The Impact of Brand Extensions on Brand Image Dilution Related to Nichemanship : An Example of Porsche in Bulgaria

The purpose of this paper is to explore the effect of brand extensions as a forerunner to brand image dilution. This determinant is discussed in the context of the sports car manufacturer Porsche in Bulgaria. Porsche has witnessed profound transformation as it has evolved from a single-product company to a broad, market oriented sports car manufacturer which targets a larger customer base. This is an attention-grabbing business transition as Porsche is undergoing many changes in core company values that have made it successful in the past (a strong focus on performance sports cars and sole control over its operations). From a managerial perspective, this paper supports the concept that traditional niche marketers such as Porsche should capitalise on consolidating their competencies and enhancing their sales proposition rather than seek a broader market outreach. From an academic viewpoint the article develops the concept that downward brand extension may have a positive financial effect, but it can also put the brand image into risk from dilution and repositioning into untypical categories