Abstract
Brand extension is a widely adopted strategy for firms to take advantage of an existing brand's equity in a new product category. The main goal of this paper is to test the moderating role consumer-company identification plays in the effect of product fit and information on consumers' evaluations of brand extensions. Study 1 demonstrates the moderator effect of identification on the effect of category fit on consumers' purchase intentions for brand extensions and brand alliances. In Study 2, we proposed that identified consumers are not affected by information about the product, while low identified consumers rely more on that information. However, results show that the presence of information about the brand extension is only significant for identified consumers. For marketing managers, our results will help in decisions regarding extension category selection, segmentation strategy, and identification cuing.
Highlights
Some firms launch new products under the format of brand extensions to take advantage of their brand’s equity in a new category (Grime et al, 2002)
This paper shows that the relationship consumers keep with the company can influence the success of brand extension activities
Previous research focuses on product features, such as category fit, attitudes and information (Simonin and Ruth, 1998) as critical drivers in explaining consumers’ reactions to brand extensions, the focus here is on the significant role played by consumer-company identification
Summary
Some firms launch new products under the format of brand extensions to take advantage of their brand’s equity in a new category (Grime et al, 2002). Brand extension strategy implies the use of established and successful brand names to enter new product categories (Keller and Aaker, 1992). Firms widely employ this strategy because of beliefs that it builds and communicates strong brand positioning, enhances awareness and quality associations, and increases the probability of trials by reducing new product risk for consumers (Taylor and Bearden, 2002). If managers are able to identify a market segment strongly loyal or identified with the company, they can market the brand extensions to that segment and reduce the probability of failure
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