How Consumers Evaluate Brand and Its Extension

8/12/2019 How Consumers Evaluate Brand and Its Extension

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HOW CONSUMERS EVALUATE BRAND AND ITS EXTENSION?

Pinaki Mandal

ABSTRACT

In todays intense competitive environment, companies launch new products to satisfyconstantly changing consumers preferences. The new products are prone to failures due

to many factors. Companies take efforts to reduce new product failure rates to maximie

their returns for their stakeholders. !rand extensions, leveraging existing "rand names to

new product categories is one such strategy to reduce the risk of new product failures.#espite two decades of research in "randing, many vagaries are yet to "e explored and

understood. This study primarily focuses on how consumers evaluate "rand extensions

for $MC% &$ast Moving Consumer %oods' and service product categories in Indian

market conditions. It explores how exactly the consumers evaluate different productcategories "ased on factors like, similarity fit, perceived (uality, "rand reputation and

perceived risk. It "rings out the impact of "rand reputation of the core "rand andperceived service (uality on the "rand extensions evaluations. It highlights the role of

perceived risk involved in the extended product category in "rand extensions evaluations.

Most importantly, this study esta"lishes the relationships among similarity fit, "rand

reputation, perceived service (uality and perceived risk in extended product categoriesthrough appropriate multivariate analysis.

Key words: brand extensions, similarity fit, perceived risk, brand reputation and

perceived service quality.

1. INTRODUCTION

The ever-changing market characteristics have huge impact on the corporate decisions.

The lobal environment also poses several complexities to the marketer in understanding

the market. The companies constantly innovate newer marketing strategies to stay ahead

in the market and reap more benefits for its stakeholders. !ore number of companies isrelying on launching new products in the market to meet the changing consumer needs

and preferences. This strategy is proven but not without risk. "ome authors estimate that

#$-#% & of all new products fail '!ontoyo ( )eissand *alatone + /oo0, 1llen,2amilton +345. 6thers estimate more negatively in that only two out of ten products

launched are successful in the market. 1dding to the difficulty in accurately predicting

the market dynamics, the promotion cost and shelf space cost to face the competitionmakes the company7s new product launches even more difficult and invariably lead to

loosing the market '1aker +85.

+


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*ompanies are taking hard steps to reduce these failure rates. 6ne way of dealing with

the rate of failures of new products is using a firm7s competence. !any business

organi0ations are leveraging their brand names to reduce the risk of failure of newproducts. 1 brand extension is the use of well-known brand names for new-product

introductions '1aker +$ Keller 4$$# Klink and "mith 4$$+5. 9or 9!* '9ast

!oving *onsumer oods5 as well as services more than 3$& of the new productsintroduced are brand extensions 'angaswamy, /urke and 6liva +# ;rnestielsen +5. /rand extensions strategies are beneficial because it reduces new

product introduction costs, reduces perceived risk in new product and increases chance ofsuccess '1aker +$ Keller +35. These benefits are largely due to the transfer of parent

brand7s awareness and associations to the new product 'Keller +35. ?ike any other

strategy it has both positive side and negative side to it. /rand extension strategy needs a

careful analysis of the market before adopting it. @f it turns out well in the new productcategory it will enhance the brand name on the other hand it will dilute the core brand

value. This is the reason why many researchers are keen on continuously exploring the

different dimensions of brand extensions.

!anagers assume they can exploit the equity of a well-known brand when entering new

markets, capitali0ing on recognition, goodwill, and any positive associations. *asestudies abound of successful brand extensions. 9or example, Aettol, with its antiseptic

liquid origin, successfully extended into shaving creams, toilet soaps and floor cleaner.

Tata successfully extended into telecom and insurance sectors. 2owever, caution needs tobe exercised. 9or example once Bonds extended into toothpaste and was unsuccessful as

it moved too far from its core values. iven the importance of brand extensions, a better

understanding of this topic is needed. esearchers have predominantly investigated brand

extensions among tangible goods. /y contrast few have investigated the service sectors'uyter and )et0els 4$$$ van iel, ?emmink, and 6uwersloot 4$$$5. >otable brand

extension activity has taken place in services. 9or example, @*@*@ entered into banking

and insurance, Cirgin moved into radio stations, airline, financial services, and bridalservices. ?ikewise the Aisney company, which in the +%$s signified world-class

animation, has extended into services such as television, publishing, software, @nternet

portals, theme parks, hotels and cruises.

2. CONCEPTUAL BACKGROUND

/rand extension strategies are used largely by companies because they believed that thebrand extension strengthens the brand positioning improves the brand awareness and

enhances the quality associations and increases the trial rate by reducing the perceived

risk involved in the new product. @n @ndia it is reported that more than 3$& of newproducts additions are using brand extensions strategies. 1 brand extension into same

product and new product category enhances and improves their market share and brand

equity in the long run '?ane Dacobson +%5. >ew products are getting relatively easyacceptance among the target audience. 1 good brand association reduces the chances of

failure of new product launch.

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Though, brand extension strategies tasted success in the past, still brand extension

success is uncertain. 1ccording to a research carried out by ;rnestielsen

'+5 in the field of 9!* brand extensions in ;uropean countries, reveal that there is afailure rate of around 3$&. !oreover, unsuccessful brand extensions can harm the parent

brand, which can result in substantial, loses of brand equity 'urhan-*anli and

!aheswaran +3 "waminathan, 9ox and eddy 4$$+5.

The success or failure of brand extensions is vastly dependent on how the customers

evaluate the brand extensions 'Klink and "mith 4$$+5. *ompanies are taking hard stepsto improve the success rate of brand extensions. Theoretical and managerial

understanding of how a consumer evaluates the brand extensions is given substantial

importance. @n order to improve the success rate of brand extensions it is imperative tounderstand the parameters or factors affecting the brand extensions evaluations.

!oreover, companies need to understand the significance of these factors and their

relative importance to develop a right brand extensions strategy.

3. REVIEW OF LITERATURE

Two of the seminal studies in '/oush, et al. +3E 1aker and Keller +$5, researchershave investigated several antecedents and consequences. !any studies have taken place

in the research arena and it is growing larger - to understand the different vagaries of

brand extensions. The broad areas on brand extensions research on product marketcharacteristics conducive for brand extensions are how the consumers evaluate the brand

extensions, and impact of brand extensions on the parent brand. "ince the two seminal

studies on brand extensions '/oush, et al.+3E 1aker < Keller +$5, many studies havebeen undertaken to study the different dimensions of brand extensions. !ore than %$

research studies since +3E have empirically analy0ed and tested the impact of certain

success factors on the overall evaluation of brand extensions. !ostly, this consumerevaluation of brand extension studies focused on parent brand quality and similarity fit interms of usage, image and features of the original brand product category to extended

product category and difficulty of extending the product category by the parent company.

These researches throw some excellent insights on the different factors affectingconsumer evaluations of brand extensions.

@f the company launches a high-quality product by exploiting existing weak brand, thebrand equity of existing weak brand increases due the positive evaluation of the high

quality extended product category 'Dun, !a0umdar, and aF + Keller and 1aker

+45. /rand equity built in a certain product catgory can also be exploited by licensing

the well-known brand name to third parties for use in a related class. The strategy is usedto challenge maFor players in an industry '/ranson +35. The chances are high for

companies to exploit its high prestige brands to stretch to more remote product categories

than brands with inferior reputations 'Bark, !ilberg, and ?awson ++5. *ompany canalso exploit and overstretch its top quality brands. *annibali0ation, a decrease in sales in

the original category, can result from competition from the extensions'/uday ++

eddy, 2olak, and /hat + "ullivan +$5. 9ailure of brand extensions may weakenbrand equity, or positively associate with the original brand '/oush and ?oken ++

#


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urhan-*anli and !aheswaran +3 Dohn, ?oken, and Doiner +35. "ometimes the

unsuccessful brand extensions create undesirable associations, which put the company at

a serious risk '1aker +$: ?ane and Dacobson +%5. The more products a companymarkets under one umbrella brand, the higher the risk that if a disaster occurs to one of

them, the effect will spill over to the rest '"ullivan +$5. 6pportunities to create a new

brand are also foregone '1aker +$5.

The following strong research insights can be observed from the brand extensions

literature. !ost number of brand extensions research involved with fast movingconsumer goods and durable goods except on one study '1aker and Keller +$5

included !cAonald7s as a service brand but they did not make any analytical distinctions

between 9!* and services. 6nly one study addressed the importance of brand

extensions in the services sector 'uyter and )et0els 4$$$5. 6nly one study comparedbrand extension Fudgements between 9!* and durable goods '/roniarc0yk and 1lba

+5. The maFority of the previous studies basically used consumer surveys to

investigate consumer evaluations of hypothetical brand extensions 'i.e., extension not

introduced in the market5. espondents in prior surveys rated the independent 'successfactors5 and dependent variable 'success of the extensions5 on simple rating scales '1aker

and Keller +$ /arone, !iniard, and ome 4$$$ /ottomley and Aoyle +8/ottomley and 2olden 4$$+ /oush and ?oken ++ /roniarc0yk and 1lba + Aacin

"mith + Keller and 1aker +4 Klink and "mith 4$$+ lane 4$$$ !ilberg, and

?awson ++5. !ost previous research used students as subFects '1aker and Keller +$/arone, !iniard, and ome 4$$$ /ottomley and Aoyle +8 /oush and ?oken ++

/roniarc0yk and 1lba + Aacin and "mith + Klink an d"mith 4$$+ ?ane 4$$$

Bark, !ilberg, and ?awson ++5

Therefore, a research issue that has remained underexposed concerns the extension of

services to unrelated markets by making use of the corporate brand. =et, this type of

service extension is becoming a prevalent phenomenon. 9or instance, deregulationand privati0ation caused many companies 'T1T1, eliance, ?@*, "/@5 to enter into

service markets, such as telecommunications, insurance sectors and transport and

spurred a number of corporate service brand extensions, particularly serviceproviders active in a myriad of other markets. "ervice providers attempt to acquire

customer trust on the basis of solidity of their reputation in the market in which they

have traditionally been active. 1s services consist primarily of intangible properties,

corporate service brands may be used to reduce perceived risk and to influencefrequently unobservable extension evaluation criteria, such as credibility, quality and

eventually customer patronage intentions. This seems particularly important when

services are extended to markets in which the service provider has no provenexpertise. /rands serve as cues for triggering image perceptions based on expressive

values associated with the company name.

4. RESEARCH APPROACH

)ith this background literature, this research paper intends to contribute to better

understanding of how consumer evaluates brand extension in @ndian perspective. 9urther


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we try to find the differences consumer evaluation mechanism in service extensions and

fast moving consumer durable goods brand extensions. This would help to get more

insights on the impact of cultural background on consumer evaluation of brandextensions across different product categories. This research encompasses the most

important factors such as similarity effect, quality of the parent brand and brand

reputation, quite often used in research studies of brand extensions evaluations. )e havealso incorporated an additional factor-perceived risk and its impact on brand extensions

evaluations. This research paper has been organi0ed in the following manner. @t discusses

the hypotheses used in this research, then the research design used for this study, thefindings on the impact of independent variables like, similarity fit, service quality, brand

reputation and perceived risk involved in the extended product category on the overall

brand extensions, conclusions and managerial implications based on the study and finally

the limitations and future directions are given.

This research focuses more on the dominant factors involved in the consumer evaluation

of brand extensions. These factors are identified with the use of the research articles

published in the peer-reviewed Fournals of national and international repute. The Fournalsused for this purpose are @nternational Dournal of !arketing esearch, Dournal of

!arketing esearch, Dournal of consumer research, !anagement science, Dournal of!arketing and !arketing "cience. The perusal of these studies revealed many factors

involved in the success of the brand extensions. 9or this research paper, the authors

strongly felt that it is better to take the most significant factors involved in consumerevaluation of brand extensions. @n order to find these significant factors, the authors made

analysis on the previous brand extensions studies and arrived at three important factors

that are more often used to find out the consumer evaluation of brand extensions. 9rom

the literature review the following stimuli are considered for this study. The factors arequality of the parent brand similarity fit between the core 'parent5 brand with the

extended product category, and reputation of the parent brand. 1part from the above-

mentioned three factors the authors strongly felt that the main purpose of brandextensions is to cope with the risk involved in the purchasing of a product category. .

!oreover the well-known brand acts as a risk reliever and would increase the chance of

product trial 'ao and !anroe +35. "ervices are predominantly posses experience andcredence qualities, the perceived risk is relatively high. This can be reduced with the best

use of brand extensions. "o it is significant to use the perceived risk involved in the

extended product category as another stimuli to find the consumers evaluation of brand

extensions. )e assure that the perceived risk involved in the new product category wouldhave some significant impact on the brand extensions evaluations.

5. RESEARCH HYPOTHESES

. T!" #"$%"&'"( )*+&,- / ,!" #$"0, $0( /rand extensions are affected by the

overall attitude towards the parent brand. The attitudes toward the parent brand are basedon durability, serviceability, incidence of defects, features, performance etc. 2ere the

overall attitudes towards the brand are perceived quality of the parent brand. Geithamal

'4$$#5 concludes after reviewing research articles that the perceived quality is at a higher

level of abstraction than a specific attribute of a product. "ince services are more of

%


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intangible characteristics the SERVUALmodel is used to understand the perceived

quality of the parent brand. Geithaml '4$$#5 considered perceived quality is the

component of customer satisfaction. The perceived quality or otherwise the overallattitude towards the original brand should have a positive impact if the brand has been

extended to the new product category. @f the perceived quality were high then the

extension would get benefited if perceived quality is low then it would harm the brandextensions. 1aker '+$5 in his study used perceived quality with this assumption but the

results do not support his claim. "ubsequent study in the brand extensions evaluation

proved perceived quality as significant factor '1aker and Keller +45. )e would like toknow the impact of perceived quality in the brand extension evaluations in the services

category. Therefore the hypothesis is

H1. I/ ,!" #"$%"&'"( )*+&,- / ,!" #$"0, $0( & !&!6 ,!"0 ,!" ,,&,*(" ,7$(

,!" $0( "8,"0&0 & #&,&'".

. B$0( R"#*,,&0 / ,!" P$"0, B$0( 0( S"$'&%" *+&,-The brand reputation

has been defined in terms of consumer perception of quality associated with the brand'1aker and Keller+$5. This fact has been further strengthened from the study

conducted by /arone et, al.4$$$. )ith this review of literature the author tries to find ifthere is any relationship between the perceived service qualities of the parent brand with

the brand reputation. 2ence the hypothesis is

H2 I/ ,!" )*+&,- / ,!" #$"0, $0( & !&! ,!"0 ,!" $"#*,,&0 / ,!" #$"0,

$0( & + !&!.

%. S&9&+$&,- /&, ",7""0 ,!" #$"0, #$(*%, 0( "8,"0("( #$(*%, %,"$-

"imilarity fit is considered to know how far the customer perceives the extended product

category is similar to the parent product '"mith and Bark +45. 9urther similarity fit may

arise in substitute, complement and transfer dimensions. 9rom the literature review, it isclear that similarity fit is frequently considered for brand extension studies. This

perceptual similarity fit had been considered in several studies and the findings reveal

that the higher the similarity between the parent product and the extended productcategory, the greater is the possibility of success. '/oush, et al. +3E, 1aker and Keller

+$, /oush and ?oken ++, Aacin and "mith +, Keller and "ood 4$$45. This

kindles an interest in the researches7 mind to explore and find the similarity fit effect in

the brand extensions evaluations in services category. Therefore the hypothesis is

H3 I/ ,!" &9&+$&,- /&, ",7""0 ,!" "8,"0("( #$(*%, %,"$&" 7&,! ,!" $&&0+

$0( & !&! ,!"0 ,!"$" & !&! #&&+&,- ,!, ,!" "8,"0&0 "'+*,&0 7&++ "

#&,&'".

(. B$0( R"#*,,&0 / ,!" O$&&0+ #$(*%,6ne of the underlying principles for thebrand extension concept is that stronger brands provide a better opportunity for the

company to utili0e this advantage to enter new product category products. /rand equity is

defined in terms of brand strength articulated implicitly in terms of consumers7

predispositions towards the brand 'Keller +#5. @n brand extension research, brand

8


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equity is predominantly considered as customer based brand equity rather than company

based brand equity. The findings of the previous studies reveal that the greater the brand

reputation the higher is the possibility of favorable brand extensions compared to the lessreputed brands '1aker and Keller+$, Keller and 1aker +4, Aacin and "mith +,

/ottomley and Aoyle +85. )ith this assumption the author has developed a hypothesis

H4 I/ ,!" $0( $"#*,,&0 / ,!" $&&0+ $0( & !&!"$ ,!" $","$ & ,!" %!0%"

/ /'*$+" ,,&,*(" / %*,9"$ ,7$( ,!" "8,"0("( #$(*%,.

". P"$%"&'"( R&: &0'+'"( &0 ,!" "8,"0("( #$(*%, %,"$-/rand extension has

been widely used to reduce the consumers7 perceived risk. The brand extension literature

reveals that the consumers are largely relying on reputation of the brand to cope with the

uncertainly level and risk involved in the products. 1 well-known brand acts as a riskreliever and increases the possibility of purchase trial of the new product. )hen a brand

gets familiar with the customers through repeated exposure, risk perceived by the

customers tends to reduce and a favorable attitude towards the product increase '/aker, et

al. +385. There is a distinction between the risk involved in the product category andproduct. The perceived risk involved in the product category means that the customer

perception of the risk involved in buying an average product in that product class. Theperceived risk in the product however, is about the risk involved in the buying of a

specific product. ;very purchase has some risk. This is also applicable to service

categories. The magnitude of the perceived risk differs from one productHservice categoryto another productHservice category. )ith this underlying assumption the authors have

developed hypothesis.

H5 I/ ,!" #"$%"&'"( $&: &0'+'"( &0 ,!" #$(*%, %,"$- & !&!6 ,!"0 ,!"

"'+*,&0 / $0( "8,"0&0 & #&,&'".

The table 4 would give us a snapshot of hypotheses used for this research study.

T+" 1 H-#,!"" &0 ,!& ,*(-

H-#. F%,$ S*$%"

2+ @f the perceived quality of the parent brand is high, thenthe attitude towards the brand extension is positive.

/oush et al. +3E"mith, Bark +4

"unde, /rodie +#

?ane, Dacobsen+%

24 @f the quality of the parent brand is high, then thereputation of the parent brand is also high Keller, 1aker +4

2# @f the similarity fit between the extended productcategories with the original brand is high then there is a

high possibility that the extension evaluations will be

positive.

1aker, Keller +$/oush, ?oken ++

Bark, !ilberg,

?awson ++

"unde, /rodie +#/ottemley, Aoyle

E


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+8

2 @f the brand reputation of the original brand is higher the

greater the chance of favourable attitude of customers

towards the extended products.

1aker and

Keller+$,

Keller and 1aker+4,

Aacin and "mith+,/ottomley and

Aoyle +8

2% @f the perceived risk involved in the product category is

high, then the evaluation of brand extension is positive.

Aerbaix +3#

/aker, et al. +38

The following figure would give better understanding of the above hypotheses.

F&*$"1. !7&0 ,!" 9("+ / /%,$ //"%,&0 $0( "8,"0&0 "'+*,&0.

24

2 2+

2# 2%

;. RESEARCH DESIGN

To test the above-mentioned hypotheses for this study, six brands are chosen based on thecriteria used in similar kind of study '1aker and Keller +$5. The criteria are 'i5 high

quality, having strong brand image, 'ii5 brand not having been broadly extended

previously 'iii5 ability to elicit relatively specific associations. To identify the brands the

secondary data has been used. These brands are selected based on the survey on the mosttrusted services brands in @ndia published in the business news daily, The )conomic

Times,!rand e(uity column on Aecember +, 4$$. This is the largest of its kind in@ndia, with a sample of over E$$$ distributed across socio-economic class, age, income

and geography. Times @ntelligence roup and 1*->ielson 6-!1 did the survey.

They have been doing this kind of study for the past five years. They have ranked the

most trusted brands based on the brand attributes like: maintains high level of quality,price premium, definitely considered brand for purchase, popular brand for many years,

3

/rand eputation

Berceived isk"imilarity 9it

6verall evaluation of

brand extensions

Berceived quality of

parent brand


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has something that no other brands have, evokes a feeling of confidence and pride among

users and a unique feeling associated with this. Two brands were chosen in the 9!*

category and four brands were chosen in the services category, the reason being thesubstantial literature has been involved with 9!* brands and very little in services

brands. "o, to get a better insight on consumer evaluation of services brands four service

brands were chosen. Two brands from 9!* were colgate 'ranked +5, Aettol 'ranked 5 ,four brand from services ?@*-?ife @nsurance *orporation of @ndia 'ranked +5, /">?-

/harat "anchar >igam ?imited 'ranked #5, "/@- "tate /ank of @ndia 'ranked 45 and

@*@*@- @ndustrial *redit and @nvestment *orporation of @ndia 'ranked 5. The givenrankings were from the above mentioned survey done by 1*->ielson. These brands aptly

fit in @ndian conditions based on the criteria suggested by 1aker and Keller +$.

;ach of the six parent brands was leveraged into # hypothetical extensions, providing atotal of +3 brand extensions 'see table 45. These extensions were developed after

conducting a small survey with the brand management students of >ational @nstitute of

Technology, Tiruchirappalli, @ndia. Aata relating to possible future extensions and their

relatedness to the existing core productHbusiness were collected. These extensions had tobe relevant and logically connected with the parent brand. @n order to test the framed

hypotheses, care had been taken to make sure that the extensions provided sufficientheterogeneity to test the similarity fit and perceived risk dimensions.

1 structured questionnaire was developed to collect data on consumer evaluation of brandextensions in services. "eparate questionnaires for all the 8 brands were developed. The

standardi0ed constructs were used to measure the service quality, brand reputation

similarity fit, perceived risk and overall brand extension are used while developing

questionnaire. Iuestions on the positive attitude, satisfaction on the brand and positiveassociation with the brand were used to find out the brand reputation of the core brand.

Iuestions on overlap between parent product category and extended product category,

competence of the original services and people, facilities 'resources5 and skills were usedto find out the similarity dimension. *are was taken to include possible dimensions

involved in perceived risk.

T+" 2 !7&0 !-#,!",&%+ $0( "8,"0&0

S.

NO$&&0+ B$0(

H-#,!",&%+ B$0( E8,"0&0 &0

,"$9 / $"+,"(0"

+

*olgate

+. !outh )ash '2igh5

4. /reath !int '!edium5#. Aental 9loss '?ow5

4 Aettol +. 1fter "have ?otion '2igh54. 1ntiseptic *ream '!edium5

#. Toilet *leaner '?ow5

#?ife @nsurance *orporation of @ndia

'?@*5

+. /anking '2igh5

4. eal ;states '!edium5

#. 2ospital '?ow5

/harat "anchar >iagm ?imited

'/">?5

+. >etworks '2igh5

4. @T < Technical ;ducation '!edium5


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#. @nsurance '?ow5

%

"tate /ank of @ndia '"/@5

+. 9inancial *onsultancy "ervices '2igh5

4. ;ducational @nstitutions '!edium5

#. 2otels '?ow5

8@ndustrial *redit and @nvestment

*orporations of @ndia '@*@*@5

+. eal ;state '2igh5

4. "atellite *hannels '!edium5#. Theme Barks '?ow5

The subFects were the users of these brands in Tiruchirappalli, Tamil >adu state, @ndia.

The valid samples for different brand users were *olgate +E3 Aettol +E3 ?@* +4

/">? +4% @*@*@ +4+ "/@ ++. The collected data were coded, edited and fed into the

"B"" package for analysis purpose. Bearson *orrelation coefficient and multipleregression methods were used to test the hypotheses made for this study.

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Table provides the snapshots of results of five hypotheses in *olgate and Aettol

hypothetical brand extensions based on the correlation coefficients. )e can infer that

similarity fit is having a strong impact on the brand extensions evaluations. There is a

strong positive relationship exits between perceived quality of the parent brand with itsreputations. Berceived quality and brand reputation of the parent brand were having

partial impact on brand extensions evaluations. Berceived risk in the extended productcategory was considered least important because only in two out of six hypothetical

extensions, perceived risk had an impact.

T+" 4 R"*+, / ,!" !-#,!"" "( 0 %$$"+,&0 %"//&%&"0,

HYPOTHESES HYPOTHETICALBRANDEXTENSIONS

COLGATE DETTOL

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Lve M supports hypothesis, -ve M does not support hypotheses

9rom the table % given below show correlation coefficient tables, we can infer that the

service quality, brand reputation and similarity fit are having positive relationships in all

the hypothetical extended category with the over all evaluation of brand extensions. Thisstrengthens that similarity fit, brand reputation and perceived service quality stronglyassociated with the service brand extensions evaluations. This supports the hypotheses

+,# and . "ervice quality is having a positive relationship with the brand reputation. This

strengthens the assumption that service quality augments the brand reputation of the coreproducts thus supporting the hypotheses 4 of the study. /ut hypothesis %, which aims at

finding the relationship between perceived risk and overall brand extensions slightly

supports the possibility of extending the /">? brand name to @T < *omputer educationbut not on other hypothetical extensions. This is one of the key results that needs to better

understand the evaluation extensions in services. @t shows that perceived risk in the

extended product categories have very less association with service brand extensions

evaluations. This is contrary to the assumption that brand name is risk reliever in servicescategory. Brobably, the customers look more paramount important factors than brand

name to evaluate the service brand extensions positively.

HYPOTHESE

S

HYPOTHETICALBRAND

EXTENSIONSOFLIC

HYPOTHETICALBRANDEXTENSIONS

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The table 8 given below is showing the summary of results for the developed hypotheses.

Berceived service quality shared a strong positive relationship with brand reputation. Thisaugments the theory that strong perceived quality will have high brand reputation.

"imilarity fit, perceived service quality, brand reputation were influencing the positive

brand extensions evaluations. Berceived risk had a lesser impact on the brand extensions

evaluations.

+#


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9rom the table E showing the results of correlations coefficients for "/@ and @*@*@,

similarity fit and brand reputation of the core product had a greater association with brand

extensions evaluations. Berceived service quality and perceived risk involved in theextended categories were less associated with brand extensions evaluations. Berceived

service quality and brand reputation were largely positively associated.

T+" < R"*+, !7&0 ,!" %$$"+,&0 %"//&%&"0,/$ SBI 0( ICICI.

HYPOTHETICALBRAND

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HYPOTHESE

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The table 3 given below is showing the summary of results for the developed hypotheses.

*ontrary to previous service extensions '?@*, /">?5 perceived service quality shared a

less relationship with brand extensions evaluation. This gives a room for doing a furtherresearch and come with a strong support that there is possibility of customers viewing the

evaluating the different types of service categories differently. The impact of similarity fit

over the brand extensions evaluation was strengthened again from "/@ and @*@*@ brand

extensions evaluations. Berceived risk had a lesser impact on the brand extensionsevaluations. /rand reputation had a quite larger impact on service brand extensions

evaluations.

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HYPOTHESES HYPOTHETICALBRANDEXTENSIONS

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The following tables ,+$ < ++ give the information about the regression results of the

hypothetical extensions for *olgate and Aettol, ?@* < /">? and "/@ < @*@*@. These

tables contain the standardi0ed regression coefficients and, in parentheses, thecorresponding t values are given. The adFusted 4 were on comparable and sometimes

high with some of the hypothetical brand extensions. 1 possible explanation could be that

brand extensions have become much more common over the years. "uccessful extensionscould thereby have set or reinforced or reinforced the standards for evaluation in

consumers, at the same time reinforcing the subsequent explanatory power of the used

constructs.

2ypothesis stating the impact of similarity fit over the brand extensions evaluations has

been supported over the years. This is confirmed in this study also. 1lthough in varying

degree it is been confirmed in all hypothetical extensions in this study. ;xcept '1aker

+$5 study all other studies supported the impact of perceived service quality over thebrand extensions evaluations. /ut this study supports the 1aker +$ study in terms not

supporting the hypothesis that it is not affecting the brand extensions evolutions. )hereas service quality is supported only in one hypothetical brand extensions '?@* into

2otels5 among the other hypothetical extensions used in this study. "imilarly brand

reputation had a significant effect only in one case '"/@ into 9inancial consultancyservices5. Berceived isk considerably had a effect on two cases in 9!* category

'colgate into breath mint < Aettol into antiseptic cream5.

+8


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+3


19/24

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. CONCLUSION AND MANAGERIAL IMPLICATIONS

This research paper augments existing literature on consumer evaluation of brand

extension in the services category. This examines the importance of similarity fit, impact

of perceived service quality, significance of high brand reputation, and influence of

perceived risk involved in the 9!* and services. @nterestingly, this study strengthensthe earlier literature in terms of findings in the similarity dimensions. "imilarity between

the core productsHservices and extended productsHservices are considered most importantwhenever the consumer evaluates the brand extensions. This study also supports the

earlier study in terms of the relationship between the perceived service quality and brand

reputation. The brand reputation could be enhanced by way of enriching the quality inproduct or services offered by the company.

+


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1gain, the very purpose of using brand extension in creating familiarity among customers

is fulfilled. These issues are to a large extent supported by brand extensions in the

services category. @f there is a strong brand reputation, then there is every possibility thatthe brand extension is successful in a competitive market. *ontrary to the earlier findings,

when perceived risk is high in the extended product category, then the brand extension

would help us in reducing the perceived risk involved in the purchase ofproductsHservices. /ut this study does not support this assumption. This could be because

of the inherent difficulties involved in perceiving the risk involved in the services. "ince

the services by nature have the credence quality it is very difficult for consumers toperceive the risk involved in the services.

This research paper gives a comprehensive view of how the consumers evaluate the

service brand extensions. That the underlying parameters used in the consumer evaluationfor service brand extensions are similarity fit, service quality and brand reputation are

clearly revealed through the results of this study. !ore over this study strengthens the

assumption that the service quality would enhance the reputation of the brand. The

researchers may look into the features of perceived risk and its impact on the brandextensions evaluations in the future studies. This study also paves the way for researchers

to do a similar kind of brand extensions studies for the different categories of servicesectors.

!anagerial implications could be that the brand extensions strategy may be used mostsuccessfully in cases the similarity between the core product and extended product

category should be there in some way. The fit may be in terms of substitutability,

complimenting the core product, usage relevance, or based on the core facilities used for

developing and delivering the productHservices. )e see significant differences inexplanatory power at the individual brand level. This might be due to the evaluation

based on brand specific factors. 9urther customers do not use the reputation of the

producer as a more important due to service extensions quality than to consumableextensions quality.

>. LIMITATIONS AND SUGGESTIONS FOR FUTURE RESEARCH

"imilarity fit variables were strongly correlated in this study like it did in other similar

studies. This may be because the items developed by 1aker and Keller and used in

similarity fit in other studies have also been followed in this study. There is scope fordeveloping a multi item scale for this purpose. enerali0ability is another problem with

this research. "ince the brand chosen does not represent whole range of productHservice

categories. There is possibility to do this study across all productHservice categories./ottomley and Aoyle '+85 mentioned in their study that brand concept consistency is a

very abstract factor, facilitating acceptance of extensions beyond the limitation of

product-related similarity. 1nother option is to incorporate attributes of services and findthe explanation, which has an effect on attitude towards extensions. Kamakura and

ussel '+#5 suggested that the construct can be decomposed into tangible and

intangible components. "ome of the hypothetical extensions brought no effect of

perceived service quality over the brand extensions attitude. This could have been due to

4$


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price clues used by the customers to assess the service quality. This can be controlled in

future studies.

>eed of the hour especially in services is to bring out the general categori0ation or

classification of services, which would allow a more detailed model taking brand specific

associations into consideration. enerali0ability can be brought by doing a number ofstudies of a similar kind in different servicesHproduct categories.

REFERENCES

1. 1aker, Aavid 1. '+85, N/uilding "trong /randsO, >ew =ork: The 9ree Bress,

#3$ p.

2. 1aker, Aavid 1. and Keller, Kevin ?ane '+$5, N*onsumer ;valuations of /rand

;xtensionsO,*ournal of Marketing, 54, 'Danuary5, pp. 4E-+.

3. /aker, )., 2utchinson, D. )esley, !oore, A. and >edungadi, B. '+385, N/rand

9amilarity and 1dvertising: ;ffects on the ;voked "et and /rand BreferencesO.@n:1dvances in *onsumer esearch, 4E 'Aecember5, pp.#E+-#3+.

4. /arone, !ichael D., !iniard, Baul ). and omeo, Dean /. '4$$$5, NThe @nfluenceof Bositive !ood on /rand ;xtension ;valuationsO, *ournal of Consumer+esearch, 2; '!arch5, pp. #38-$$.

5. /oo0, 1llen, and 2amilton '+345, N>ew Broduct !anagement for the +3$sO.>ew =ork: /oo0, 1llen, and 2amilton.

;. /ottomley, Baul 1. and Aoyle, Dohn . '+85, NThe 9ormation of 1ttitudestowards /rand ;xtensions: Testing and eneralising 1aker and Keller7s !odelO,

International *ournal of +esearch in Marketing, 13, pp. #8%-#EE.

. /ranson, ichard '+35. N Making !rand )xtensions -ork, /ales and

Marketing Management, +%$'++5, 3.

1=. /roniarc0yk, "usan !. and 1lba, Doseph ). '+5, NThe @mportance of the

/rand in /rand ;xtensionO,*ournal of Marketing +esearch, 31 '!ay5, pp. 4+-

443.

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11. /uday, Tom '++5, N*apitali0ing on /rand ;xtensionsO, *ournal 0f Consumer

Marketing, 8'9all5, 4E-#$.

12. Aacin, Beter 1. and "mith, Aaniel *. '+5, NThe ;ffect of /rand Bortfolio

*haracteristics on *onsumer ;valuations of /rand ;xtensionsO, *ournal ofMarketing +esearch, 31 '!ay5, pp. 44-44.

13. Aerbaix, *. '+3#5, NBerceived isk and isk elievers: 1n ;mpirical@nvestigationO, Dournal of ;conomic Bsychology, #,pp.+-#3.

14. ;rnst< =oung and >ielsen '+5: >ew Broduct @ntroduction: "uccessful

@nnovationH 9ailure: 1 9ragile /oundary.

15. Prhan-*anli, Geynep and !aheswaran, AurairaF '+35, NThe ;ffects of

;xtensions on /rand >ame Ailution and ;nhancementO, *ournal of Marketing

+esearch, 35'>ovember5, pp. 8-E#.

1;. Dohn, Aeborah oedder, ?oken, /arbara and Doiner, *hristopher '+35, NThe>egative @mpact of ;xtensions: *an 9lagship Broducts /e AilutedQO *ournal of

Marketing, ;2 'Danuary5, pp. +-#4.

1ew Dersey, Brentice

2all.

2=. Keller, Kevin ?ane '+#5, N*onceptuali0ing, !easuring and !anaging *ustomer

/ased /rand ;quityO, Dournal of !arketing, %E 'Danuary5, pp. +-44.

21. Keller Kevin ?ane and "ood, "anFay '4$$+H45 NThe ;ffects of /randing "trategies

and Broduct ;xperience on /rand ;valuationsO, Dournal of !arketing, 'Danuary5.

22. Keller, Kevin ?. '4$$#5, /trategic !rand Management. !uilding, Measuring, and

Managing, !rand )(uity, Jpper "addle iver: Brentice 2all.

23. Klink, ichard . and "mith, Aaniel *. '4$$+5, NThreats to the ;xternal Calidity

of /rand ;xtension esearchO,*ournal of Marketing +esearch, 3 '1ugust5, pp.

#48-##%.

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3;. Can iel, 1llard *. ., ?emmink, Dos and 6uwersloot, 2ans '4$$$5, N;xtensions

of "ervice/rands: Transfer of *onsumer-/ased /rand ;quityO. @n: @1; aix-en-provence, The ;ric ?angeard @nternational esearch seminar in "ervice

!anagement, !arketing, "trategy, ;conomics, 6perations and 2uman

esources: @nsights on "ervices 1ctivities, Broceedings, pp. %E%-%3#

3

Documents

How Consumers Evaluate Brand and Its Extension