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Brand Extension and its Impact on the Parental Brand

Background of the brand extension strategies

Introducing a new product into the marketplace can be a risky and costly venture for companies. However, brand extension is not without risks. According to DeFanti and Goodman (2005), “there are only certain situations where an extension truly damages the parent” (p. 8).

Further, it has been reported that as many as 90% of new products ultimately fail (Brand Strategy, 2004). Although the potential costs are high, introducing new products is a key strategy for businesses to enter new markets, expand their customer base, and respond to competition.

To mitigate the risk of new product failure (i.e. not succeeding in the marketplace), companies often offer a line or brand extension, capitalizing on the current brand image and stature in the market, as opposed to developing an entirely new product or brand. Aaker and Keller (1990) delineate these two types of extensions as follows: A line extension is when “A current brand name is used to enter a new market segment in its product class (e.g., Diet Coke as a complement to Coke, and Liquid Tide as an extension of Tide)” (p. 27). Line extensions generally have minor differences from the parent brand (e.g., flavor, size, composition, and price). In contrast, a brand extension is defined as “A current brand name used to enter a completely different product class (e.g., Jell-O frozen pudding pops, Clorox laundry detergent, Ivory Shampoo, or NCR photocopiers)” (p. 27).

brand extension

Background of the Problem

Competition in the global market has increased and more stakeholders continue to join the market. With the high level of competition, competitive advantage has been established as a major issue that needs to be accounted for within any organization. In this case there are many ways of winning the competitive advantage, which an organization can apply. These are strategies that will enhance the uniqueness of an organization and win the loyalty of customers. The common market strategies have been challenged because many organizations have capitalized on the including gifts, offers and promotions (Reddy, Holak, & Bhat 1994, pp.276 – 285). Therefore, it has become excessively difficult to change the strategies as well as approaches used in winning the customers’ loyalty. Pina, Martinez, De Chernatony, & Drury (2006, pp. 174-197) were among the scholars who noted that the only strategy that is still working in the modern market to win the competitive advantage of consumers is brand extension. In this case, other strategies as noted earlier have been so common among organizations and their applications are the same. Kwon & Leslie (2010, pp.276 – 285) noted that brand extension is ideal as one of the strategies because of its diverse nature. Brand extension is unique to the product or service, to the market and to the target audience. Therefore, it is the only way to ensure a successful strategy in the modern day as compared to other strategies. However, Pina, Martinez, De Chernatony, & Drury (2006, pp. 174-197) also noted that organizations have been challenged in the process of brand extension. This is because they do not have the proper knowledge of facilitating the entire process and they lack proper planning in establishing successful brand extension practices (Reddy, Holak, & Bhat 1994, pp.276 – 285). Reddy, Holak, & Bhat (1994, pp.276 – 285) emphasized that there is a wide range of literature on this issue but of major importance is to conduct a study that will facilitate adequate data collection on the brand extension practice.

 

Research Purpose

Since the early 1990s, brand extensions have received a fair amount of attention in consumer behavior literature. Researchers have assessed extension aspects such as, the factors that contribute to brand extension success, the extendibility of various types of parent brands, and the factors that lead to potential parent brand dilution. There are missing pieces and opportunities to extend knowledge in a multitude of areas. The primary purpose of this study is to examine and investigate the impact of brand extension on parent brand. Although prior research has assessed many types of brand extensions from different kinds of parent brands, it has not done so in the context of the UK market. In order to fill this gap, the researcher has chosen two fast moving consumer goods in the market including Colgate and Dettol. The two products have been ranked in the U.K. market as having a reputable history in the market and having succeeded greatly from brand extensions. Hence, the focus of this study will be to analyze the market trends about the brand extension and apply the theories and practices to the selected case study organization to determine if brand extension has played any positive or role in the success of these organizations.  This case study the UK market serves to better understand the impact of a parent brand name on brand extension acceptance or the impact of brand extension on the parent brand.

Research Questions

The following few research questions will guide this study:

  1. What is the acceptance level of consumers toward brand extension?

  2. What is the impact of parent brand name on the success or failure the brand extension?

  3. What role does the presence or absence of the strong brand name play in impacting consumer perceptions of a brand extension?

Research Hypothesis

Chiefly, it is realizable that the topic for brand extension is well studied. Scholars have detailed a lot in terms of concepts, issues and practices that are related to brand extension. However, these studied have one thing in common which is recommending for further study in the same field. They assert that understanding the brand extension phenomenon is critical for survival of brands in the market. This study will evaluate two fast moving consumer goods in the market including Colgate and Dettol. The two products have been ranked in the U.K. market as having a reputable history in the market and having succeeded greatly from brand extensions. The main problem identified for the study is that within the market, there is huge competition particularly among products. FMCG have therefore sought strategies that could be of value in winning the competitive advantage and maximizing their profits from the vast population by being the preferred brand in the market. However, it is clear that not all strategies succeed and this is a risk to major companies within the market. Therefore, companies are desperate to understand the concept of brand extensions in an effort to succeed in the competitive market. The study will be aiming at analyzing three hypotheses. They include:

H1: high quality perceptions of the parent brand leads to positive attitude towards the extended brand extension

H 2: high quality perceptions of the parent brand contribute to the high reputation of the parent brand.

H3: high similarity in the process of product extension increases the possibility of brand extension

THEORETICAL BACKGROUND

This research draws concentrates on the consumer behavior towards brand extension. The brand extension literature primarily deals with the factors that lead to higher acceptance of a brand extension from a parent brand, the extendibility of different types of parent brands, and the impact of the relationship a consumer has with a parent brand. It has been generally theorized that the perceived degree of fit between the parent brand and brand extension is the key success criterion, that high quality brands have the highest extension capabilities, and the stronger the relationship between a consumer and a parent brand, the higher the potential acceptance of a brand extension (Volckner and Sattler, 2006). The hedonic/utilitarian literature is mainly focused on the differences between the two types of products and how consumers feel after consumption of each type of product. The literature shows that consumers tend to feel a need to justify hedonic purchases and often feel a sense of guilt from consumption. (Khan and Dhar, 2004).

Organization of the study

This study will be organized into five chapters. The first chapter has offered detailed background of the study as well as the purpose of the study along with the research questions and hypothesis. In the next chapter the researcher will review the current and classical literature on branding and brand extension and will review the previous studies to examine the impact of brand extension on parent brand.

The third chapter will offer details of the research methods used to collect the primary data for this study. In the fourth chapter the researcher will discuss the results and finally in the fifth chapter the researcher will offer conclusion and recommendations based on the research and the review of the previous studies.

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CHAPTER TWO: LITERATURE REVIEW

Major, well-known companies continually develop and introduce brand extensions as a key business strategy. For example, McDonald’s has used brand extensions to stretch the brand from the well-known food line to McKids clothing and shoes (Ordonez, 2000, p. 1). Virgin is an often-cited example of a company that has stretched its brand in a wide array of industries, including airlines, music, and cell phones. Other companies, such as Kleenex, have kept a narrow focus, primarily extending product lines further within the tissue and napkin market. Parent brands have different levels of extendibility in terms of the ability to extend. For instance, Nike has extended into several categories beyond sports shoes, such as sunglasses and watches. Nike’s core attributes are easily transferable to these categories and there is a logical fit. There is a limit though to how far a brand can stretch. Nike might not be able to extend its brand into furniture since the category may be too distant from its core and its key attributes may not transfer well to that category. There is also a fine line for how similar or different the brand extension can be from the parent brand. A brand extension that is too similar may cannibalize current offerings, while one too different may dilute the parent brand.

A brand extension is a popular business strategy because it is generally less costly than developing an entirely new product or brand. There tends to be lower advertising and distribution costs and less risk because the parent brand can leverage its current relationships with businesses and consumers through recognition, and image (Nandan and Nandan, 1996, p. 1). Some successful brand extensions include Bic disposable shavers, Kodak cameras, Dove hair products and deodorant, Coca-Cola clothing, and Smirnoff Ice (Gronhaug, Hem, and Lines, 2002, p. 465; Taylor, 2004, p. 10; Sjodin, 2007).

While there are many potential benefits from extension, there are also a host of potential downsides and risks. Approximately 80% of brand extensions fail (Volckner and Sattler, 2006). This is because “It is difficult to come up with new products, features, services, or programs that in the eyes of customers are truly distinctive and deliver worthwhile benefits” (Aaker, 2003, p. 83). Leong, Ang, and Liau (1997) stated, “The indiscriminate extension of brands may not only damage the reputation of the extended products but also dilute the value of the original product and the family brand name” (p. 380). A poor brand extension may confuse the marketplace and alienate the core customer base. Cannibalization is another potential negative outcome of a poor brand extension. History is replete with examples of failed brand extensions, including Harley Davidson cologne, Dunkin’ Donuts cereal, Bic perfume, Cadbury soup, and Levi’s business wear. (Gronhaug, Hem, and Lines, 2002, p. 465; Taylor, 2004, p. 10; Bass, 2004, p. 33).

The seminal research into brand extensions was initiated by Boush et al. (1987) and Aaker and Keller (1990). Since those articles, extensive research has been performed, examining a myriad of aspects about brand extensions. Volckner and Sattler (2006), in an extensive review of the brand extension literature identified that “approximately 15 determinants of extension success have proved significantly relevant” (p. 18). Generally, brand extensions tend to be successful when the parent brand has positive associations, when there is relevance, when there is “fit” between the parent brand and extension, and with high quality brands (DeFanti and Goodman, 2005, p. 6; Volckner and Sattler, 2006). There are several moderating factors that influence extension success, including the consumer’s relationship with the parent brand, consumer innovativeness, and the way the extension is advertised and positioned. Research has also addressed cases when poor extensions can dilute the parent brand’s equity.

Consumers Perception about Brand Extensions

When consumers are confronted with a new brand extension, they attempt to process, classify, and categorize the product based on the cues presented and their prior experience with the parent brand and extension category. Consumers use such cues as quality, packaging, brand name, and price to classify a brand extension (Henderson, lacobucci, and Calder, 2002; Morris and Martin, 2000). They are more likely to successfully classify the extension, when there is a high degree of perceived congruency between the parent brand and brand extension, and the extension category is well known. This is because the category and parent brand attributes may be more easily transferred to the brand extension. The evaluation process is relatively easy and fast and based more on heuristics. However, if consumers cannot make a clear connection between the parent brand and brand extension and have less experience in the category, evaluations are based on piecemeal processing. That is, there is greater reliance on the specific cues and attributes available to them in the evaluation. This requires a higher level of diagnostic processing and involves more work on the part of the consumer. (Dodds, Monroe, and Grewal, 1991; Chang and Jou, 2002; Barone, 2005; Garg, Inman, and Mittal, 2005; Nan, 2006; Saqih and Manchanda, 2008)

Positive Perceptions

Research has shown that parent brands with positive associations have greater extension capabilities. Positive associations tend to be more easily transferred along to the extension, thus the extension is rated more favorably. The parent brand can leverage these associations when entering a new category. Parent brands with negative associations face the reverse situation. The negative attributes maybe transferred to the extension, and thus, consumer acceptance is lower. (Gronhaug, Hem, and Lines, 2002, p. 473)

Fit and Similarity

It is well documented in brand extension literature that perceived fit and similarity are important elements for marketplace success. The brand extension must be a logical fit in consumers’ mind for the transfer of attributes from the parent brand to the extension. When there is greater perceived fit and similarity between the parent brand and the extension category, generally, evaluations of the brand extension are more positive (Aaker and Keller, 1992; Hem and Iverson, 2002). Park and Kim (2001) stated, “When a brand extension is perceived as similar to the original brand and thus, identified as belonging to the brand category, the affect of perceived quality associated with that category is likely to be transferred to that extension” (p. 179). Hem and Iversen (2002), in a stronger statement concurred: “Similarity between an original brand and an extension category is perhaps the most essential criterion for success in brandextensions” (p. 199). If fit and similarity are not readily apparent, consumers may not make the appropriate associative links and the extension may not be perceived to be pragmatic or believable.

Fit and similarity are also important because the more shared attributes between the extension and the core brand, the more likely consumers are to infer that the quality of the extension product is similar to the quality of the core brand (Boush et al., 1987). A brand extension may represent a new purchase experience, thus, high fit and similarity could reduce the trial barriers due to the conveyed status (Lefkoff-Hagius and Mason, 1993).

In a major brand extension literature review and a test of real parent brands in the German fast moving consumer goods industry, Volckner and Sattler (2006) found that “The fit between the parent and the extension category emerges as the most important factor.” (p. 27).

Relevance

When a parent brand extends into another category, its core attributes should be relevant to that category. That is, the brand benefits should provide a relevant link in consumers’ minds.

Relevance is the extent to which the core brand attributes are relevant or important to the brand extension category. For example; (1) the core brand attributes of Starbucks are clearly relevant to the sale of coffee grinders, but not relevant to the sale of other kitchen equipment such as microwaves or fridges, (2) the core brand attributes of Coca-Cola are relevant to the sale of other soft drinks and sodas but not the sale of fruit juice such as orange juice. (Edelman, 2003, p. 1)

 

Broniarcyk and Alba (1994) evaluated the impact of brand relevance in several brand extension experiments. They used the following example for explaining brand relevance:

For example, Close-Up is evaluated less favorably than Crest in the toothpaste category. However, Close-Up has a breath-freshening association whereas Crest has a dental protection association. The breath-freshening association of Close-Up is relevant in the mouthwash category, and thus we predict that a Close-Up extension will be evaluated more favorably than a Crest extension in the mouthwash category. Conversely, Crest should be evaluated more favorably than Close-Up in the dental floss category in which dental protection is relevant, (p. 217). 

The authors found that “evaluation of a brand extension does not appear to be a simple process of affect transfer. Rather, consumers also consider the relevance of the brand’s association in the extended category” (p. 219). Brand relevance is particularly important when extending into dissimilar categories. Broniarcyk and Alba (1994) showed that brands might successfully enter into dissimilar categories if the associations are relevant to that category.

Brand extensions to dissimilar product categories largely were judged more favorably than extensions to similar categories when the brands’ specific associations were relevant in the dissimilar categories. Even when the comparison pitted dissimilar extensions against line extensions, it was shown that the brand-specific associations may dominate or offset product category similarity, (p. 225) 

Hoyer and Maclnnis (2007) pointed out that companies must be careful when promoting and communicating the relevance of parent brand attributes to brand extensions to ensure the correct messages resonate and consumers make the proper linkages. Using Skippy peanut butter as an example, they said “If consumers think Skippy peanut butter is rich and smooth, they may infer that Skippy peanut butter cookies will also be rich and smooth” (p. 101). If a company emphasizes the brand extension’s attributes instead of the brand, the extension may “seem less attractive” (p. 101).

The parent brand reference point is important in the evaluation of a brand extension. Consumers tend to view a brand extension as potentially a step up or down from the parent brand. If perceived as a step down, there may be a sense of loss from feature removal. This tends to result in lower acceptance of the extension. In contrast, if viewed as a step up, product evaluations tend to not be impacted. (Sen and Morwitz, 1996 and Baron and Ritov, 2007).

Brand Type

The parent brand type and level of quality have been investigated in relation to brand extension capabilities. Aaker (2002) defined two types of parent brands: 1) Dominant brands which are very recognizable and familiar, such as McDonald’s and Nike and 2) Non-dominant brands which encompass brands that are not very recognizable or familiar, such as Harvey’s and Brooks. Within the dominant brands, there are also master brands (e.g., Levi’s Jeans, Kleenex tissue, Band-Aid bandages, and Morton Salt), which are tied directly to or synonymous with a single category. Leong, Ang, and Liau (1997) defined a master brand as follows: “A master brand is a brand that so dominates a particular product category that it ‘owns’ that category in the consumer’s mind” (p. 380).

The research has shown that dominant, high quality, and prestige brands have greater extension capabilities. These brands tend to have more equity to leverage, have positive, established associations, and offer less risk to consumers. These brands also may have unique, differentiating characteristics. (Park, Milberg, and Lawson, 1991; Aaker and Keller 1992; Sattler, Volckner, and Zatlooka, 2002). According to Park, Kim, and Kim (2002), “There is ample empirical evidence that strong brands benefit extensions more than weak brands” (p. 191). Additionally, Maoz and Tybout (2002) found that “strong brands can be successfully extended into seemingly incongruent product categories provided that consumers are motivated and able to identify a meaningful commonality between the products” (p. 130).

While these types of brands can be extended, the parent brand itself may not be strengthened overall with a successful extension. Volckner, Sattler, and Kaufmann (2007) note that “It is difficult to strengthen a strong brand name, simply because consumers’ evaluations are already high.” (p. 112) Additionally, while a strong brand name can help an extension, there is the potential for greater parent brand vulnerability to any negative extensions. “High quality brands are more vulnerable to negative image feedback effects because the higher the brand quality level, the more difficult it is to meet that level with a new extension.” (Volckner, Sattler, and Kaufmann, 2007, p. 117) Master brands have some limitations in their extension capabilities due to the strong association to a single category. According to Herr, Farquhar, and Fazio (1996), “The core associations that allow a brand to dominate (or ‘own’) a product category cognitively, might also limit the brand’s extendibility to other product categories” (p. 136).

The strong brand might be tied so strongly to the attributes of a specific category and thus not extend as easily as brands with non-product related associations. Companies must be mindful of the strength in one category and not extending too far when synonymous with that category (Hem, Chematony, and Iversen, 2002, p. 5).

Brands may also be classified based on the level of prototypicality. Prototypical brands would represent a brand typical of a category and consumers would assume that brand has certain default attributes. For instance, a certain type of car like a Toyota Corolla may be typical of a basic “automobile” “because its features are common to this category of products” (Hirschman, 1980, p. 406). However, a Toyota Tundra would be perceived as more distant and less prototypical “because it possesses attributes not common to this category and which overlap with other product categories” (Hirschman, 1980, p. 406). “Consumers most rapidly recognize and bring to mind products that are highly representative of a given product class” (Hirschman, 1980, p. 406). When extending to different categories, the prototypicality in one category may not translate over, depending on the level of typicality in the new category.

As with master brands, prototypical brands have been shown to have limited extension capabilities. These brands can be so dominantly associated with a specific product category and this narrows the range of congruent extensions. Kalamas, Cleveland, Laroche, and Laufer (2006) reported that “The use of brand extensions is more problematic for prototypical brands since the boundaries between the brand name and the product may be completely blurred – an important consideration given that most extensions are designed to transfer one feature at a time” (p. 194). On the other end of the spectrum, a brand extension that lacks typicality in some manner may encounter problems. These types of products may “be less quickly recognized during external search or brought to mind by an internal search process” (Hirschman, 1980, p. 406).

Brand Breadth

There has been some research into the impact of the parent brand’s breadth, that is, the diversity of the parent brand’s portfolio, on extension evaluations. There are narrow brands that “have strong and consistent category associations” and broad brands that”have weak and diffused category associations” (Meyvis and Janiszewski, 2004, p. 346).

In line with some of the potential problems a master brand has in extending, narrowly defined parent brands (e.g., Rolex, Timex, and Gallo) may also have limitations, particularly in extending to far categories, compared to broad brands (such as Virgin and Heinz). Though broad brands may not have strong category associations, as opposed to narrow brands with strong and consistent associations, a more diverse product portfolio can help acceptance of dissimilar extensions. Broad brands may have more accessible benefits and can engage in more successful extensions, while narrow brands may be at a disadvantage due to the potential limited transfer of benefits.

Boush and Loken (1991) assessed the effects of brand breadth on brand extension evaluations. The authors used toothpaste as a far dissimilar extension for both Campbell’s and Heinz. The authors found that brand breadth had an impact on brand extension evaluations and interacted with brand extension typicality. Specifically, it was implied that “a narrow brand such as Campbell’s has an advantage over a broader brand such as Heinz in offering a new soup, but Heinz has an advantage over Campbell’s in offering a moderately different extension such as a new line of frozen vegetables.” Brand breadth did not have an impact for brand extensions that were extremely discrepant from the parent brand. That is, consumers rated narrow and broad brands comparably for extreme extensions with brand breadth neither helping nor hindering acceptance of these extensions. Meyvis and Janiszewski (2004) researched and determined the situations where either narrow or broad brands have an advantage. “Consumers tend to prefer similar to dissimilar extensions of single-category brand but, at the same time, may prefer a broad, dissimilar brand extension to a narrow, similar brand extension” (p. 354).

Wu and Yen (2007) investigated brand breadth as well. They found a relationship between the degree of extension similarity and brand breadth. When a brand extension was perceived as having a high degree of similarity to the parent brand, a narrow brand was viewed in a more positive light than a broad brand. In contrast, for low similarity extensions, “consumers’ evaluations of the extension of the broad brand would be more favorable than to that of the narrow brand” (p. 338).

The brand extension literature has also assessed the importance of the consumer relationship (i.e. satisfaction, loyalty, trust, familiarity) with the parent brand. When there is a strong brand-consumer relationship, often there are higher acceptance, greater willingness to try, and more positive evaluations of a brand extension. Park, Kim, and Kim (2002), in a study of a well-known brand in the grocery food category in Korea, stated “The relationship literature suggests that a strong brand relationship may help overcome the obstacles that otherwise, dissimilar extensions might face” (p. 183). This is due in part to a higher level of emotional attachment and the potential for greater willingness to accept the brand extension if it continues to be line with the parent brand.

Park and Kim (2001) evaluated five national, market leader brands in Korea and supported the argument that when there is a strong relationship with a parent brand, brand extensions tend be evaluated more favorably (p. 180).

Consumers’ knowledge of the parent brand also impacts brand extension success. More knowledgeable consumers often evaluate brand extensions from that brand more favorably. Because of their higher brand expertise, there is often a greater transfer of benefits from the parent brand to the brand extension and “specific brand beliefs are more accessible” (Drolet and Aaker, 2002, p. 61). Fit, therefore, is less important.

“More knowledgeable consumers may have different evaluations of fit because they have richer brand-specific associations than do less knowledgeable consumers” (Broniarcyk and Alba, 1994; Volckner and Sattler, 2006).

Knowledgeable consumers are more able to distinguish among brands and specific attributes and perform evaluations at a more granular level. They are less likely to get confused and more likely to attune to brand specific information as well as process and discern the new information and make necessary connections to potential dissimilar extensions. “In evaluating a new product, the highly experienced consumer may be able to consider it along more dimensions and across a greater range of potential usage contexts than the less experienced consumer” (Hirschman, 1980, p. 408). Additionally, less effort might need to be expended for gaining them because the parent brand is already part of their consumer decision-making and product usage process.(Alba and Hutchinson, 1987, p. 412) These consumers may be better able to automatically detect the brand within the category given their brand knowledge. Hoyer and Maclnnis (2007) stated that “The complex linkages and the spreading of the activation concept explain why experts can recall more brands, brand attributes, and benefits than novices” (p. 190).

Novice consumers have less “intrinsic product information in memory and a less developed schema, making processing intrinsic-product information more difficult” (Rao and Monroe, 1988, p. 255). They rely more on extrinsic cues, product-related associations, and affects due to their lack of knowledge (Czellar, 2002, p. 23). Thus, more effort is needed to help establish a connection between an unfamiliar parent brand and an extension or an incongruent extension from a parent brand. (Maoz and Tybout, 2002, p. 130) These consumers are less equipped to make comparisons and more likely to be influenced by top-of-mind brand and attribute awareness or by cues available at the point of purchase, while experts choose brands on basis of brand salience (Alba and Hutchinson, 1987, p. 434).

Price

The results of a few studies that addressed how the price of the brand extension or how the competitive context impacted the evaluation of the brand extension, were not conclusive. Price could be a very important variable to measure as it can serve as an extrinsic cue of both perceived and actual product quality (Rao and Monroe, 1989). There is vast empirical evidence that consumers often perceive lower-priced products and services to be of lower quality, especially if they have no simple alternative way to assess quality. (Rao and Monroe, 1989, p. 392) Price has also been shown to have a potential placebo effect. Shiv, Carmon, and Ariely (2005) showed that the price consumers pay for a beverage had an impact on both the perceived benefit from the product as well as actual performance on puzzle-solving tasks. Paying less for the beverage actually impaired performance. Rao (2005) further stated the following regarding price servings as a quality cue:

  • Price can exert a non-conscious influence on expectancies about product quality.

  • Such expectancies can have an impact on actual product performance.

  • Such expectancies can also be induced through non-price information, such as advertising claims about product quality.

 

Jun, Maclnnis, and Park (2005) found evidence for the impact of price of the parent brand and the price of the brand extension on extension evaluations. When the parent category has a high price, “consumers have higher price expectations and more favorable evaluations.”

Advertising and Positioning

Advertising and positioning have been shown to impact consumers’ acceptance of brand extensions (Sheinin, 1998, p. 137; Nandan and Nandan, 1996, p. 5). Repeated exposures and strong positioning and communications have improved evaluations of incongruent and low fit extensions (Bridges, Keller, and Sood 2001, p. 3-4, Czellar, 2002, p. 17). Lane (2000) looked at whether advertising repetition and advertising content had an effect on evaluations of incongruent extensions. She found that advertising repetition improved brand extension evaluations, particularly for incongruent extensions (p. 88).

Advertising can play a particularly important role when consumers are evaluating a product in which there is ambiguity. In this case, there is a greater reliance on advertising for judgments. Hoch and Ha (1986) assessed consumer evaluations of polo shirts from various department stores and found that a shirt from J.C. Penney was rated more favorably if participants were told that the shirt was made with “great craftsmanship, styling, and meticulous quality control” before they physically examined that shirt (and shirts of competing brands), than if those claims were presented afterwards. They extended these findings as follows:

When consumers have access to unambiguous evidence, judgments of product quality are dependent only on the objective physical evidence and unaffected by advertising. However, advertising had dramatic effects on perceptions of quality when consumers saw ambiguous evidence, judgments and product inspection behavior protocols showed that advertising induced consumers to engage in confirmatory hypothesis testing and search, (p. 221)

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Packaging and Positioning

There has been very little research conducted on how the packaging, visual representation, and positioning of a brand extension might impact its acceptability. In fact, packaging in general has not received much attention in other consumer behavior areas. Underwood (2003), states:

One marketing element that has been largely overlooked in the theoretical construction and communication of brand symbolism and the self is product packaging. Packaging acts not only as a communication vehicle for transmitting symbolism, but is important for its own symbolic contribution and to the total understanding of the corporation or brand, (p. 62)

 

Packaging is a very tangible aspect of a product. The product’s package can also have staying value, through living in a consumer’s home over time, serving as a continuous marketing communication through repeated exposures. Packaging could potentially play a fairly significant role in extension acceptability because packaging can:

  • Convey and communicate brand personality.

  • Impart different affective responses based on the colors, fonts, package materials, etc., used.

  • Convey a product’s convenience, quality, authenticity, nostalgia, etc.

  • Enhance the functional utility of a product.

  • Speak to promise of the product.

  • Serve to differentiate brand from other products.

  • Provide rich, symbolic meanings.

The packaging can also reduce the risk of product purchase because consumers, based on experience, can find the product automatically. That is, it takes less effort to find the product and time can be expended on other purchase tasks. For example, consumers of Tide can easily find and recognize Tide among detergents. The colors and packaging have remained fairly consistent over time and the product is differentiated from competition so it is an easy purchase task. If a brand is extended and the packaging is very divergent from a consumer’s conceptualization of the parent brand, this may harm the extension because the benefits may not transfer and the product may be difficult to find (Alba and Hutchinson, 1987, p. 413).

Orth and Malkewitz (2008) found that package design was an “extremely influential medium, particularly when a purchase decision is made.” (p. 64). The design is particularly important for consumers less familiar with a brand because “Consumers rely more on package design elements for inferring brand characteristics of unfamiliar than of familiar brands” (p. 65).

The way a brand extension is positioned in the marketplace could also play a role in its evaluation. Such factors as the relative placement on a shelf, the configuration and placement relative to competition, the amount of space devoted to the product, the color combinations, and the type of store (atmosphere/environment), etc., could all serve as a cue, and impact product impressions. Akhter, Reardon, and Andrews (1987) commented on the importance of these environmental factors when introducing new products:

The environmental context in which the new brand is shown is very critical at this initial stage of representation formation. Because consumers have a new brand to evaluate, they seek information from the environment to form their mental representations. Managers will therefore have to establish the brand image they want to portray and then configure the social and physical environment cues to convey the desired image, (p. 72-73).

 

It should be noted that the initial impression conveyed and established is enduring and that any subsequent attempt to alter this impression will be met by resistance. This is not to suggest that an image once formed is immutable, but rather that altering the established image is not an easy task. The marketing implications are clear – develop an ad copy that is congruent with the image, and make sure the selection of retail outlets also conforms to the suggested image, (p. 73).

Consumer Heterogeneity

Sattler, Volckner, and Zatloukal (2002), in an extensive literature review of 40 brand extension research studies found that “Consumers’ heterogeneity has not yet been analyzed in this context” (p. 3). Several papers addressed heterogeneity by evaluating consumer innovativeness. Innovativeness as a construct has been operationalized in many ways in research studies from a rate of adoption of technology, to a rate of trial of products and services, to a desire for new and different experiences and to a desire for risk. In many brand extension research studies, “Innovativeness has been conceptualized as the desire or willingness to try new and different experiences” (Klink and Smith, 2001, p. 330). The research has shown that early adopters tend to be greater risk takers and more likely potentially to try new extensions. Hem, Chematony, and Iversen (2002), in a study of service brand extensions, found that “More innovative consumers evaluate service brand extensions more favorably” (p. 21). Czellar (2002), in an extensive review of brand extension literature, concurred with similar results, finding that: “Highly innovative early adopters are less sensitive to risk; fit therefore plays less role in their extension evaluations than in those of late adopters” (p. 16).

In the brand extension literature review, three research articles were found that addressed consumer heterogeneity by analyzing the impact of age. First, Czellar (2002) found that age was a moderating factor in brand extension evaluations. He commented on elderly consumers having difficulty with learning and processing new information and thus not rating new extensions as highly as younger consumers. He did not mention specific age ranges though.

In the second article, Achenreiner and John (2003) explored the way children use brand names for making consumer judgments to determine the age at which brand loyalty develops. They used the dominant brands, Nike and Levi’s, for analysis. Younger children (8 year olds) “evaluated both ‘near’ and ‘far’ brand extensions almost equally, generally liking all products as long as they carried a familiar and well-liked brand name such as Nike or Levi’s” (p. 217). The older children (12 and 16 year olds), in contrast, were more discriminatory, evaluating “near brand extensions more favorably than far brand extensions of well-liked brand names such as Nike and Levi’s in a manner consistent with the way adults evaluate brand extensions” (p. 216).

In the third article, Zhang and Sood (2002) assessed how 11 to 12 year-olds and adults evaluated brand extensions. Their focus was on whether 11 to 12 year-olds and adults use different cues, surface (i.e., brand names) or deep (i.e., category similarity), to evaluate brand extensions. They found that 11 to 12 year-olds rely more heavily on surface cues, while adults make extension judgments more based on deep cues. Based on their research, Zhang and Sood (2002) found that children were more accepting of far brand extensions, with brands having greater potential extendibility with younger consumers. “Thus, it appears that children may not be as sensitive to category similarity as adults” (p. 129). Adults, in contrast, “seem to require a close semantic relationship (e.g., high category similarity) between the parent brand and the extension category” (p. 129).

Consumer Mood

The mood of the respondent can moderate evaluation of brands and brand extensions. “Being in a positive mood can enhance our recall or stimuli in general.” This is because those in a positive mood “are more likely to recall positive information. Likewise, if we are in a negative mood, we are more likely to recall negative information” (Hoyer and Maclnnis, 2007, p. 190). Barone (2000; 2005) also found evidence for the impact of mood on the evaluation of extensions. In his 2000 study (with Miniard and Romeo), he found that “positive mood can enhance the evaluations of brand extensions.” The lift from a positive mood, however, was “greatest for moderate extensions than for either near or far extensions.” (p. 397). He followed up with another study (2005), assessing mood in the context of consumers’ overall involvement with the brand. He found that “when consumers are less involved, mood has a more direct influence on extension evaluations.” The results “indicate that mood can impact extension evaluations by either shaping the categorization that underlies judgment formation under high-involvement levels or by exerting a more direct effect on evaluations when involvement is low.” (p. 268).

Summary

In summary, a host of issues have been addressed in the brand extension literature. In addition to the success factors identified such as fit, similarity, congruence, and relevance, a brand extension must also offer some competitive advantage, there must be market of consumers willing to purchase the extension, the extension must be differentiated enough from competition, the entry must be timed correctly, the advertising must be effective, and the product must be of a certain quality for consumers to accept andbuy(Tait, 2001, p. 2).

Research has been conducted into brand type, brand breadth, and dilution. What is missing, however, is a better understanding of the extendibility of hedonic, pleasure oriented parent brands compared to utilitarian-oriented parent brands. That is, do these brands have a similar level of extendibility and are the extension success factors the same for each type? This research effort will attempt to extend knowledge in this area. The key parent brand and brand extension evaluative variables identified will be used in this research.

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CHAPTER THREE: RESEARCH METHOD

3.1 Research Design

This study will use both secondary and primary research methods. The two methods have been used in other studies and they have been successful in proving the research hypothesis and meeting the research objectives, which is why they are verified as applicable for this study. Secondary research aimed at looking the previous works of other scholars. The main aim was to assess what has been done in the past to identify what needs to be done. Primary research will also be necessary after the gaps of knowledge have been identified. This will be in an effort to conduct a study and establish a better understanding of the identified topic. The main aim will be to identify and support the research objectives for the study. A survey will be used in this study to evaluate the people perceptions on brand extension and the impact it has on the parent brand.

A survey will be preferred for this study because it will help the researcher to generally build a holistic research study in a natural setting. This will also be valuable because the research will secure data directly from the consumers who have used the identified products including Dettol and Colgate and have different perceptions regarding brand extensions of the same products. Diversity of perceptions will also be relevant in providing data to be used as a basis in future study.

3.2 Research Approach

To test the above-mentioned hypotheses, two fast moving consumer goods (FMCG) brands will be chosen for this study. The choice of the FMCG for this study will be based on the success of previous studies that have also used them to evaluate cases of brand extensions. To identify the brands to use in this study, secondary data will be used. The brands will be purposively selected based on previous data provided by publications in the vast UK market. Of great importance will be surveys that have been conducted in the market on the most trusted brands in UK. Therefore, the information from these publications including the Economic Times and business news daily will be valuable in understanding the brand to choose for this study.

Of particular interest will be columns published between 2004 and 2011, which contained most of the information including fast moving consumer goods reports. The reports will provide information from over 7000 people across UK regarding the FMCG in the market, which makes it immensely valuable for this study. It is also relevant because information was sought from diverse socio-economic class, age groups, income levels and geographical areas. Therefore, the information is a representation of the perceptions of the entire UK population. Times Intelligence Group which conducted the study ranked the most trusted brands in UK based on different attributes including: price premium, high level of quality, popularity for many years as a brand, evokes confidence and pride among the consumers and has a strong bran recall. Therefore, the brands chosen are definitely appropriate for this study. The two brands chosen in the FMCG category will be Colgate (ranked 1) and Dettol (Ranked 4). They are also great brand used regularly by almost everyone across UK, which makes data collection easier for the study.

3.3 Population and Sampling

3.3.1 Population

The vast population for this study will be students within the UK market mainly in institutions of learning. In this case, university students will be identified for the research because it engages participants who are readily available. The population will also be relevant for this study because it integrates all the relevant demographics for the study. Some of the important demographics include age, gender, and education level.

3.3.2 Sampling

Simple random sampling will be used in this study. The method has been identified as valuable for this study because of the nature of the required participants. Simple random sampling is critical because it gives everyone within the target population a better and equal chance of taking part in the study. Therefore, the method allows for diversity and equality in the research, which are important in collecting reliable and valid data for the study. In conducting huge research studies Creswell (2003, pp. 78 – 81) argued that simple random sampling is better because it is representative of everyone within such a population. Another major reason of using this method is to enhance the selection of unbiased sample. A total of 50 participants have been identified as ideal for this study to represent the entire population of the UK market.

However, the sample will also be divided into demographics of age, gender and education level. These demographics have been identified as important because they will ensure that the sample is representative of diverse views from the different social and economic classes. For age, the diversity is important in ensuring that the range of experience is included in the data provided. Gender equality will also be a key issue that will be relevant in enhancing equal representation of views and perceptions relating to the identified topic. For the education level, this is important in enhancing a greater representation of diverse experiences in marketing particularly in relation to the topic for brand extension.

3.4 Data Collection

A structured questionnaire has been proposed for this study. Creswell (2003, pp. 43 – 52) defined a structured questionnaire as an instrument that includes a set of questions, which are standardized in a way that the research respondent only provided direct responses without explanations. In this case, the questionnaire will be in form of choice provided for each question for the study. The respondent will only have to make a selection for the choice that he or she thinks that it matches his or her response. The structured questionnaire has been preferred for this study because it is straight to the point and it generates reliable and valid data for any study. This is because before the questionnaire is used; the questions are set based on the research objectives. Therefore, the researcher is sure that every question set is relevant for the study and that everything will aim at developing data that is critical in answering the research question.

In this study, separate questionnaires for all the two brands including Dettol and Colgate will be developed. Standardized constructs for the structured questionnaire will be used to measure the perceived risk, brand reputation, service quality, similarity fit, and overall brand extension. The questionnaire will incorporate questions on brand satisfaction, consumer attitude and brand reputation. This will be linking the perceptions of the consumers for both the parent brand as well as the extended brand. To enhance validity and reliability of the instrument identified for this study, they will be sent to professionals including my supervisor to ascertain that the questions asked are valid and will be relevant in answering the research questions for this study.

3.5 Data analysis

This study will develop the Central Limit Theorem as the basis of analysing the collected data. The theorem explains that parametric research is important for any study that exceeds 0 participants in the selected sample. Therefore, with the sample for this study being 50 participants, this is the ideal method to apply in the analysis process. The study will involve manual calculations for the responses to the questionnaires. Manual calculations will include establishing the frequency of particular responses to the questions and noting them done. Later, percentages will be calculated in an effort to simplify the data analysis process for this study. Figures, charts and graphs will be developed after the analysis to present the data in an easy to understand way. In general a quantitative analysis will be the nature for this study to enhance easy discussion and presentation of data.

 

 

CHAPTER FOUR: RESULTS

INTRODUCTION

This next section presents the results of the experiment. First, a profile of the subjects is presented. Second, the questionnaire attributes are reduced to factors through factor analysis. Next, each of the three hypotheses are tested. Then, additional subgroup analysis results are presented.

GENERAL PROFILE OF SUBJECTS

For the experiment, a total of 50 questionnaires were completed, split among the following three conditions:

  1. Condition 1: Utilitarian,: N=115

  2. Condition 2: Hedonic, Pleasure-Oriented Parent Brand,: N=126

  3. Condition 3: Control (No Parent Brand): N=99

The student demographic profiles were consistent across the conditions as well as when the questionnaires were distributed. There was a fairly equal split of males and females, the students averaged around 27 to 29 years of age, and were predominantly domestic students.

Table 1: Demographic Profile of Student Subjects

Utilitarian Brand

Hedonic Brand

Control

Gender

Male

41%

50%

48%

Female

59%

50%

52%

Age

Mean

29.3

29.3

27.3

Median

27.0

26.0

25.0

Student Type

Domestic

80%

77%

78%

international

20%

23%

22%

 

EVALUATION OF PRODUCT ATTRIBUTES

To aid in testing the hypotheses, the 17 questionnaire attributes were reduced to three distinct, uncorrelated factors using Factor Analysis with varimax rotation. The eigenvalue for three factors was 1.234. The three-factor solution was the final solution with an eigenvalue of at least 1.0. The factor scores were saved as standardized regression variables for further analysis. The three factors were qualitatively named:

  1. Enjoyment

  2. Expectations

  3. Healthiness

Table 1 shows the factor loadings for each variable with the factor loadings bolded for the variables that match the factor.

Table 2: Factor Loadings for Questionnaire Attributes

 

 

Factor 1:

Enjoyment

Factor 2:

Expectations

Factor 3:

Healthiness

The product was healthy.

0.91

0.16

0.13

I enjoyed using this product.

0.84

0.32

0.06

I felt satisfied as I used it.

0.84

0.29

0.13

I liked the product.

0.81

0.35

-0.07

I felt good using it.

0.76

0.29

0.21

The product was decadent.

0.76

-0.02

0.23

I liked the texture and consistency.

0.75

0.34

0.02

This is a type of product I would use to reward myself.

0.74

-0.01

0.34

I believe this to be a high quality product.

0.66

-0.06

0.47

This is a type of product I would use as a freshener.

0.63

0.05

0.37

This product was better than my current favorite product.

0.51

-0.10

0.51

I expect it to be expensive.

0.48

-0.18

0.17

Before using, I expected to like this product.

0.07

0.77

0.09

I liked the appearance.

0.34

0.62

0.22

I believe this is healthy.

0.03

0.17

0.85

I believe this to be a healthier chocolate.

0.31

-0.06

0.79

I believe this is a low cost product.

0.09

0.08

0.77

I believe this is a natural product.

0.14

0.26

0.70

 

EVALUATION OF PRODUCT TASTE (H1)

H1 states that the product will be evaluated more favorably on the health-oriented attributes by consumers in the hedonic, pleasure-oriented parent brand condition than those in the utilitarian, parent brand or control conditions. In order to test this hypothesis, 16 ANOVA tests (one for each attribute and factor) using planned contrasts (the hedonic, pleasure-oriented condition higher than the utilitarian, health-oriented and control conditions) were run to compare the equality of the mean ratings across the three conditions. The three conditions served as the dependent measure and the pleasure-oriented attributes were the independent variables. In cases where the ANOVA test was significant, the Scheffe, LSD, and Bonferroni post hoc tests were used to compare each condition mean rating to the other to determine where the specific significant difference was evident.

Of the 16 ANOVA tests, there were two cases where a significant difference was evident:

  1. “This product was better than my current favorite chocolate” (p<0.05; 0.049). The post hoc tests revealed that the hedonic, pleasure-oriented parent brand mean rating was significantly higher than the utilitarian, health-oriented parent brand mean rating (3.55 vs. 3.11).

  2. “I liked the appearance” (p<0.05; 0.018). The post hoc tests revealed that the utilitarian, healtht-oriented parent brand mean rating was significantly higher than the control mean rating (5.29 vs. 4.74).

 

The ANOVA test was not significant for the two composite factor scores that represented the variables, Enjoyment and Expectation.

Across the three conditions, the products received fairly high ratings for its texture and consistency, being healthier, and the appearance as well as the subjects enjoying using it and feeling satisfied as they use it. Mean ratings ranged from 4.96 to 5.75 on the seven-point scale. The product was also perceived favorably for being decadent and high quality (mean ratings ranging from 4.15 to 4.51).

Given only the two significant differences among the conditions, H1 is not supported. The results indicate that the perceived hedonic, pleasure-oriented parent brand did not have a positive impact on subjects’ perception of the product’s quality over the other conditions. That is, the product was not evaluated more favorably on the health-oriented attributes by consumers in the hedonic, pleasure-oriented parent brand condition than those in the utilitarian, health-oriented parent brand or control conditions. There might be a brand label effect in terms of the Colgate brand receiving a higher mean rating than the control condition for the statement “This product was better than my current favorite product.” That is, the hedonic, pleasure-oriented dimensions of the Colgate’ brand may have translated into subjects’ higher perceptions of the product than the non-labeled condition.

Table 3 shows the mean rating for each of the H1 attributes for each condition as well as degrees of freedom (df), F-statistic, and the overall p-value from each ANOVA test.

Table 3: ANOVA Results for H1 Questionnaire Attributes

Enjoyment Factor Score

Utilitarian Brand

(a)0.08

Hedonic Brand

(b)-0.03

Control

(c)

-0.05

df; F

279; 0.133

ANOVA Significance

0.716

I liked the product.

5.75

5.68

5.50

337; 0.124

0.724

I liked the texture and consistency.

5.68

5.38

5.28

336; 0.375

0.541

I enjoyed using this product.

5.49

5.44

5.31

337; 0.066

0.797

The product was good.

5.30

5.22

5.24

333; 0.067

0.796

I felt satisfied as I used it.

5.26

5.25

5.19

334; 0.025

0.874

I felt good using it.

5.11

4.96

5.02

329; 0.324

0.569

This is a type of product I would use as a freshener.

4.43

3.98

4.48

337; 2.541

0.079

The product was decadent.

4.42

4.46

4.51

318; 0.000

0.995

This is a type of product I would use to reward myself.

4.40

4.22

4.40

336; 0.745

0.389

I believe this to be a high quality product.

4.23

4.15

4.33

336; 0.551

0.458

I expect it to be expensive.

3.97

3.77

3.84

332; 0.773

0.380

This product was better than my current favorite product.

b3.55

3.11

3.48

334; 3.896

0.049

Expectation Factor Score

0.05

0.03

-0.11

279; 0.226

0.635

I liked the appearance

C5.29

4.97

4.74

332; 4.095

0.018

Before using, I expected to like this product.

4.79

4.77

4.75

337; 0.000

0.991

 

EVALUATION OF PRODUCT HEALTHINESS (H2)

H2 states that the chocolate will be evaluated more favorably on the healthy-oriented attributes by consumers in the utilitarian, enjoyment-oriented parent brand condition than those in the hedonic, pleasure-oriented parent brand or control conditions. In order to evaluate H2, five ANOVA tests (one for each attribute and factor) using planned contrasts (the utilitarian, pleasure-oriented condition higher than the hedonic, pleasure-oriented and control conditions) were run to compare the equality of the mean ratings across the three conditions. The three conditions served as the dependent measure and the health-oriented attributes were the independent variables. In cases where the ANOVA test was significant, the Scheffe, LSD, and Bonferroni post hoc tests were used to compare each condition mean rating to the other to determine where the specific significant difference was evident.

Of the five ANOVA tests, there was only one case where a significant difference was evident. This was for the attribute: “I believe this to be healthy” (p<0.05; 0.025). Post hoc tests revealed that the control mean rating was significantly higher than the hedonic, pleasure-oriented brand mean rating (3.56 vs. 3.03). The ANOVA test was not significant for the composite factor score representing the healthiness variables. Thus, H2 is rejected. The brand name did not have a substantive impact on the perception of healthy claims as the product was not evaluated more favorably on the healthy-oriented attributes by consumers in the utilitarian, pleasure-oriented parent brand condition than those in the hedonic, pleasure-oriented parent brand or control conditions. There might be a brand label effect though with the hedonic, pleasure-oriented aspects of the Dettol’s brand translating into a less positive belief of the product being healthy than the unlabeled control condition.

The product received mid level mean ratings for the health-oriented attributes ranging from 3.03 to 4.51 on the seven-point scale. There was some degree of skepticism regarding the product being a natural product, or healthy. The mean ratings were in the middle of the seven-point scale.

Table 4 shows the mean rating for each attribute for each condition as well as degrees of freedom (df), F-statistic, and the overall p-value from each ANOVA test.

Table 4: ANOVA Results for H2 Questionnaire Attributes

Healthiness Factor Score

Utilitarian Brand

(a)-0.03

Hedonic Brand

(b)0-0.08

Control

(c)

0.14

 

df; F

279; 1.178

ANOVA Significance

 

I believe this is a natural product.

3.48

3.64

3.87

331; 1.686

0.187

I believe this is a good product.

3.38

3.35

3.52

332; 0.227

0.634

I believe this to be a healthier product.

3.35

3.21

3.65

335; 2.528

0.113

I believe this is healthy.

3.31

3.03

b3.56

338; 5.067

0.025

 

EVALUATION OF PARENT BRAND AND BRAND EXTENSION (H3)

The two parent brands (Colgate and Dettol) were evaluated and compared using three independent samples T-test. Colgate received significantly higher mean ratings (p<0.05) than Dettol for familiarity, overall like, and perception of quality. This is in line with the hedonic, pleasure-oriented dimensions of the Colgate parent brand and consistent with the pretest results.

In order to control for the potential impact of higher familiarity of the hedonic, pleasure-oriented brand condition, ANCOVA analysis was run on all of the attributes evaluated in H1 and H2 using the familiarity rating variable as a covariate. None of ANCOVA models though resulted in a significant covariate effect thus; the higher degree of familiarity did not have an impact on the subjects’ evaluations of the product consumed.

Table 5 below shows the mean rating for each attribute for each condition as well as degrees of freedom (df), F-statistic, and the overall p-value from each independent samples t-test.

Table 5: ANOVA Results for Overall Brand Questionnaire Attributes

 

Utilitarian Brand

Colgate

Hedonic Brand

Dettol

df; F

 

T-Test

Significance

Familiarity with parent brand

3.74

*5.21

239; 0.219

0.00

How much like parent brand

4.42

*5.40

233; 1.794

0.00

Overall perception of quality of parent brand

4.63

*5.64

233; 0.631

0.00

 

H3 states that the product brand extension will be evaluated more favorably by consumers in the hedonic, pleasure-oriented parent brand condition than those in the utilitarian, enjoyment-oriented brand condition. The brand extensions were evaluated and compared using five independent samples t-test (shown in Table 6).

There were no significant mean rating differences between the Colgate and Dettol’s brand extensions for overall similarity to the parent brand, overall opinion of the products, likelihood of purchase, and impact on parent brand. The only significant difference between the two conditions was for the brand extension to be expected from the parent brand; higher for Dettol compared to Colgate’s (p<0.05; 4.95 vs. 4.35, 0.009 p-value). The results (Table 6) indicate that the parent brand name did not have an impact on brand extension acceptance. Thus, H3 is rejected. The parent brand extension was not evaluated more favorably by consumers in the hedonic, pleasure-oriented parent brand condition than those in the utilitarian, health-oriented brand condition.

Brand extension similarity ratings, overall opinion ratings, purchase intent scores, the impact on the parent brand image, and the degree to which one would expect the brand extension from the parent brand were moderately high, ranging from 4.24 to 4.96 on the seven-point rating scale.

Table 6 below shows the mean rating for each attribute for each condition as well as the overall p-value from each independent samples T-test.

Table 6: Independent T-Test Results for H3 Questionnaire Attributes

 

Utilitarian Brand

Colgate

Hedonic Brand

Dettol

df;F

T-Test

Significance

Overall opinion of the product

4.94

4.96

235; 0.016

0.904

Likelihood of purchasing the product if offered by parent brand

4.53

4.24

235; 0.980

0.199

How opinion of parent brand would be impacted from offering the product

4.89

4.91

236; 0.446

0.874

Expect parent brand to offer the product

*4.95

4.35

233;11.073

233;11.073

 

EFFECT OF STATE, PRODUCT INVOLVEMENT, AND LIFESTYLE & HEALTH STATEMENTS

There were 16 questionnaire attributes to measure the subjects’ level of involvement with product and their lifestyle and health. Factor analysis using varimax rotation was run to reduce these statements to three distinct uncorrelated factors. The three-factor solution had an eigenvalue of 1.221. The factor scores were saved as standardized regression variables for further analysis. The three factors were qualitatively named:

  1. Product Involvement

  2. Lifestyle/Health

  3. Stress

SUMMARY

In summary, there were very few significant differences among the conditions. The product was rated very similarly in terms of its level of healthiness, and degree of acceptance as a brand extension for each condition. The three hypotheses were all rejected. There was not evidence of a placebo effect in this experiment based on the nature of the parent brand. That is, whether they did not know the parent brand, thought the parent brand was a familiar, hedonic, pleasure-oriented, or thought the parent brand was utilitarian, health-oriented did not have a significant effect on their evaluations of the product or the evaluation of the brand extension from the two parent brands.

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CHAPTER FIVE: CONCLUSION

CONCLUSIONS

This experiment represented an initial assessment of the extendibility of hedonic, pleasure-oriented parent brands, expanding the knowledge in the brand extension arena. Additionally, this dissertation aimed to contribute knowledge in the area of potential placebo effects in terms of the effect of the perceived hedonic or utilitarian nature of a parent brand name on taste perceptions and brand extension acceptance.

While placebo effects have been demonstrated in prior research, there was not strong evidence for the presence of these effects in this research. The nature of the parent brand in this experiment did not have a significant effect on taste or product healthiness perceptions or brand extension acceptance. Furthermore, subjects’ higher degree of familiarity with the Colgate’s brand than the Dettol brand did not significantly impact subjects’ evaluations of the products.

There was fairly high acceptance of the brand extension from both parent brands (4.95 mean on seven-point scale for Dettol and 4.35 for Colgate, on the same scale). Furthermore, in both conditions, the extension received high similarity ratings to the parent brand, a key determinant of extension success, which may have reduced any potential placebo effects. Interestingly, self identified chocoholics within the Colgate’s parent brand condition expressed higher acceptance of the product extension from Dettol’s than those who self identified as non-detergents. This suggests that those who love a product most may be the most open to a healthy or low quality option being introduced.

Interestingly, the utilitarian, health-oriented and hedonic, pleasure-oriented brands received mean ratings in the low 3’s out of 7 on the four healthiness attributes, with no significant differences between the brands. In the pretest, where no detergent was consumed before or after the evaluation of the brand name, these brands were viewed as markedly different on the attributes “healthy,” and “freshener.” Specifically, Colgate scored higher on all three variables. Thus, the lack of significant differences between the brand conditions after tasting the detergent might suggest that subjects disregarded the brand information as soon as health information was available. While we did not see the hypothesized placebo effects in the experiment, there could have been a reverse placebo brand label effect on product perceptions/expectations and pre-consumption. After testing the health care products, it seems the impressions of the brands’ in terms of healthiness changed. Colgate seemed less healthy in the experiment than the Colgate brand in the pretest.

In addition the potential aforementioned brand label effect, there were some other interesting significant brand label effects evident for the Colgate’s brand. The hedonic, pleasure-oriented dimensions of the brand appears to have impacted subjects’ perception of the health care products in terms of favorability compared to their favorite one, the overall perceived healthiness of the product. Perhaps most surprising, the brand appeared to affect the personal lifestyle and health attributes the experiments’ participants used to describe themselves. The fact that a low quality product represents more of a stretch in terms of a brand extension for Colgate’s than Dettol was also observed in the results.

The Colgate’s products were rated significantly more favorably than the Dettol version for being “better than my current favorite health care products.” This was not surprising and is in line with Colgate’s favourable ratings in terms of quality, being healthier, and likeability.

Colgate’s products were significantly less likely to be expected from the parent brand than the Dettol version. The brand extension is likely seen as more of a stretch for Colgate’s than Dettol because Dettol already produces a wide variety of health care categories), while Colgate, in contrast, solely makes health care products with no detergent options available.

Colgate had fewer significant gender and age differences than the Dettol condition particularly on liking the products and believing it to be a high quality, natural product. In the Dettol condition, males were more likely than females to believe the product to high quality and a natural product, as well as to expect Colgate to offer it. Those under the age of 25 were significantly more likely than those older rate the product highly for being healthier, decadent, high quality, a natural product, and freshener as well as liking the appearance, feeling satisfied and good as they consumed it, being likely to purchase it, and having a more positive opinion of Dettol from offering the brand extension. This could represent an indirect labeling effect whereby the Dettol label makes the product more open to individual construal of the health experience than either the Colgate’s label or no label conditions. It is also possible that men and women react to healthy brand cues differently.

The subjects in the Colgate’s condition were far more likely to claim to be leading a healthier lifestyle than those in the no-label condition. The conditions were randomly assigned, and the actual detergent substance was held constant across conditions. The fact that those in the hedonic condition were more likely to claim to exercise represents a possible defensive reaction to the Colgate’s label as opposed to the non-labeled condition. The guilt of indulging in a hedonic brand may have increased their tendency to say that they follow a healthy lifestyle, feel that exercise is a very important part of their life and they love to exercise, use natural foods, and always read the labels on foods. This follows some of the hedonic, pleasure-oriented research in terms of justifying or feeling a sense of guilt with an indulgent “vice” consumption experience may cause consumers to compensate or counterbalance with virtuous behaviors or self-reports (Dhar and Wertenbroch, 2000; Strahilevitz and Loewenstein, 1998).

In sum, there was not sufficient empirical support for any of the three hypotheses tested. However, there was some evidence of a brand label effect that might have impacted how the participants in our experiment responded to other questions about their life style.

RECOMMENDATIONS FOR FURTHER RESEARCH

There are several potential areas for further research into the extendibility of hedonic, pleasure-oriented parent brands and placebo effects. In this experiment, the only aspect manipulated was whether the parent brand offering the products was hedonic or utilitarian in nature. The product consumed was rated favorably with regards to decadence, and quality. There was some skepticism regarding the product being natural, healthy, and freshener. Other studies might use product that is not perceived as favorably (i.e. more bland in nature) and/or manipulate the type of product used per condition (i.e., very bland, moderate, and very healthy) to gain more insight into the potential placebo effect of a brand name when the product itself is not so fabulous.

This experiment had subjects consume the product however; some brand extension studies only evaluate the acceptance of the brand extension without consumption. Thus, it might be worthwhile to assess and compare the acceptability based solely on the parent brand name both before and after consumption.

Another direction for additional research is to include other cues such as product packaging, health information, brand logos, and prices. These cues might interact with brand name as well as have their own effects that impact consumer perceptions. Future research might also evaluate other health care claims, such as “less healthy,” “healthy,” “reduced antiseptics,” or other health care claims.

It would be promising to have more empirical evidence regarding the extendibility of hedonic, pleasure-oriented parent brands. Research might examine other extension categories that are viewed as less similar to the core brand to determine the boundaries into which a hedonic, pleasure-oriented brand can extend.

LIMITATIONS

This dissertation has several potential limitations. First, a sample of participants may limit generalizability to the extent they could be different from the general population in terms of how brands affect their lifestyle preferences. Second, only health care products were used as a brand extension category. The findings thus may not be generalizable to all other health care categories. The experiment was also conducted in the absence of such cues as price, packaging, and advertising, which might interact with brand name to affect taste perceptions as well as brand extension acceptability. While this experiment isolated only one variable, the parent brand name offering the product, there could be an interaction between the nature of the parent brand and other variables such as price, labeling or nutritional information. Consumers might be affected differently if such variables were present in the experiment.

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