How does the congruity of brand names affect evaluations of brand name extensions?

Abstract

In 2 studies, the authors examined whether or not G. Handler's (1982) schema congruity theory would explain students' evaluations of new products purportedly introduced by companies with established brand names that were congruent, moderately incongruent, or extremely incongruent in relationship to the product. Consistent with this theory, results showed that products associated with moderately incongruent brand names were preferred over ones that were associated with either congruent or extremely incongruent brand names. Results suggest that this finding may be mediated by students' greater elaboration of the incongruent brand name and related information and by the process of resolving incongruity. Brand names that have been trademarked and successfully developed over the years are among the most valuable assets that firms possess. With new-brand introduction costs averaging between $50 million and $100 million (Brown, 1985), any attempt to duplicate the recognition, goodwill, and positive associations tied to such established brand names is likely to be prohibitively expensive. For this reason, an increasing number of firms have turned to leveraging their existing brand names by introducing new products under these established names—a practice called brand name extension. Along these lines, products ranging from soft drinks to vitamins have been introduced under the Sunkist name, and Kodak has attached its brand name to such varied products as videocassette s, copiers, and batteries. Indeed, estimates suggest that 81 % of consumer products introduced in 1990 were brand extensions (Stern, 1992). Furthermore, in 1986 alone, products using licenses or trademarked brand names accounted for over $ 15 billion in retail sales and over 34% of apparel and accessory sales (Kesler, 1987). The success achieved by such brand name extensions has been rather mixed. For example, Levi Strauss, a company whose name is almost synonymous with blue jeans, successfully added both footwear and men's casual pants to the line of products bearing the Levi's name; yet, the introduction of men's three-piece suits under the Levi's name proved to be a very expensive and embarrassing failure (Learning Corporation of America, 1981). Such observations raise the question of when brand name extensions are most likely to be successful. The degree to which the brand name and the new product are congruent or linked