Brand extension is a form of new product introduction in which the name of an established brand is attached to a new product introduced in a separate category, facilitating acceptance because consumers transfer the affect and meanings they associate with the parent brand to the extension. A factorial investigation varies three factors, attitude toward the parent brand, brand specific associations formed in the extension category, and similarity of fit between parent and extension categories. Results of a convenience sample of 360 consumers surveyed in India indicates that attitude toward the parent brand is the strongest factor influencing extension evaluation, substantiating the efficacy of extension. Brand specific associations in the extension category may enhance the transfer process, though consumers seem not to engage in similarity matching of parent and extension categories in making this transfer. Transfer is dampened if the parent brand is prototypical of its category. Managerial implications are discussed.
Though there have been many successful launches of new products as brand extensions in the last 30 years, there have also been many failures (Reddy, Holak and Bhat 1994; Taylor 2004; Trout and Ries 1981), a record that should call into question the efficacy of brand extension far more than it has. Likely contributing to a popular belief in the efficacy of brand extension is its compelling conceptual basis. Built on the notion that established brands hold equity as intangible assets of a firm (Rao, Agarwal, and Dahlhoff 2004), it follows that there would be leverage in the transfer of established brand names as a means of reducing risk of introduction and accelerating comprehension and trial (Aaker and Keller 1 990). Accordingly, brand extension efficacy may appear self-evident, and its wide acceptance could thus be due to mere bandwagon effect.
Two relatively recent studies do offer empirical support for the efficacy of brand extension. Yeung and Wyer (2005) suggest that parent brand affect positively influences extension brand affect. Reddy, Holak and Bhat (1994) demonstrate that parent brand strength and symbolic value contribute positively to line extension brand market share. However, neither study tests brand extension in the context of alternative factors that others have proposed could explain extension success, those being similarity of fit (Aaker and Keller 1990), parent brand prototypicality (Farquar and Herr 1992) and the relevance of brand specific associations in the extension category (Broniarczyk and Alba 1994). Also included in our model is a factor hypothesized to mediate the effect of parent brand attitude, that being parent brand prototypicality.
We test a model of extension efficacy whose scope, design, method, and means of analysis take it past the limitations of prior studies. Specifically, we: (1) review the literature on brand extension; (2) present a theoretical framework which identifies the main factors that determine attitude toward a brand extension, including those factors that represent alternative explanations for brand extension, and limiting factors to brand extension; (3) provide a methodology that allows the researcher to decompose and estimate the relative effects of each of these factors within and across brands, as well as the special case of distant extensions; (4) provide an empirical test of the framework's predictions; (5) extend these findings to India; and, (6) discuss managerial implications.
Parent brand attitude and brand specific associations relevant to the extension category
Alternative explanations for brand extension success have been put forward. Van Osselaer and Alba (2003) argue that parent brand attribute beliefs (ie., brand meaning) are not transferable and stay with the parent brand, while Broniarczyk and Alba (1994) argue that brand-specific associations relevant to the extension category have a direct effect on new product entry, independently of any transfer process. …