Brand extension strategies and customer loyalty: Empirical evidence from fast-moving consumer goods companies

Abstract

The expansion of brands through new product lines in the fiercely competitive fast-moving consumer goods (FMCG) industry is aimed at bolstering companies’ brands and market share while catering to customer preferences. In creating FMCG value chains and fostering company sustainability, companies need to have a strong grasp of the interplay between the company’s brand strategies and customer loyalty. This study investigated how brand trust mediates the effect of brand extension strategies on customer loyalty among people in Lagos State metropolis, Nigeria, who buy a variety of FMCG. Data were collected from 293 respondents via an online survey and analyzed using partial least squares structural equation modeling. The analysis revealed that brand familiarity (β = 0.376; p < 0.05), similarity (β = 0.397; p < 0.05), and reputation (β = 0.392; p < 0.05) are the strategies adopted in brand extension. It was found that brand extension strategy positively influences brand trust (β = 0.659; p < 0.05), while customer loyalty is positively impacted by brand trust (β = 0.585; p < 0.05). Besides, the results showed that brand trust mediates the relationship between brand extension strategies and сustomer loyalty (β = 0.385; p < 0.05). These results suggest that satisfaction with and trust in a specific product brand can significantly enhance the likelihood of repeat purchases by customers.