using SPSS, the final outcome of the research was concluded regarding
the five variables, each revealing a different impact on the sales image of the firm.

5.2 Conclusion
By conducting this research study it has been established that pack size and
packaging are the only variables that were discovered to be significant for product
line extensions impact on the sales image of the firm. Whereas, the remaining three
variables namely flavor, design and pack type were revealed to have no significant
effect whatsoever for product line extensions impact on sales of the product. As a
result, it can be concluded that consumers are influenced by line extension of a
product that offer different, innovative packaging and are made available in other
various pack sizes. Consumers are less drawn towards new flavor, design or pack type
of the product in its line extension. Ultimately, sales will be drawn via new pack sizes
and packaging in extension of a line.

Impact Of Product Line Extension On The Sales Image of a Firm 21

5.3 Policy Implication

The major implications for the firms were to study the ever-changing nature of
their consumers behavior when it comes to their preferences for line extensions of the
product. Success for firms lies in inspiring their consumers with their own creativity
and authenticity while extending their product line. The research also implies that
since the consumers will prefer to choose new packaging and pack size as line
extensions, firms should be highly cautious in providing the best to the consumers and
search for novel packaging and useful pack sizes to influence their sales volume.
Firms can use this research to analyze the potential of the significant variables to drive
consumer preference and reject the insignificant ones to avoid expenses for irrelevant
features of product line extension.

5.4 Future Research

Since this research has been conducted on the choices of consumers in
Karachi, the outcome of this research cannot be generalized for people dwelling in
other regions of Pakistan. There is a great probability that consumers living in
different regions of Pakistan might differ in their opinions about product-line
extension. This research suggests for the potential explorers to assemble results from
the other areas of Pakistan, to improve the work conducted in this area of the productline study.

Impact Of Product Line Extension On The Sales Image of a Firm 22

References
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Ambler, T., & Styles, C. (1996). Brand development versus new product
development: towards a process model of extension decisions. Marketing Intelligence
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Clark Sinapuelas, I., & Ram Sisodiya, S. (2010). Do line extensions influence parent
brand equity? An investigation of supermarket packaged goods. Journal of Product &
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information processing perspective. Advances in Consumer Research, 20(1), 599-606.
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extensions of luxury and designer brands. Journal of Fashion Marketing and
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extension trial and repeat purchase. Marketing Letters, 9(2), 181-193.
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Impact Of Product Line Extension On The Sales Image of a Firm 23

Lee, M., Lee, J., & Kamakura, W. A. (1996). Consumer evaluations of line
extensions: A conjoint approach. Advances in Consumer Research, 23.
Lei, J., de Ruyter, K., & Wetzels, M. (2008). Consumer responses to vertical service
line extensions. Journal of Retailing, 84(3), 268-280.
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goods", European Journal of Marketing, vol. 33 (5), pp. 450 474
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Impact Of Product Line Extension On The Sales Image of a Firm 24

Appendix
Table 3.1: Reliability Statistics
Reliability Statistics
Cronbach's
Alpha

N of Items

.853

31

Table 4.1: Model Summary

Model Summary
Model

R
Square

.346a

.119

Adjusted R Std. Error of

Square
the Estimate
.103

.38197

a. Predictors: (Constant), Design, Pack Size, Flavor, Pack Type,

Packaging

Table 4.2: ANOVA

ANOVAb
Sum of
Squares

df

Mean
Square

Sig.

Regression

5.425

1.085

7.437

.000a

Residual

39.976

274

.146

Total

45.401

279

Model

a. Predictors: (Constant), Design, Pack Size, Flavor, Pack Type, Packaging

b. Dependent Variable: Sales Image of a Firm

Table 4.3: Coefficients

Impact Of Product Line Extension On The Sales Image of a Firm 25

Coefficients
Un standardized
Coefficients
Model

Std. Error

(Constant)

2.981

.149

Pack Size

.059

.029

Pack Type

.039

Packaging

Standardize
d
Coefficients
t

Sig.

20.057

.000

.133

2.022

.044

.031

.085

1.272

.204

.063

.031

.143

2.077

.039

Flavor

.034

.026

.080

1.319

.188

Design

.024

.027

.057

.889

.375

a. Dependent Variable: Sales Image of a Firm

Beta

Impact Of Product Line Extension On The Sales Image of a Firm 26

Variable View

Impact Of Product Line Extension On The Sales Image of a Firm 27

Data View

Impact Of Product Line Extension On The Sales Image of a Firm 28

Impact Of Product Line Extension On The Sales Image of a Firm 29

Impact Of Product Line Extension On The Sales Image of a Firm 30

Impact Of Product Line Extension On The Sales Image of a Firm 31

Impact Of Product Line Extension On The Sales Image of a Firm 32

Impact of Product Line Extension on the Sales Image of a Firm
Name: ..

Gender:

Male
Female

Contact Number: ..
Occupation: ..
Designation: ..
Age: 15-20yrs

21-30yrs

31-40yrs

41-50yrs

51yrs and above

1. Rate your opinion on the importance of each of the factors in a product

line extension
Very High

High

Moderate

Low

Very Low

a) Pack Size

b) Pack Type

c) Packaging

d) Flavor

e) Design

2. Given below are some statements related to Impact of Product Line Extension
on the Sales Image of a Firm. For each statement, kindly specify your level of
agreement or disagreement by putting a tick mark in the appropriate boxes.

Strongly Agree
5

Agree

Undecided

Disagree

Strongly Disagree

Statement
New packaging of a product influences buying choice for a
product
The consumer is more influenced to purchase products that are
available in various pack sizes
The consumer is induced to try out a new pack size of a product
than the one he usually buys

1
1

Impact Of Product Line Extension On The Sales Image of a Firm 33

The consumer is more influence to purchase products that are
available in various pack types
The consumer is induced to switch to a new pack type of a
product than the one he usually buys
The consumer tends to purchase products that have creative and
colorful packaging
The consumer tends to try out products when they renew their
packaging
The consumer tends to purchase products that offer ingredients/
calorie count/how-to-use instructions on its packaging
The consumer tends to purchase products that have weight
efficient pack types and sizes
The consumer tends to purchase products that have easy- tohandle pack types and sizes
The consumer tends to purchase products that offer eco-friendly
packaging
The consumer tend to purchase products that are available in
various designs
The consumer is induced to try out products when they renew
their designs
The consumer tends to purchase products that are attractive and
innovative in design
The consumer tends to purchase products that are available in
various flavors
The consumer tends to experiment with new flavors of a product
than the ones he frequently buys
Attractive design packaging of the product has a positive impact
on the brand image
Appetizing flavors of a product have a positive impact on the
brand image
Various product attributes play an important role in attracting
consumers
A product with appealing attributes automatically influences the
consumer to purchase it

Impact Of Product Line Extension On The Sales Image of a Firm 34

3. Rate your opinion about the importance of each product attribute in a product
line extension

Very High

High

Moderate

Low

Very Low

a)Appearance

b) Shape

c) Color

d) Style

e) Smell

f) Function

g) Feel

h) Ease of Use

Impact Of Product Line Extension On The Sales Image of a Firm 35

Impact Of Product Line Extension On The Sales Image of a Firm 36

Impact Of Product Line Extension On The Sales Image of a Firm 37

Impact Of Product Line Extension On The Sales Image of a Firm 38