Are there generalizable patterns in line extension performance?
Journal of Product & Brand Management
ISSN: 1061-0421
Article publication date: 16 July 2024
Issue publication date: 9 August 2024
Abstract
Purpose
New product introductions, particularly line extensions (LEs), are common in consumer goods categories. Despite their commonality, the success of LEs are not guaranteed. The purpose of this study is to provide brands that introduce LEs a benchmark about what success to expect.
Design/methodology/approach
This study investigates the success of 36,994 LEs in each quarter for the first three years after introduction. Four indicators are calculated using consumer panel data to benchmark how long LEs survive (failure rate), how competitive they are in the category (market share) and how they are adopted by category buyers (penetration and repeat buyer rate).
Findings
Most LEs survive after the first year, but many cease to exist or perform well in the long term. Around 50% of LEs fail a year after launch, but this failure rate halves once seasonal LEs are removed. Failure rates start to approach 80% after three years. Most LEs do not perform better than existing products. Around three in four LEs have a market share or penetration near or below the category norm. Although this percentage decreases the longer after launch, most LEs are still below the category norm.
Practical implications
These new product success benchmarks provide guidelines to practitioners about what success the “typical” LE will achieve. This research can help guide new product investment decisions because it provides context on what is feasible to achieve.
Originality/value
Four market success measures are used, a departure from past benchmarking research which uses practitioner evaluation on metrics seldom used in practice. The authors provide guidelines about when and how to measure LE and new product success more broadly.
Keywords
Acknowledgements
Researcher(s) own analyses calculated (or derived) based in part on data from Nielsen Consumer LLC and marketing databases provided through the NielsenIQ Data sets at the Kilts Center for Marketing Data Center at The University of Chicago Booth School of Business. The conclusions drawn from the NielsenIQ data are those of the researcher(s) and do not reflect the views of NielsenIQ. NielsenIQ is not responsible for, had no role in, and was not involved in analyzing and preparing the results reported herein.
Citation
Victory, K., Tanusondjaja, A., Dawes, J., Nenycz-Thiel, M. and Romaniuk, J. (2024), "Are there generalizable patterns in line extension performance?", Journal of Product & Brand Management, Vol. 33 No. 6, pp. 733-744. https://doi.org/10.1108/JPBM-08-2023-4678
Publisher
:Emerald Publishing Limited
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