Consumer evaluation of brand extensions: the process, and moderating role of involvement

Abstract

Brand extension is the strategy of using a well-established brand name to enter a different product category. Consumers1 evaluation of a brand extension is primarily suggested to be a function of brand affect (attitude towards the parent brand) and similarity between parent and extension categories (similarity domains: physical features / usage situations / complements / substitutes). Subsequent research has stressed on the importance of brand-specific associations, brand portfolio characteristics and typicality of the parent brand in the evaluation of an extension by consumers. This study develops a general model for consumer model for consumer evaluation of brand extensions incorporating all the above variables. Secondly, it examines whether the process of evaluation of brand extensions differs across situations of high and low consumer involvement in the extension category. Finally, the study is conducted in two different cultural contexts, India and France, in order to check whether cultural differences account for differences in the process of evaluation of extensions. Objectives 1) To understand the process by which consumers evaluate brand extensions. 2) To investigate whether the process of evaluation is different for high and low involved consumers in the extension category. For the Indian study, we specifically hypothesize that brand specific associations are likely moderate the influence of brand affect and similarity between parent and extension categories the evaluation of extensions by consumers. This moderating influence is expected to be perceived for high involved consumers compared to the low involved ones Methodology Real, non-prestige, mono brands {brands which have not been extended hitherto) in four fast moving consumer goods categories were identified through five pretests conducted on a sample of 564 consumers. From a comprehensive list of 74 product categories and 518 corresponding brands obtained from the retail audit conducted by ORG-MARG, the first two pretests used a free association task to generate con sumer's associations to these brands and product categories. Pretest 3 was used to arrive at two non-prestige brands in each product category such that they differed significantly in terms of brand affect. Extensions to these brands were generated in pretest 4. Extensions were chosen to satisfy similarity and relevance manipulations in pretest 5. The final studies were designed after the pretests were administered to 360 consumers in the form of structured questionnaires that balanced the different design factors. In France, we chose brands that conformed to the same criteria as used in India, the only difference being that the brands chosen had already been extended in the market. Multiplicative and linear regression models were estimated and the design was analyzed as a nested anova to test the specific hypothesis in the Indian context. Results Brand affect is found to be the most dominant variable underlying the evaluation of extensions in both India and France. The variables of relevance of brand- specific association and similarity between parent and extension categories are found to be the next important variables explaining attitude in the Indian context. These variables are also important in the French context. Thus, no single process is dominant in the evaluation of extensions in both contexts. We find that brand specific associations moderate the effect of brand affect in the evaluation of the extensions, thus confirming our hypothesis, but they are not able to provide enough leverage to extend the brand to dissimilar categories. Brand affect is also moderated by the variables of similarity between parent and extension categories and typicality of the parent brand. However, the main effects of these independent variables are more important in explaining an individual's attitude towards the extension than the interaction / moderating effects. The interaction effects provide pointers on how to manage the dynamics between these variables for a successful brand extension strategy. We find that consumers' involvement in the extension category affects an individual's attitude towards the extension in both India and France. However, contrary to our hypothesis, brand specific associations moderate the effect of brand affect for low involved consumers than for high involved consumers instead base their evaluation of the extension on the main effects of the variables of brand affect and relevance of brand-specific association. Regression analyses also show that all the variables that are significant in explaining attitude towards the extension for high involved consumers are significant in explaining attitude towards the extension for low involved consumers as well. Both these results suggest that low involved consumers may not use an overly simplistic theme to evaluate an extension. They consider all variables to make the evaluation; however, their method of processing the information may be different and less intensive as compared to high involved consumers. The study has implications for marketers pursuing the brand extension strategy in firms. It stresses on the importance of building a brand's equity in terms of strong affect and associations, so as to further its long-term growth prospects outside its original category. Insights from the French study suggest that, as the brand extends into different categories, quality variance among these categories is an important concern for consumers in their evaluation of extension. The differences in the evaluation process for high involved and low involved consumers in the extension category suggests how marketers should design strategies targeted at both these kinds of consumers in mature markets.