Factors Influencing Brand Extension Success

Published Date: 02 Nov 2017

Brands enable consumers to efficiently encode their functional and emotional values in their minds ( Franzen and Bouwman , 2001 ). Some studies have focused on the role of the parent brand in brand extensions (Apostolopoulou, 2002; Bath, 1997; Bhat and Reddy, 2001; Yeung and WyerJr, 2005).The resulting images of the parent brand mainly enable consumers to recognize the points of difference between competing brands. Like other abstract concepts, such as brand value brand image can have multiple meanings and interpretations according to the various points of view linked to business studies. Ninety five percent of offerings in the market are some form of Extension (Lye et al., 2001). Therefore, this is obvious that extension always leaves more or less impression on parent brand. Therefore, we can define this impression as the image, brand leaves in consumers mind. Brand image is defined by Keller (1993, p. 3) as the perceptions about a brand as reflected by the brand associations held in consumer memory. Although brand extension is important in practice, but it is, also important to consider the extendibility of that brand and how extension strategy could be implemented so that it does not affect negatively the most sensitive side of an established brand – its image. Brand image, one of the major components of brand equity. Brand equity can be defined as the net worth and long term sustainability just from the renowned name. High brand equity achieved through high perceptions of the brand by the customers, that increases brand’s market share that in turn encourages more extensions. To maintain and to retain this cycle, the manufacturer need to know whether the new product, launched as a scope of brand extension is diluting the brand image or not. The study also concerned whether the extension with a high fit (more specifically brand image fit / category fit) will have a lower dilution effect on the brand image. It is typically believed that , the similarity or fit ensures consumers to be able to transfer the positive affect created by parent brand to extensions (Aaker and Keller , 1990 ; Bottomley and Holden , 2001 ; Broniarczyk and Alba , 1993; Keller and Lehmann , 2006 ; Klink and Smith ,2001 ; Volckner and Sattler , 2006 , 2007 ) and vice-versa.

So, it can be said that brand image is the impression a brand leaves in consumers mind because mostly the brands are differentiated in consumers mind. If the brand image is strong enough and extensions are meaningful then the target customer will definitely perceive significant value from the brand extensions (Cegarra& Merunka,1993; Speed 1998;Turpin,2005).So consumer attitude towards extension may be positive or negative because it’s a common strategy now a days and no more seems surprising. But it’s not necessary that they feel the extension is logical in their own way .So either successful or unsuccessful extension may lead to dilution of the equity built up by the brand. There is always an uncertainty the new extension may create negative impression in consumers mind and may weak the core values of the brand (Tauber,1981,1988;Roedder John et al., 1998). It is really an alarming one because the company, market share, consumer loyalty is standing on the base of the brand only, that’s why in recent time the researchers are much more concerned about this fact (Keller, 2003; Morrin, 1999), that is dilution of brand extension. As this strategy is not risk free, it could result in dilution of the appeal of the brand and in other case brand enhancement. Martinez and de Chernatony (2003); F. Mu¨ge Arslan and Oylum Korkut Altuna (2010) found Image dilution occurs in spite of high degree of similarity .The study mainly considers two type of situation of misfit where dilution may happen: The consumers may not be able to associate the brand with the new extension, due to lack of clarity about how the brand really aims to project itself through its extension. In other case when the new product is physically not similar to the other products of the brand or consumers fail to find any resembles in terms of category fit.

In responding to the main research question of whether there is brand image enhancement or dilution in presence of high degree of perceived fit because of feedback effect and to know the limits that the evaluation of new products imposes on the brand extension strategy ,this chapter proposes several hypotheses.

H1: Any type of brand extension (image fit or category fit) will have a dilution effect on the product brand image of the parent brand.

H2: The more positive the initial brand image, the more favorable the attitude to the extension.

H3: The more positive the initial brand image, the more favorable the feedback effect.

3.9.2. Consumer knowledge

The importance of Consumer knowledge – defined as the amount of experience with particular products or product categories (Bettman / park 1980 , p. 233; Sujan 1985 , p. 32) – is discussed broadly in the literature (Alba / Hutchinson 1987; Hoyer 1983, p. 828; Jacoby / Troutman/ Kuss/ Mazursky 1986, pp. 370; Olson 1980,p. 157) . Prior knowledge is the information stored within memory. This variable is considered an important variable influencing consumer behavior.Mostly Consumer knowledge has been treated as one single variable in previous research.The affective component refers to the feelings associated with a brand name or a product category (Boush&Loken, 1991; Loken& John, 1993). When the new extension is launched, consumers evaluate it based on their attitude towards the parent brand and the extension category. If a consumer does not know the parent brand and its products at all, h/she will evaluate the new extension solely based on her experience with the extension category (Sheinin, 1998). Conversely, if the extension product category is new to her, an attitude towards the extension will be formed only based onhis/her attitude toward the parent brand.

Conceptualization of different consumer knowledge

Consumer knowledge is multidimensional.Category knowledge and brand knowledge - these two types of consumer knowledge were found to have different effects on information search behavior and brand evaluations (Brucks1986 ;Bei and Heslin 1997; Fiske et al.1993; Yun Ma , 2005).

It was found in previous researches two different elements of consumer knowledge; product knowledge and brand knowledge have different effects on information search behavior and brand evaluations (Bei and Heslin 1997; Fiske et al.1993).They found that these two constructs affectknowledge access very differently. Thus, in this study, product knowledge and brand knowledge are also considered as two separate variables in order to investigate their roles in brand extension evaluations separately. In (Bei and Heslin’s, 1997; Ma, 2005) research, they found that consumers who choose brands that give more value for the price are knowledgeable about the product category. The term of ‘more value’ in their study means the best balance between theproduct quality and price. This tends to be the functional aspects of the product.Those consumers who choose famous and more expensive brands consider theconsistency between the brand images and their personalities, egos, or interestsmore than the functional aspects of products.By the moving time axis, a brand should always on top of consumers mind. Consumers now want to hold efficient knowledge while making purchase decisions. Previously Broniarczyk and Alba (1993); Roux and Boush (1996) examined the influence of consumer brand knowledge on brand extensions. Past research shows mixed results for the effects of consumer knowledge on extension evaluations (e.g. Dawar 1996; Herr et al. 1996). Marketers must understand that consumers’ knowledge about the original brand lies beneath the brand’s core equity. Any modifications in this core equity resulting from the introduction of an extension can thus affect the brand’s competitive position in the marketplace (Sheinin, 2000).

These findings indicate that consumer product knowledge and brand knowledge play different roles in brand evaluations. Product knowledge can help consumers to evaluate brands from a product-related aspect, while brand knowledge helps consumers to evaluate brands from a non-product-related facet. So ‘Product knowledge’ refers to information about product categories, either the most general category, or subcategories stored in a consumer’s memory, where as ‘brand knowledge’ refers to consumer knowledge about a brand, including brand name, attributes, benefits, concepts, images, and everything that is associated with the brand (Peter and Olson 2005). Muthukrishnan and Weitz (1991) examine the influence of product knowledge, whereas Broniarczyk and Alba (1993) research the impact of brand knowledge. There has been calls for more studies of consumer knowledge effects in brand extension evaluations (Czellar , 2003;Grime , Diamantopoulos , & Smith , 2002).Thus the purpose of this study is to further examine the roll of two types consumer knowledge in brand extension evaluations.

Brand Knowledge determines whether there is a true understanding of what a brand stands for. The individual’s knowledge of the brand (Klink and Smith, 2001) can affect reaction towards extensions. The level of brand knowledge is a signal of the company‘s past performance as well as a foundation for its further development. Positive and accurate understanding of the brand amongst target consumers results in brand loyalty. Keller (2003) defined consumer brand knowledge as all descriptive and evaluative brand-related information, which was individualistic inference about a brand stored in consumer memory.Some researchers have suggested that high and low knowledge consumers may react differently when evaluating a brand extension (Broniarczyk& Alba, 1993).Again, reaction towards extensions can be affected by the individual’s knowledge of the brand (Klink and Smith, 2001). More consumer knowledge about the brand leads to more favorable attitude towards extension. Brand extensions allow consumers to draw conclusions and form expectations about the potential performance of a new product (I,e, the brand extension )based on their existing knowledge about the brand (keller, 2003; phang ,2003). Like Nokia through their customer service centre helping their consumers to develop a deep and comprehensive understanding of their company will help Nokia consolidate their customer loyalty and brand equity.

Table 3.1: Literature reviews of two types of consumer knowledge

Consumer knowledge is multidimensional.

These two types of consumer knowledge were found to have different effects on information search behavior and brand evaluations.

Category knowledge and brand knowledge

Brucks1986 ;Bei and Heslin 1997; Fiske et al.

1993; Yun Ma , 2005

H3: The greater the product category knowledge, the more favorable the attitude to the extension.

H5: The greater the brand image knowledge, the more favorable the attitude to the extension.

3.9.3. Fit perception

Aaker and Keller’s theory of brand extension proposes that original brand quality and the congruence, or ‘fit’ between the original brand and the extension concept, influence brand extension evaluation. Perceived fit between the parent brand and the extension is one of the major determinants of brand extension success (Vo¨lckner and Sattler, 2006). Despite the lack of consensus on the definition of this concept (Bridges et al., 2000), A fit can be defined as the label up to what the product is identifiable as an appropriate extension of a parent brand. In the context of brand extensions, similarity fit is to know how far the consumer perceives the extended product category similar to the parent product (Smith and Park, 1992). Perceived fit has a twofold importance: its weight in the evaluation of extensions (Aaker and Keller, 1990; Boush and Loken, 1991; Bottomley and Doyle, 1996; Bottomley and Holden, 2001) and its feedback effect on the parent brand (Smith and Park, 1992; Morrin, 1999).Consumers tend to evaluate extensions more positively when they identify some similarities with the parent brand (Aaker& Keller 1990; Czellar 2003; Hem et al. 2003; Völckner& Sattler 2006). However, there are number of examples for successful brand extensions that lack an overall perceived similarity with the parent brand ( Klink& Smith 2001;Maoz &Tybout 2002). For example, by simply attaching name of virgin the brand has been successfully extended to huge range of products, such as magazines, a music retailing chain, music label, airline company, vodka, wine, cola, financial services, radio stations, Train Company, holidays, personal computers, bridal services, movie theatres, perfume and cellular (Keller 2008). Kumar (2006) found evidence to suggest that a successful extension can indirectly dilute a brand by reducing the perceptual separation between the parent and extension categories. Martinez &Pina (2003) posit that extensions inconsistent with the brand image are likely to create new associations in buyers’ minds or to confuse their current brand feelings and beliefs. For further insights, more specific dimensions of perceived similarity should be considered. The present study extends this research by addressing the most possible ways a consumer bridges a similarity between the parent brand and the extended product. This study proposes to obtain the effect of fit Consumers have to perceive some dimension of similarity between parent brand and the extension (Boushet. Al. 1987; Aaker& Keller 1990; VÖlckner& Sattler 2006; Ahluwalia 2008).If consumers successfully perceive an aspect for similarity bridging in their own way of logic then not only brand extension get success but also the parent brand remain secure from image dilution. Bridges et al.‘s (2000) findings suggested that the connection of any salient and relevant parent brand association (e.g. category ,brand concept ,brand specific associations) to the extensions can be used by consumers in forming the perception of fit. The fit of extension with the core brand category depends on physical features, functions, prestige value, or the skills required manufacturing the product (Aaker and Keller, 1990).Evaluating an extension often involves a transfer process, wherein parent brand associations are transferred to the extension (Nan, 2006).

Conceptualization of different fit perception

Despite the fact that the importance of fit is broadly accepted, there is no consensus reached about the dimensions of fit (Grime, Diamantopoulos and Smith, 2002). Other dimensions mentioned in the literature are similarity, typicality, relatedness and brand concept consistency (Aaker and Keller, 1990; Grime, Diamantopoulos and Smith, 2002).

An occurring problem in discussions about fit are the terms similarity, typicality and relatedness there is not enough differentiation between the terms (Grime, Diamantopoulos and Smith, 2002). The same authors propose that the dimension of fit which is most often referred to is similarity. Aaker and Keller (1990) describe similarity as how similar the current and the new product classes are in terms of features, attributes or benefits. Another point that is suggested by several researchers is that consumers also evaluate fit with concept consistency between the image represented by the brand and the extension (Park, Milberg and Lawson, 1991). The level of consistency between an extension and the brand image is supposed to be just as important as the similarity between the product classes (Park, Milberg and Lawson, 1991). Concept consistency is different from the similarity and relatedness of the product category.

It shows how a brand influences the fit perceptions of consumers. Bhat and Reddy (1997 in Grime, Diamantopoulos and Smith, 2002) propose two dimensions for fit: product category fit; the similarity between the product category of the parent brand and its extension and brand image fit; the similarity between the image of the parent brand and its extension. Park, Milberg and Lawson (1991) argued that there are two important elements when analysing the fit. These two elements are the similarity between the new product and the core products of the company and the consistency between the new product and the parent brand. This paper adopts Park, Milberg and Lawson’s (1991) vision and similarity and consistency are the two major dimensions of fit.

Successful brand extensions are not that easy to make out, develop and position. Just sticking a known name on a new product does not guarantee its success. Categorization theory has explained the transfer of affection between an existing brand and an extension product which results in the positive evaluation by consumers .The brand extension literature along with categorization theory suggested that if the overall similarity between associations (e.g. associations regarding product-features, brand-concepts, or particular brand-unique associations) is high, consumers perceive the knowledge about the parent brand to be of relevance for the extension as well. For an example Nokia makes high-quality electronics but this association is not strongly associated with other mobile brands or with the product class as a whole.An example of category dominance is Hoover / people don’t vacuum they hoover. This property of fitting also known as critical factor. According to (Broniarczyk&Alba ,1993; phang ,2003) brand specific associations allow for brand extensions to unrelated product categories. Variable like brand association has already been considered by many authors as it is a responsible one that determines the degree of acceptance of extended products . The study proposes, to obtain the effect of fit Consumers have to perceive some dimension of similarity between parent brand and the extension (Boushet. Al. 1987; Aaker& Keller 1990; VÖlckner& Sattler 2006; Ahluwalia 2008).Two general dimensions can be indentified underlying the concept of perceived fit: product category fit and brand image fit (Bhat and Reddy, 2001; Grime et al., 2002; Czellar, 2003). Thus, individuals can believe that the new product is physically similar to the other products of the brand (category fit) or coherent with the general brand associations (image fit) (Grime et al., 2002; Czellar, 2003), they are more likely to have a positive attitude towards the extension.

Moreover, Keller (2003) further highlights the importance of consistency between the extended products and the parent brand regarding the consumers’ perception towards the extension. This author argues that strong associations of the parent brand in the consumers’ memory should result in a more noticeable connection between the extension and the parent brand. This concept is defined as the similarities between the parent brand and the extension. Moreover, the perceived fit is further subcategorized into product fit and image fit. The product fit concerns the differences in the product features transferred from the parent brand to the brand extension while the image fit focuses on the transfer of the image (Bhat et al 2001).

Some authors like Milberg et al. (1997) have proved that low-fit extensions generate negative feedback in terms of attributes or image. Similarly, Lee and Ulgado (1993)verified that fit has a positive effect on the image of service firms, whereas Martı´nez and de Chernatony (2003) verified the same for tangible product extensions. Otherworks equally suggest that the impact of brand extensions on the parent brand isdirectly related to similarity (Martı´nez and Pina, 2003) or image fit (Loken and John,1993; John et al., 1998). All in all, we expect a more positive feedback effect provided thebrand stretches coherently with either its image or current products.

Table 3.2: Literature reviews of two types of consumer fit perception

Conceptualization and empirical evidence on the two dimensions of the fit construct

Category fit and Brand fit

Park, Milberg & Lawson, 1991; Park & McCarthy, 1993, Bhat&Reddy ,1997, 2001; Bridges, Keller &Sood, 2000; Swaminathan, Fox & Reddy, 2001 ; Grime et al. , 2002 ; Czellar , 2003; VÖlckner& Sattler 2006; Ahluwalia 2008.

H6: The greater the perceived category fit between the extension and the core brand, the more favorable attitude to the extension.

H7: The greater the perceived image fit between the extension and the core brand, the more favorable attitude to the extension.

H8: The greater the perceived category fit between the extension and the core brand, the more favorable the feedback effect on the extended brand.

H9: The greater the brand fit between the extension and the core brand, the more favorable the feedback effect on the extended brand.

3.9.4. Consumer innovativeness

Brand name encourages with a symbolic meaning to assist consumer recognition and decision-making processes (warnerfefelt, 1988). Likewise, brand extension facilitates consumer decision-making process by the established brand names (Alba and Hurchinson, 1987).For a successful brand extension among various consumers’ characteristics consumer innovativeness plays an important role. Innovativeness influences consumers learning and purchasing process of new products in the market place (Yu Henry xie, 2008).Innovators are more likely to be receptive to the new ideas and experiences and they minimize the chance of new product failure (Im et al, 2003) There is huge importance of consumer innovativeness given in the literature on adoption of innovation. A basic tenet of diffusion theory is that individuals respond differently to new products (Gatignon and Robertson 1985).Rogers (2003) considers these differences to be driven by consumer innovativeness. Consumer Innovativeness defined as "the degree to which an individual is relatively earlier in adopting an innovation than other members of his system"(Rogers and Shoemaker 1971,p.27).The early adopters consider new ideas (Roehrich, 2003) and that minimizes the chance of new product failure (Im et al ,2003). Consumer’s propensity to try, to purchase new products earlier (Roger1983/2003) in the market place nevertheless has certain impacts on consumer’s brand loyalty (Hirschman 1980), which in turn influence the acceptance of brand extension, that is why brand extension have been extensively applied in the launch of new products (Aaker and Keller 1990). Researchers have found that higher consumer innovativeness increases purchase intention of new services (Hem at al., 2003; Siu et al., 2003) as well as tangible products (VÖlckner and sattler 2006).In spite of this importance until date innovativeness concept still lack clarity (Ellonen et al. 2008), and this need to be underpinned by further research .The present research intends to fill this gap also.

Midgley (1977, p. 39) defines innovativeness as being "the degree to which an individual makes innovation decisions independently of the communicated experience of others." Manning, Bearden, and Madden (1995) operational this constructs and shows that it is directly related to new product trial. Customer satisfaction would lead to customer commitment. Since the earlier seventies, several researchers have tried to predict consumers' innovative buying behavior (i.e., the purchase of innovations or new products) using different scales intended to measure innovativeness as a personality trait. Midgley and Dowling (1978), Foxall (1988), and Hirschman (1980) argue that the level of innovativeness influences whether a consumer will adopt a new product or not, as well as influencing the speed of innovation after the product or service is introduced to the market (Goldsmith and Flynn, 1992).

Aaker and Keller first contributed in the systematic research on consumer behavior towards brand extension and has mainly addressed the adoption and diffusion of innovations (Greenhalgh et al., 2003, 2005; Rogers, 1995; Wejnert, 2002).As an important construct, much attention has been paid to the concept of consumer innovativeness (Goldsmith and Hofacker, 1991; Goldsmith et al., 1998; Im et al., 2003, 2007; Midgley and Dowling, 1978; Steenkamp and Gielens, 2003; Steenkamp et al., 1999).

Consumer Innovativeness defined as "the degree to which an individual is relatively earlier in adopting an innovation than other members of his system" (Rogers and Shoemaker 1971, p.27). Consumer innovativeness influences consumers learning and purchasing process of new products in the market place (Yu Henry xie,college of Charleston).Consumer’s propensity to try and purchase new products earlier (Roger1983/2003) in the market place has certain impacts on brand extension .We propose that consumer innovativeness—that is one’s propensity to adopt earlier versus later (Rogers, 2003)—is particularly relevant to investigating the use of extended brand names for new products. The influence exerted by consumer innovativeness on the consumer’s willingness to pay a price premium for the brand, recommend it to others and buy brand extensions (Park and srinivasan , 1993;Cobb-Walgren et. al.,1995;Agarwal and Rao ,1996;Hutton, 1997;Yoo et. al.,2000) . A lack of understanding on the appeal to the innovators while judging their buying intention can increase the probability to failure in spite of well-set branding strategy. The new products acceptance fairly depends on innovators because they minimize the chance of new product failure (Im et al, 2003) largely and brand extension have been extensively applied in the launch of new products (Aaker and Keller 1990).

H10: The greater consumer innovativeness, the more favorable the attitude to the extension.

3.9.5. Consumer attitude towards brand extension

Consumer attitude towards brand extension was initiated by two seminal studies (Boush et al,1987; Aaker and Keller ,1990).Since research on the same has been conducted around the world like in the US, the UK, france, NewZeaLand to name but a few (Holden & Barwise,1995;Sunde and brodie,1999;Chen & Chen,2000). This statistics itself implies the importance of this research area. Attitude towards the extension is an essential variable in determining whether the extension is accepted by the consumer or not. Many of the findings identified in those studies were reinvestigated or further investigated with new variables. Consumer evaluation are important ,as they are believed to be a key element in indicating extension and core brand success (Aaker and Keller, 1990;boush and Loken 1991) .Therefore, consumers’ attitude towards the extension turned out to be an important factor explaining the reciprocal effects on parent brand attitude.

H11: The better the attitude to the extension, the more favorable the feedback effect on the extended brand.

3.9.6. The effect of the initial brand image before extension on the brand image after extension

Brand image is an essential factor for understanding consumer attitude toward brand extensions, since the credibility of the new product increases when brand perceptions become more favorable (de Ruyter and Wetzels, 2000). If the brand image consists of associations such as a high-perceived quality, the extension attitude will be better (van Riel et al., 2001; Vo¨lckner and Sattler, 2006). In the same vein, the extension attitude is positively related to the perceptions of reputation (Hem et al., 2003), prestige (Park et al., 1991) and the consumers’ affection for the brand (Sheinin and Schmitt, 1993). In the case of corporate and service brands, a positive image also clearly generates favorable perceptions of the new products (Brown and Dacin, 1997; de Ruyter and Wetzels, 2000). Given that the extension leverages the current brand associations, the better the initial brand image the more positive will be the consumers’ response.

In agreement with the associative network theory (Morrin, 1999 in Pina et all, 2006), what is described as image association’s result from a system of hierarchical networks in consumers’ minds. If consumers become aware of the extensions’ brand name, they support the brand memory structures and ease the retrieval processes (Morrin, 1999 in Pina et all, 2006). Pina, Martinez, de Chernatony and Drury (2006) propose that from the associative theory the image after an extension is forecasted by the original image. In the same article it becomes clear that prior expectations have effect on the brand interpretations from consumers to such a extend that the effectiveness of company actions on brand equity are moderated by earlier beliefs. The same authors propose that companies that have a positive image are better able to have success with a brand extension strategy then companies that start with a poor image. Based on this literature there is evidence that brand image before extension will influence the brand image after extension.

3.10. Brand extension research in consumer durable industry

In today's highly competitive environment, organizations are convinced that a company's success can increase with frequent launch of new products to satisfy the constantly changing customer preferences. Launching new products can be an attractive growth strategy; however, this can be risky too.The ever-changing marketplace dynamics and increased competition of the global economy has expanded the role of brands to an unmatched level. Marketing of brand constantly seek innovative ways to achieve high growth, stay ahead in the competition and bring in more profits for its stakeholders.

Table 3.3: Literature table for brand extension research in consumer durable industry

Study

Purpose

Stimuli

Design

Subjects

Findings

Boush, et al.

(1987)

The importance

of similarity and

brand reputation

Durable goods:

Fictitious calculator

brand (Tarco)

Lab exp.

103 students

Similarity: +

Reputation: +

Park, Milberg,

and Lawson

(1991)

Similarity and

brand concepts

Durable goods:

Wristwatches

Lab exp.

195 students

Similarity: +

Extend concept

consistent: +

Boush and

Loken (1991)

How important

is similarity

(typicality)?

Durable goods:

Fictitious grocery and

electronic brands (B/G)

Lab exp.

133 students

Similarity

(typicality): +

Broniarczyk

and Alba (1993)

Explore the

importance of

brand-specific

associations

FMCG: Toothpaste,

Cereal, Soap, Beer

Durable goods:

Computers

Lab exp.

76, 159 and 35

students

Brand-specific associations

moderate

similarity and brand

reputation

Dacin and

Smith (1993)

The effect of

brand portfolio

on extension

evaluation

Durable goods:

Fictitious portfolio

brand (Jasil)

Lab exp.

+

Survey

180, 80 and 98

students

Number of products

affiliated with a

brand: +

No support in the

Survey

Gürhan-Canli

and

Maheswaran

(1998)

The effects of

extensions on

brand name

dilution

Durable goods:

Sony and Sanyo

Lab exp.

337 students

Motivation and

similarity influence

the brand name

dilution

Jun, et al.

(1999)

Effects of

technological

hierarchy on

brand extension

evaluations

Durable goods :

TV, HDTV, Word processor,

and

Mainframes

Lab exp.

239 students

High technology of

original brand: +

Similarity: +

The technology

level is important: +

Barone, et al.

(2000)

The influence of

positive mood on

brand extension

evaluation

Durable goods:

Fictitious electronic

brand (A)

Lab exp.

67 and 71

students

Positive mood

enhances

evaluations of

moderate similar

extensions

Ahluwalia and

Gürhan-Canli

(2000)

The effects of

extensions on the

original brand

Durable goods:

Fictitious athletic shoes

and electronic products

Lab exp.

68 and 113

students

Negative info about

a similar extension

led to dilution

Zimmer (2003)

The reciprocal effects of extension quality and fit on parent brand attitude

Durable goods:

Bic , Sony

Survey

157 university staff employees

Dilution found when an extension was introduced

Extension quality +

Fit +

3.10.1. The study intends to fill the gaps below

Brand extension , related studies (Park, Milberg & Lawson, 1991; Brozniarczyk& Alba, 1993; Roux, 1995) incorporated additional concepts into brand extension research, but have failed to identify the real strengths to consumer attitude formation towards an extension acceptance.

Mixed support for the existence of either positive or negative feedback effects influencing parent brand equity (Swaminathan et al. 2001). Practitioners are concerned about the latter, that is, the dilution of parent brand equity (Keller, 2003; Morrin, 1999).

This is an area to be approached more and more to explore whether there is any dilution on the core brand in presence of high fit extension and, if yes, how it can be controlled or normalized so that extension strategy will become less exposed to risk.

Most previous research on brand extensions focusing on a reduced number of variables (e.g. Loken and John, 1993; John et al., 1998; Alexander and Colgate, 2005). The present study considers and analyzed eight major variables simultaneously.

Muthukrishnan and Weitz’s (1991) research measured consumer knowledge about product category, and did not take the knowledge about particular brands into consideration. Roux and Boush (1996) measured the consumer knowledge about the brand specifically, and did not take category knowledge. The study also examines the essentially neglected impact of consumer knowledge on the brand extension evaluation process and investigates both type of consumer knowledge.

Lane and Jacobson (1997) blame the insufficient statistical power of former studies failed to prove reciprocal effects. Some authors have tested models through structural equation modeling (e.g. Bhat and Reddy, 2001; Vo¨lckner and Sattler, 2006) although they concentrate on consumer attitude toward brand extensions and not on reciprocal spillover effects. So it will be beneficial to test the proposed model using structural equation modeling.

Thus this study investigates is there any dimensional significance of fit which effects brand enhancement or brand dilution

Table 3 .3 : Overview of the Hypotheses with their link to the literature

Hypothesis Development

Link to the literature

H2: The greater the product category knowledge, the more favorable the attitude to the extension.

Muthukrishnan and Weitz’s(1991); Bei and Heslin, 1997; Peter and Olson (2005).

H3: The greater the brand image knowledge, the more favorable the attitude to the extension.

Alba and Hutchinson , 1987; Roux and Boush

(1996) ;Ahluwalia&Gürhan-Canli, 2000; Peter and Olson (2005).

H3: The more positive the initial brand image, the more favorable the attitude to the extension.

Cegarra&Merunka , 1993; Speed, 1998 ; Turpin , 2005;Isabel Buli, Laslie de Chernatony ,Leif E. Hem, (2009).

H5: The greater the perceived category fit between the extension and the core brand, the more favorable attitude to the extension.

Aaker& Keller, 1990; Boush&Loken, 1991; Keller &Aaker, 1992; Bottomley& Doyle, 1996; Flaherty & Pappas, 2000; Bottomley& Holden, 2001; Bhat& Reddy, 1997, 2001; Klink & Smith, 2001, Eva Martínez, José M. Pina, (2010)

H6: The greater the perceived image fit between the extension and the core brand, the more favorable attitude to the extension.

Smith and Park , 1992 ; Morrin , 1999; Ian Grime, Adamantios Diamantopoulos, Gareth Smith, (2002) ;Martínez, José M. Pina, (2010).

H7: The greater consumer innovativeness, the more favorable the attitude to the extension.

Klink & Smith, 2001; Roehrich , 2003 ; Xieyu Henry (2008).

H8: The greater the perceived category fit between the extension and the core brand, the more favorable the feedback effect on the extended brand.

Sunde&Brodie, 1993; Broniarczyk& Alba, 1993; Ian Grime, Adamantios Diamantopoulos, Gareth Smith, (2002) ;Martínez, José M. Pina, (2010)

H9: The greater the brand fit between the extension and the core brand, the more favorable the feedback effect on the extended brand.

Smith and Park , 1992 ; Morrin , 1999; Ian Grime, Adamantios Diamantopoulos, Gareth Smith, (2002) ;Martínez, José M. Pina, (2010).

H10: The better the attitude to the extension, the more favorable the feedback effect on the extended brand.

Aaker& Keller (1990 ) ; boush and Loken , (1991 );Gürhan-Canli&Maheswaran, 1998; Ahluwalia&Gürhan-Canli, 2000; Chen & Chen, 2000 ,Klink and Smith , 2001; Mao et al (2006)

H11: The more positive the initial brand image, the more favorable the feedback effect.

Lee and Ulgado , 1993 ;Lane and Jacobson , 1997; Martinez and Pina , 2003 ; Martinez and de Chernatony ; 2003;

3.11. Proposed model

The basic model depicted in Figure 3.1 focalizes on the process of extension attitude formation and its effects from the perspective of an individual consumer.

Figure 3.1 proposed study model