The Attitudinal Response to Alternative Brand Growth Strategies: The Moderating Role of Brand Stretch

Abstract

Brand growth is logically a key goal for most brand managers. Brand extension has evolved as one dominant growth strategy, where the brand capitalizes on the strength in its original category to obtain a foothold in a nearby or distant product or service category (Aaker & Keller, 1990; Volckner & Sattler, 2006). In this strategy, the brand makes its move on its own, solely relying on its own strength to succeed in the new category. This has proven to be a risky endeavor for the brand in the original and the extension category (Loken & John, 1993). An alternative strategic approach to brand growth is to forge some sort of alliance, or join forces with other established brands (James, 2006; Rao & Ruekert, 1994; Simonin & Ruth, 1998). In this strategy, the collaborating brands could potentially hope that “the sum is larger than its parts”, and the likelihood of success for both brands could be potentially higher (than if they should make the move alone). Hence, the purpose of the current study is 1) to experimentally test the attitudinal responses to a brand pursuing either the extension or alliance strategy, and 2) assess the extent to which this effect is moderated by the length of category stretch, from short, via medium, to long stretch. The two preceding growth strategies have not been directly compared in the same experiment previously; hence there is limited empirical knowledge about the relative pros and cons of both when seen in direct comparison. James (2006) findings lend support to the basic fit-assumption, i.e., fit is a significant driver of both extension and alliance acceptance. However, relative impact cannot be derived from his study, as extensions and alliances were treated as separate datasets.