The Impact of Vertical Service Line Extensions and Brand Salience on Reciprocal Transfer of Image and Performance Associations

Abstract

Research has addressed the extent to which an extension, horizontal or vertical, reciprocally affects a parent brand negatively through dilution or positively through enhancement, without explaining the process underlying brand associations' reciprocal transfer by type. This article addresses the dynamics behind reciprocal transfer of image and performance associations triggered by a vertical service line extension and prior contextual salience of the brand. The results suggest that reciprocal transfer of unique image and performance brand associations is direct and modifies the parent brand associations' structure leading to dilution in one case and enhancement in the other. However, with prior contextual presence of the parent brand, reciprocal transfer is positively mediated through initial ratings of image associations with the extension. In contrast, direct reciprocal effects of both vertical direction and prior parent brand salience occur only through the mediating effect of the extension’s unique performance associations, which confirms this study’s assumptions. This study should help managers carefully choose the timing of launch of a new vertical service line extension, better understand how the type of associations can affect the parent brand, and measure their strategies against corporate objectives.