Service Delivery and Branding Management in Digital Platforms: Innovation through Brand Extension

Abstract

Purpose. Resources and experiences may give platform owners an advantage to expand their business to new areas of possible growth. However, can the winner take it all? Or is the spandex rule—“just because you can, does not mean you should”—valid for platforms, as well? The present study is aimed at narrowing this research gap by focusing on the innovation through brand extension impact on customer satisfaction and brand loyalty in an ever-greater area of the service sector. Design/Methodology/Approach. The partial least-squares structural equation modelling (PLS-SEM) is applied to analyse the questionnaires and explore the relationships between the proposed research model’s constructs. Findings. The results reveal that service innovation through brand extension impacts customer satisfaction and loyalty favourably. Customer satisfaction mediates the relation between innovation through brand extension and brand loyalty. Parent brand reputation intensifies service innovation through the impact of brand extension on customer satisfaction and loyalty, while perceived risk deters its effects. Customer innovativeness enhances customer satisfaction. Finally, perceived category similarity (fit) augments customer satisfaction while impacting loyalty negatively. Practical Implications. The findings provide a deeper understanding of innovation and brand management in digital platforms and forge a promising path forward for marketing researchers investigating the platform economy. Originality/Value. Little remains acknowledged regarding the theoretical interface of innovation through brand extension in the digital platform sphere and its consequences on customer behaviour. Building on this lacuna, the authors adopt an underexplored object that focuses on digital platform innovation through brand extension, customer satisfaction, and brand loyalty.