Background study regarding brand extension
This chapter reflects the researcher’s attempt to make a critical review of theoretical background in the context of Brand Extension, as also the previously conducted studies associated with brand extension that have a significant impact over the perception of the parent brand. In the course of this chapter, the objective of identification of current knowledge as also the literature gap that existing in the context of this subject of the strategy of brand extension have been fulfilled. Besides, the researcher have also attempted to establish a logical link with chapter three where the conceptual framework have been provided. Moreover, previously conducted studies regarding brand extension frames one holistic background, on the basis of which the researcher have attempted to justify the hypothesis in this study, and this would be achieved by the demonstration of the relationship within the key variables in the framework of this study for identification of new dimensions regarding brand extension and the associated concepts that requires further in depth study. Here the dependent variable have been recognised in the form of brand extension and the parental bran d’s image have been the dependent variable. The conceptions of previous researches have been utilised to decide the dependent and the independent variables.
The following section provides an insight based on the use of theoretical framework. The essential frameworks used here are: Associate Network Model, Processing fluency model, Theory of Aaker and Keller and lastly categorisation theory.
Brand Extension Theory of Aaker and Keller
This theory by Keller and Aaker proposes that there are four attributes, based on which positive attitude regarding brand extension are being influenced. These are namely complementarity (of extension context of original product brand), sustainability (in the process employed for brand extension), transferability (compatibility of the resources as well as capabilities of the original brand to transit to the extended version) and lastly, difficulty (concerned with making of the extension). This theory propagates that quality as well as congruence of the actual brand or the fit in quality of the original brand and conception of this extension, thereby contributing to the evaluation of the brand extension.
Theory of Categorisation
Researchers regarding brand extension have confirmed that consumers are likely to favour the extension of that brand if only it bears similarity with the original parent brand (Aaker and Keller 1990). According to the proposition of this theory, individuals use the assistance of schemas in the accumulation of data regarding the embodiments (Sujan and Bettman 1989). In psychological terms, schema represents the cognitive structures which represents knowledge regarding conception about an object or entity (Boush and Loken 1991). Researchers in many empirical findings have pertained to the usage of the theory of categorisation for investigating the procedure that the customers use in order to evaluate the brand extensions (Broniarczyk and Alba 1994). An example can be provided. Boush and Loken (1991), provides that customers evaluate the extension of any brand relying on the existing perception about the existing brand and favours the extension if the characteristics after the extension in brand are consistent to the brand schema. According to the suggestions of the categorisation theory, it can be opined that the positive equity of the original brand and the consumer perception regarding the original brand are actually transported to the customer’s estimation of the company’s extension on condition of the vertical brand extension being offered in one justified domain in resemblance with price range as well as class level (Bless and Greifeneder 2009). In fact Bhat and Reddy (2001), also associated the conception of brand trust of the consumer in lieu of the theory of categorisation. Empirical findings strongly support the fact that higher level of “fit” linking real brand with brand extension actually entails richer belief regarding the particular brand and the same belief being transferred over the new brand product (Aaker and Keller 1990). In analogy, Boush and Loken, (1991), have informed that the more is the analogy between a parent brand extensions, it is more likely that the customers would infer and identify the features of the parent brand upon the new product extension. According to the opinion of Bottomley and Holden, (2001), the extent of the perceived fit resembling the extension category with parent brand, determines the transfer of the perception of customers regarding parent brand to the extension. Although, in contrast, other empirical findings have confirmed that parity between brand schema of real brand and the extension product decides the proportion of the association of consumer belief regarding the parent brand with belief of the new product’s extension by the brands Boush and Loken, (1991), also showing agreement to the fact that categorisation theory justifies the same in high parity with the outcomes of the vertical extension of the original brand. The associations with parent can be transported to an extension since the customers possess the perception that after extension of the brand also offers the same favours and benefits as offered by the brand in original (Keller 2007). In fact when the customers’ attitude regarding the authentic brand is highly favourable, it is easier for the researchers to evaluate the brand extension phenomenon. Hence, it can be finally opined that theory of categorisation holds that the customer beliefs regarding the parent brand is supposed to have less significant influence.
Brand Extension Theory of Aaker and Keller
Associative Network
The theory of associative network memory have a deep delved significance towards the understanding of the estimation of the new extension as well as the feedback of the evaluation. The customer’s memory perceives the knowledge regarding any brand in the form of network of nodes sharing brand information and this is known as schema (Keller 2003). In case if the consumers are having a positive relation with the real brand, generally after launch of the brand, the perception is evoked. The interlinking of the memory nodes works in case of the brand’s extension and positive attitudes and belief of customers in communion with the previous brand perception that is encouraged by the original brand. In case if the customers are feeling satisfied/dissatisfied with any particular brand extension, in turn a positive/negative association with the brand is formed and that in reverse impacts the brand scheme of parental brand, thus accomplishing a feedback impact. However Balachander and Ghose (2003), states that it is obvious that the brands that enjoy high level of customer favour, have a certain level of advantage in the context of being accepted by the customers as a newly emerged popular brand.
This theory of memory helps in the understanding of the feedback effects of brand’s extension (Chen and Liu 2004). The mental perception of a parental brand is stored in the nodes of memory of an individual customer and the general tendency of the customers is exactly reflected on the new product/service launched as an outcome of product extension. In case when the brad extension gathers favourable evaluation, then ultimately it leads to strengthening of the image as well as quality of real brand (Alter and Oppenheimer 2009). The corroboration of this mechanism have taken place in a setting outside the lab and Bhat and Reddy (2001), have went on to observe that customers generally alter their perception about the parent brand relying on the experienced as well as the familiarity with the brand extensions.
The Model of Processing fluency
Keller (1993), having developed the fluency theory divides it in two significant parts, namely perceptual fluency and the conceptual fluency. Perceptual fluency is related to the enhancement of physical processing and on the contrary, conceptual fluency is associated with processing of the meanings. The brand during the extension phase provides continuously, perceptual as well as conceptual stimuli and this entices the consumers to be attracted to the new product and shift the perception that he/she had regarding the authentic brand over the process of the extension with launch of an absolutely new product. At time when the same design as that of original brand is used in the extension of the new category of product of the same brand, perpetual fluency of customer’s is boosted and this results in development of positive attitude of the potential customer towards the extended product. Favoured brands have the potential to gain more positive customer feed and that actually helps in the acceptance of product to be launched, that is bearing the name of the parent brand (Martinez, Polo and de Chernatony 2008). The accumulated data from the various empirical sources confirm the high influence of the evaluations of the original parental brand over the evaluation of the extended products of the particular brand.
Theory of Categorisation
Strategies of Extension
In the domain of the manufacturing industry, the conception of brand extension is of utmost importance for marketing of the same products. As opined by Liu, Ng and Lim (2015), by means of brand extension, the business firms make use of the brand name or logo and thereby use the brand equity of the same brand to endorse a different set of products. This new phenomenon of product launch is also referred by spin off. This strategy helps the potential brands not only to enhance their brand awareness, but also increase their profitability from production of multiple genre of products.
As per the findings of Buil, Chematony, Hem (2008), the strategies of brand extension have a major role to play for organisations whenever new products were being launch by them from the same brand. Companies have shown the trend of extracting the maximum profitability from the usage of their brand name as well as brand equity.
Among others, the most enticing positive effect of brand extension like that identified by Aaker and Keller (1990), has been increased efficiency in saving cost as well as financial resources. As an outcome, in most instances the companies are able to recover the costs incurred by launching of the product. According to Aaker and Keller (1990), the strategy to keep the parent brand intact in the market and parallely introduce a latst product bearing the tag of same brand is actually a poignant sales strategy that helps in increasing the brand loyalty of the customers. The advertisement’s impact on sales is shared by both products under the same brand name and hence this strategy brings in cost effectiveness for the company by saving advertising costs. This is actually an enigmatic business plan to gain high level of success in business endeavours when the organisation is not in the place to invest the same capital behind endorsement of the new brand as done at the occasion of launching of the core brand. This strategy of brand extension have heavy positive impact on sales. However, this strategy incurs potential risks also. Even nowadays the reputed organisations make use of this strategy to enhance brand equity. In fact, Chung and Kim (2014), states that the rate of success of brand extension is actually highly linked with the customer’s engagement with the same brand.
In the views of Dall’Olmo Riley, Hand and Guido (2014), brand extension can actually enhance the brand equity of the organisation as a whole or dilute the core brand fame. Hence the consequences of brand extension is not always favourable. At time when the same brand is utilised for the purpose of widening the range of similar products, then it is termed horizontal extension. However, when new product with different price range is launched under same brand name, the extension is called vertical extension (Sheinin 1998). In fact, Sheinin (1998), also opines that brand extension actually invites a subtle level of risk as all brands do not have the convenience to handle the strategies to extract benefits out of brand extension.
Associative Network
Perceived “fit” of the brand
Perceived fit is the most pertinent parameter which the potential to impact the consequences of brand extension in general. In case if the perceived fit is higher, it implies that there is great deal of market investigation behind the successfully high ratings of perceived fit. The fit is actually the nearness of the brand with the consumer expectations. According to the views of Czellar (2003), the primary drivers of perceived fit are perceived quality which needs to be kept in same state when at lets the class of the goods are nearly stable. A poor fit actually weakens the positive relationship between the brand and the customers. In fact a weak fit also motivate undesired judgements as well as associations. Most of the times, the customers raise queries regarding product quality if the perceived fit is low and hence a negative impression regarding the brand extension is framed. The prior extension work suggest that better the rate of analogy among parent product as well as extended new market product, further is the influence on extended brands (Czellar 2003). The reason is that if there is favourable association between the extended product as well as the real brand, the customers actually frame a more favourable attitude the brand in general. The fit is therefore the basic equation identifying how well the newly extended product/service fits in the domain of the existing image of the brand. The customers readily accept the extended products if they observe a good ratio of perceived fit and this implies that the parent brand is going to enjoy a high level of profitability. In fact, Martinez and Chernatony (2004), professes that the fit is much dependent on the adaptability of transfer of current skill sets and/or assets in the manufacture of new product. This fit actually have a straightforward influence over the customer point of view regarding the new extension and determines the future success of the product in the future. The conceptual framework includes this as Hypothesis 1. While conducting analysis of the process of extension of a brand, the similarity between the nature of the parent brand and the high level of perceived fit actually harms the image of the organisation. Amidst the direct point lying between perceived and similarity, there are two crucial points that are given great importance by the clients. These are resemblance in connecting the customers with the newly launched product as well as already present product in the market. The other point is affectivity in concern to the new launched products as well as the product belonging to the parent product brand.
In the views of Serrao, Botelho (2007), a strong brand fit have the potential to measure the belief of the customers and which in turn have a high rate of influence on the market position of the already existing brand. At this stage the potential customers access information of both the existing products as well as the latest products of that company in market and seek if there exist any perceived fir among them (Chen and Liu 2004).
The Model of Processing fluency
Perceived level of Brand Quality
Researches regarding the brands have confirmed that customers have largely viewed the quality of the brands. The assumption regarding extension is that the opinions and the customers’ attributes would be generally shifted to the extension and the greatness of the existing brand will positively impact the customer’s perception regarding the extended product. As opined by Milewicz et al (1994), there is an acute congruency of brand quality and the successful launch of the extended product of the brand. In the views of Zeithaml (1988, p. 3), where the perceived fit have been recorded low, the reports have suggested a low level of acceptance of the extended products of the company without relevance to the acceptance showed towards the actual brand and original products. According to the data provided by the empirical findings, in an attempt to replicate the impact of extension of a brand, it have been observed that brand quality as well as brand fit are compiled entities. Zeithaml (1988), had opined that brand quality impacts the purchasing decisions, particularly when the specific shows high level of interest and high level of motivation performing a comprehensive analysis of the purchased product. This can remain as effective price as well, thus helping in the enhancement of the real company’s profits and the level of equity. Keeping empirical views in mind it can be stated that if a mother brand sustains the brand quality through extension of the respective brands, the higher is the level of extension, higher is the brand evaluation required.
The brand quality sustained by the parent brand is another determining factor that decides the outcome of the brand extension of any designated organisation. The original brand quality gives an organisation the confidence to consider extension of the brand. As stated by Kevin Lane, Margaret and Campbell, (2003), when an organisation develops prolific brand image for the sound quality of the products, the company can easily afford to launch the brand under the same brand image, as evident in the business case concerning Unilever. People are generally aware of the standard of the product quality of the brand and this what gives them the confidence to extend their brand profusely in a horizontal as well as vertical way. Naturally if the product quality of a brand is average or poor, the brand fame does not allow the organisation to extend the brand. This evidently shows that the quality of the products is of utmost importance for the customers as well as the purchasers when any brand considers the extension. According to the views put forward by Kevin Lane and Margaret C. Campbell, (2003), managers of a particular brand while undergoing extension generally presumes the customer’s attributes towards the parent brand would be perfectly reflected towards the acceptance showed by them towards the extended products’ range. This gives birth to the conception of perceived quality which is actually a perception in the perception of the customer regarding the level of superiority or the excellence of the product (Tsai et al. 2014). This factor enables the customer the chance to decide and perform strict comparison concerning the parameters like products, image of brand, services and as such the level of competition that it puts up with the other major brands present in the market. The cornerstone regarding any potential brand is the yardstick of perceived quality since this is the major parameter for larger sales as well as increased level of trust (Liu 2001). One significant part of perceived product’s quality is acceptability of the product brand as also the product. This strictly implies that product quality should not alter with time and the same standard of quality is to be maintained throughout the product line (Serrao, Botelho 2007).
According to the explanations provided by Boush et al., (1987), the list of extrinsic cues have relation with the product, however are strictly not component of the product itself, physically. An example can be cited. The cues against price differences, difference in brand names, advertisement levels, are not particular to any respective market and hence these parameters can be easily used for the purpose of description of the quality of many multiple products (Keller and Campbell 2008). In contrast, the intrinsic cues are concerned with the product’s internal physical composition, for instance flavour, texture, colour and so on. It have been evident from the market surveys that the customers preferably tend to rely on the intrinsic factors more than the external factors when it comes to determination of quality from the end of the customers.
Brand Familiarity
According to the ideas of Aaker (2004), attitude is the overall parameter for the brand evaluation of any customer. This is actually the attitude that the customers preserve about te products which determines they would be loyal to the brand or would probably buy or become regular customers of the product. The major threat in this context is that if the potential customer develops a negative perception regarding any product, the perception becomes almost unchangeable and this in fact leads to the lack of knack to buy the product in the future also. In fact, Bristol (1996), professes that knowledge in the mind of the customer regarding the brand, determines the extent of familiarity of the customer with the identity of product of the brand. Brand familiarity is an essential factor which influences the attitude of customers regarding products of a certain brand. In the short term period advertisement is used for the conveyance of brand information and in the long term plan, the parameter of the product quality is the only option (Martinez and Chernatony 2004). Any new extension of a particular brand should be communicated in detail to the customers through the means of print as well as digital media and making the product available on the shelves of maximum number of stores. This at once helps in the extension of the brand alongside ensuring the high level of brand fit. The 2nd Hypothesis speaks of this relationship within the scope of the conceptual framework. The customisation of the term parent brand is actually a dependent concept. The level of customer satisfaction achieved by any brand or product determines the level of popularity and acceptance and as such the particular brand achieves the standard of being a parent brand. Czellar (2003), have opined that the identification of the conception about the brand among the customers varies counting on the knowledge that the buyers have regarding the brand and the use of the various products of the same brand. The brands have the permeability to overview the degree of customers’ trust over the personality traits of a particular brand and hence the authors have opined that this brand familiarity can be used as a variable for control in the course of this study. As per, Martinez and Chernatony (2004), brand familiarity depends on the creation of a clear brand image and the ways in which the customers can have detailed perception of the brand and thus develop brand familiarity is yet ambiguous. Naturally, when less amount of brand information reaches the customers, they attempt to develop brand familiarity based on the quality of the product.
Customer’s attitude towards extension of brands
Many researchers who have contributed towards assessing the trends of buyer’s estimation of the company’s extension, have studied the various attitude of the consumers towards analysing brand extension. Familiarity is actually how the customers finds it suitable to assess the product (Rangaswamy et al. 1993). The customers achieve this, by means of gathering suggestions from friend and/or family who have used a specified product, from the advertisements, and other miscellaneous sources. Familiarity is again instrumental in determining the purchase trends of low involvement products. In turn the degree of knowledge of that brand with the buyers determine the degree of brand familiarity achieved by the brand (Rangaswamy et al. 1993). Familiarity is mainly enhanced by customers’ activities that enhance attachment of the customers with the products of the particular brand. Research shows that customer have shown a deliberate trend of purchasing the products of those brands that are most familiar with them. Nevertheless, at first if they are fed with nonsensical words and later motivated, they tend to choose the nonsensical names only (Bhat et al. 2001). The association with parent brand actually defines the attitude of the customer towards the extension of the brand. As identified by Keller and Aaker (1992), the attitude of the customers towards the brand might be a direct outcome of the impression of brand image and the indirect impact on equity. However, as per the words of Martinez and Pina (2003), the brand extension of the high end brands is an effective component of promotion actually.
Bristol (1996), opines that customers, nowadays are framing conception of brand extension based on the characteristics of extension that the parent brands are focusing up on. About 10% customers prioritise brand extension based on the category of the product (Bristol 1996).
Brand image of parent brands
Aaker (1994) explains that the high rate of customer association actually impact the brand extension in a positive or a negative manner. However, Aaker and Keller (1992) have opined that if the companies have developed subtle brand image and have achieved high market position, they brand extension is supposed to be successful in 85% of the instances. Parent’s brand image is a highly determining as well as determined factor. Initial brand perception have a significant role in development of the perceived fit for familiarity with new and existing customers. This actually paves the way for brand extension and leads the organisation towards the future growth. Kind of perceptions regarding the extension fit and concerned evaluations of the extensions might depend on the prospects of original brand which goes in the extension of new market product. The advantage of extending one strong brand is that while brand extension it can be diversified in two to three sector without potential risks of loss (Rangaswamy et al. 1993). Quality and powerful brands are aware of the avenues they are selecting for the brand extension. As an outcome, even if the customers suppose that the extension have a distant relation with the brand, they would be willing to purchase the product of a famous brand as an outcome of benefit of doubt.
On the contrary, if any average brand makes one product extension as also have a high stand of perceived fit, majority of customers in most cases are likely to question the motives behind the extension of the brand. However, many researchers have also observed that when the portfolio of the extended product does not match the standard of real brand, dilution of previous identity of company might take place. Here in spite of brand familiarity, the brand linkage is missing (Martinez and Pina 2003).
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