Abstract
Brand extension is a marketing strategy to apply the previously established brand name into new goods or service. A number of studies have reported the characteristics of human event-related potentials (ERPs) in response to the evaluation of goods-to-goods brand extension. In contrast, human brain responses to the evaluation of service extension are relatively unexplored. The aim of this study was investigating cognitive processes underlying the evaluation of service-to-service brand extension with electroencephalography (EEG). A total of 56 text stimuli composed of service brand name (S1) followed by extended service name (S2) were presented to participants. The EEG of participants was recorded while participants were asked to evaluate whether a given brand extension was acceptable or not. The behavioral results revealed that participants could evaluate brand extension though they had little knowledge about the extended services, indicating the role of brand in the evaluation of the services. Additionally, we developed a method of grouping brand extension stimuli according to the fit levels obtained from behavioral responses, instead of grouping of stimuli a priori. The ERP analysis identified three components during the evaluation of brand extension: N2, P300, and N400. No difference in the N2 amplitude was found among the different levels of a fit between S1 and S2. The P300 amplitude for the low level of fit was greater than those for higher levels (p < 0.05). The N400 amplitude was more negative for the mid- and high-level fits than the low level. The ERP results of P300 and N400 indicate that the early stage of brain extension evaluation might first detect low-fit brand extension as an improbable target followed by the late stage of the integration of S2 into S1. Along with previous findings, our results demonstrate different cognitive evaluation of service-to-service brand extension from goods-to-goods.
Highlights
Brand extension refers to a marketing strategy where a well-established brand extends its name to new goods or services (Loken and John, 1993)
Note that there was no significant difference within the Q7-related z-values (p > 0.05), indicating that Q7 was not correlated with any other behavioral responses
We further investigated the spatial patterns of these event-related potentials (ERPs) components by constructing topographies of the ERP amplitudes for three different fit groups at 200, 300, and 400 ms after stimulus onset
Summary
Brand extension refers to a marketing strategy where a well-established brand extends its name to new goods or services (Loken and John, 1993). Goods and service are considered as both sides of an important continuum of “offering,” being distinguished from each other by the characteristics such as inseparability, heterogeneity, intangibility, perishability, and a lack of ownership (Zeithaml et al, 1985; Iacobucci, 1998; Lovelock and Gummesson, 2004). Based on this offering level, brand extension can be separated into four types: goods-to-goods, goods-to-service, service-to-service, and service-to-goods (Ramanathan, 2013)
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