Consumer Evaluations of Brand Extension: The Impact of ... · PDF filejanuary · april...

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Consumer Evaluations of Brand Extension:The Impact of Brand Relationship Qualityand Naming Strategy*1

Busacca, B.; Bertoli, G.; Pelloni, O. (2009). “Consumer Evaluations of Brand Extension: TheImpact of Brand Relationship Quality and Naming Strategy”. EsicMarket, 132, pp. 285-306.

AbstractThis study explores the impact of brand relationship quality and brandnaming strategies on the success of brand extensions. The authors present theresults of an experiment based on a 2x2x2 between-subjects design, wherethe following three independent variables are considered: the category fit bet-ween the products involved in the extension decision (high vs. low), thenaming strategy chosen for the new product (parent brand vs. sub-brand pro-minence), and the level of brand relationship quality (high vs. low). Thedependent variable is the consumers’ evaluation of brand extension.The findings suggest that when brand relationship quality is high consu-mers evaluate the extension more favourably, no matter the level of cate-gory fit. When category fit is high (low) and brand relationship quality ishigh, however, evaluations of the extension are enhanced if the parent-brand name (sub-brand) is more prominent. If brand relationship qualityis low, brand naming strategy does not affect consumers’ evaluation.

Key words: Brand extension, brand relationship quality, naming strategy.

JEL Code: M31.

Bruno Busacca / Ottavia PelloniUniversità Luigi Bocconi. ([email protected] / [email protected])Giuseppe BertoliUniversità degli Studi di Brescia. ([email protected])

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(*) The authors wish tothank Marina Carnevale,PhD candidate at BaruchCollege, City University ofNew York for her help insubstantially improving the writing style of the paper andLeonardo Toscano for hisprecious assistance todata collection.

1 In number 130 of ESIC Market there was an incorrect version of the article “Consumer evaluations of Brand Stret-ching: the impact of brand relationship quality and naming strategy” by Busacca, B. and Bertoli, G. The editor apo-logises for this error and includes the final piece in this number.


consumer evaluations of brand extension: the impact of brandrelationships quality and naming strategy

1. IntroductionBy directly influencing opportunities of value creation, brand extensionstrategies are of crucial importance both from a managerial and a theore-tical perspective. As a matter of fact, while firms have continuously incre-ased the implementation of such strategies in order to enter new markets,a consistent stream of research has been devoted to investigating the fac-tors that may influence the success of brand extensions.

Initially, numerous studies have highlighted the fundamental role ofcategory fit (Aaker and Keller, 1990; Boush and Loken, 1991; Russel et al.,1999; Jun et al., 1999). However, in light of the success-cases of brandsextended in product categories different to the original, marketing researchhas further developed the conceptualization of fit, focusing on brand asso-ciations. More specifically, research has shown that the fit perceived bet-ween brand associations and extension, namely brand fit, may affect con-sumer evaluation more than the category fit (Park et al., 1991; Aaker andKeller, 1992; Broniarczyk and Alba, 1994; Han y Schmitt, 1997; Swami-nathan et al., 2001).

More recently, some studies have emphasized the role played by othervariables, such as brand reputation (Hem et al., 2003), familiarity with thebrand (Martinez and De Chernatony, 2004), the perceived quality of thebrand and the sequence of the extensions progressively carried out (Aakerand Keller, 1992; Gronaug, 2002), the number of products under the samebrand name and the consistency of the quality level among them (Dacinand Smitt, 1994).

While brand extensions have been thoroughly investigated, little isknown about the impact that the quality of the relationship between con-sumers and brand may have on the success of these strategies. This issue isvery important as the new technologies and the new digital environmentsemphasize the centrality of consumer-brand relationship as a source of sus-tainable competitive advantages for the firms. Building on Fournier’s(1998) conceptual framework as well as Park and Kim’s (2001) and Parket al. (2002) research findings, our study represent an attempt to partiallyfill this gap. More specifically, the objective of the current study is twofold.First, we want to confirm that brand relationship quality may positively

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affect consumers’ extension evaluations. Second, we explore the impact ofthe naming strategy chosen for the extension (parent brand vs. sub-brandprominence), with a view to verifying if and how it may interact with thequality of the relationship between brand and consumers.

The structure of the paper is as follows: paragraph 2 presents a litera-ture review on brand relationship quality and illustrates the researchhypothesis; paragraph 3 explains the methodology, procedure, and resultsobtained; finally, in the last session the main managerial implications of thestudy are taken into account.

2. Theoretical Background and research hypotheses The relationship between brand and consumer holds a key position amongmarketing issues. A rather interesting perspective assumes that interperso-nal relations dynamics should be taken into account when studying suchphenomenon. In this view, consumers may interact with brands in waysthat reflect interactions among individuals. (Fournier, 1998; Aaker et al.,2004; Aggarwal, 2004). Such perspective has been developed building onresearch by Fournier (1998), who proposed the construct of brand rela-tionship quality in order to highlight the contribution that the interactionwith a brand can provide to consumers in terms of meanings, psychologi-cal and social well-being. Thanks to affective and socio-emotive attach-ments, behavioral ties and supportive cognitive beliefs, brand relationshipquality can positively affect the potential of brand extension by enhancingthe breadth of brand awareness as well as the favorability of brand asso-ciations. Brand relationship quality increases the breadth of brand aware-ness (related to the range of purchase situations and use in which the brandis recalled in one’s memory) by progressively discarding the connectionbetween product and brand and making a stronger entry of the latter intosystems created by consumers in order to obtain functional benefits as wellas to give a meaning to their lives (Fournier, 1998). This dissolution isfinally the outcome of an abstraction process, which determines a pro-gressive weakening of the “brand - product - functional benefits” connec-tions and in the transfer of such connections onto a wider level of “brand- self-identification feelings - social and psychological well-being”.

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Through this process, the brand goes beyond the boundary traced by thesingle product category, thus widening its potential of extension.

Brand relationship quality influences also the favorability of brandassociations. Indeed, it depends upon the desirability of the associations aswell as the ability attributed to the brand itself to deliver them effectively(Keller, 1998). Both factors (desirability and deliverability) are directlyimpacted by the affective attachments and supportive cognitive beliefs con-nected with the brand relationship quality, while its behavioral ties,through commitment and interdependence makes a repetition of the abo-ve causal influences easier.

In light of such considerations, the main objective of the current re-search is to further explore the effects that the existence of a strong rela-tionship between brand and consumers may have on the success of a brandextension decision. Unfortunately, these effects have been rarely investiga-ted. One exception is represented by Park and Kim’s research (2001), inwhich the authors analyze the interrelationships between quality perceivedof the brand, quality of the relationships between brand and consumers,and consumers’ purchase intentions of the new product. More specifically,the authors show that the relationship between brand and consumersinfluences purchase intentions in two ways:

– indirectly and positively, through the enhancement of the qualityperceived of extension. The size of such effects depends on thedegree of fit perceived between the original and the extended pro-duct category;

– directly, disregarding the perceived quality of the extension and thedegree of category fit.

The authors, however, highlight the limitations of measures of thebrand-consumer relationship used; moreover, they call for a replication ofthe study based on more complete and refined evaluation frames and expli-citly refer to Fournier’s brand relationship quality construct.

In a following research, the same scholars and colleagues (Park, Kim,and Kim, 2002) operationalized such construct and demonstrated that

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when levels of brand relationship quality are high consumers react betterto the extension (both in terms of evaluations and purchase intention) asopposed to those that have low levels of brand relationship quality.

As a matter of fact, when quality of the brand relationship is high themeans-end chains, that summarize the memory networks with which con-sumers represent the brand (Gutman, 1982; Anderson, 1983a and 1983b;Olson and Reynolds, 1983; Reynolds and Gutman, 1984), achieve a highlevel of abstraction. The exposure to stimuli related to the brand elicits notonly the functional benefits or the connection with specific product cate-gories, but also the values that express the brand-consumer relationship,the affective components associated to the brand, and the meanings thatthe brand transmits to the consumer during his lifetime (Aggarwal, 2004).These effects should result in an increased potential of brand extension.

Based on the abovementioned effects, we first want to explore howbrand relationship quality and fit perceived between the original and newproduct category interrelate when a strategy of brand extension is imple-mented. A consistent stream of research has shown that choices of exten-sion based on a high perceptual fit elicit more favourable attitudes towardsthe new product. In the case of noticeable similarity between the categoryof the original product and that which is being extended, it is easier for theconsumer to transfer his positive attitude about the brand to the new pro-duct, especially when considering the functional benefits that may be satis-fied by the brand (Boush and Loken, 1991).

Moreover, the existence of a high quality brand-relationship broadensthe meanings attributed to the brand beyond the functional benefits offe-red by the product that the brand identifies, thus reducing the constraintsrelated to the perceptual fit and increasing the potential of extension(Aggarwal and Law, 2005). Consequently, when the brand relationshipquality is high, it is reasonable to expect that, even when the category fitis low, attitude towards the extension will be significantly enhanced. Thus,our first hypothesis states:

H1) consumers who associate to the brand a high level of relationshipquality react more favourably towards the extension than those who

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associate to the same brand a low or null relationship quality, inde-pendently of the level of perceptual fit.

A second area of interest of our research refers to the interactionsamong the brand relationship quality, the level of perceptual fit and thechoices relative to the naming of the new product (i.e., the extension). Spe-cifically, our objective is to investigate the influence of brand relationshipquality on the relationship between the perceived fit and naming decisionsof the extension.

Some studies have shown that when an extension may be potentiallynegatively evaluated (for example, because brand associations do not wellsuit the new product category) communication policies should emphasizeinformation about the new product rather than remind consumers of theoriginal brand (Aaker and Keller, 1990; Bridges et al., 2000). It followsthat the name of the new product should be adapted to the degree of fitperceived between the categories involved in the extension through a sub-branding choice; that is to say, through the association of a new name tothe original brand that may create additional associations apt to facilita-ting the acceptance of the new product.

This would allow to leveraging on the brand knowledge established inthe traditional business while at the same time reducing the limitations thatcould follow the possible existing distance between the traditional and thenew product category. Furthermore, the possibilities of negative conse-quences on the parent-brand would be significantly reduced, in as much asthis and the sub-brand would be “distanced” from both a cognitive pointof view and a strategic market positioning perspective. Specifically, Kellerand Sood (2003, p. 14) observe that: “Sub-branding (…) credibly sends asignal to consumers to expect differences in the extension and distances theextension from the parent brand. Sub-branding strategies can thus alterconsumer attributions regarding whether or not the parent brand shouldbe held directly responsible for failed extensions. (…) Thus, sub-brandingis one managerially controllable factor that permits firms to engage in amore active extension strategy, allowing the brand to ‘make mistakes’ andextended farther than otherwise would be the case”.

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The choice of realizing the brand extension through sub-branding high-lights the problem of prominence, i.e., of the relative visibility attributableto the parent-brand rather than to the sub-brand (Keller, 1998). In thisregards, it would be reasonable to expect that when the fit perceived bet-ween the existing and the new product category is low, the sub-brand pre-dominance might be a better option; in the opposite situation (high cate-gory fit), though, consumers may easily transfer the positive attitudetowards the brand to the new product. Hence, more visibility to the parentbrand should be given.

The hypothesized effects of naming choices on consumers’ evaluationsof the extension appear, however, to apply only when consumers associa-te a high level of relationship quality to the brand. In such situations con-sumers develop strong cognitive, affective and behavioural connections tothe brand; the easiness of transferability of such connections may dependon naming choices. Therefore, when the brand relationship quality ishigh, the existence of a high category fit should lead to emphasize the pro-minence of the parent-brand when naming the new product. When cate-gory fit is low, higher visibility to the sub-brand should be preferred. Inthe case of low brand relationship quality, the brand does not elicit parti-cular meanings to the consumer, which indicates that the effects of thenaming choices may be, essentially, insignificant. Thus, our second hypot-hesis states:

H2a: when category fit is high and brand relationship quality is high, con-sumers evaluate the extension more favourably if in the name of thenew product the prominence of the parent-brand is greater. When thebrand relationship quality is low (or null), consumers’ evaluation willnot be influenced by the naming strategy adopted for the new product.

H2b: When category fit is low and brand relationship quality is high con-sumers evaluate the extension more favourably if in the name of thenew product the prominence of the sub-brand is greater. When thebrand relationship quality is low (or null), consumers’ evaluationwill not be influenced by the naming strategy adopted for the newproduct.

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3.1. Research Design The study planned in order to verify the abovementioned hypothesis isdivided into the following phases:

– brand selection;– scales of measurements development;– pre-test for categories of extension identification; – sample description and interviews structure; – scales of measurement validity and manipulation checks; – data analysis and test of the hypothesis.

3.1. Brand Selection As regards the brand, we have decided to carry out the experiment inreference to the Apple-Macintosh brand. This choice resulted from thefollowing considerations. Firstly, Apple-Macintosh, as well as being oneof the market leaders in computers and notebooks, stands out for alsohaving internally developed operative software, which makes it the maincompetitor of Microsoft in this business. Obviously this gives rise to asubstantial incompatibility between the software of the two brands and,as a consequence, the need for consumers to choose between one and theother. This leads to the hypothesis that those who use these brands arecharacterised by a well defined and coherent structure of preferences,which can be analysed through the brand relationship quality conceptualframework.2

Secondly, the brand Apple-Macintosh targets a wide variety of marketsegments; in particular, although its distinctive features (such as designinnovation, nice and simple graphic interface) are greatly appreciated byyoung people (the success of I-Pod comes to mind), in the traditional sec-tor (personal computers) this brand also gained a strong competitive posi-tion in business to business market.

Finally, despite the recent launch of I-Pod, the current state of extensionpotential of the brand has scarcely been exploited. Such a characteristichas greater importance for the objectives of our study, as it allows foreasier elaboration of the manipulation checks.

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(2) It is interesting, at thispoint, to remember Aggarwal (2004, p. 87),exemplifying the analogyof relationships betweenbrands and consumerswith those existing in asocial context: “There isabundant anecdotal evidence of people beingcrazy about some brands.(…) The love affair thatsome consumers havewith their favorite bug canbe seen on the innumerable Web siteswhere consumers haveshared their intimate experiences with thebrand. Mac users, reputed to be very passionate about theirbrand, have Web pagesknown to feature an altered picture of BillGates that includes devil-style horns, entitled‘Save us from Gates ofhell’. I personally know anadvertising executive whogot the Apple logo ofMacintosh tattooed on hischest - next to his heart!”



3.2. Scales of MeasurementTo measure the dependent and independent variables, we used multi-itemsscales, already tested in literature. Table 1 shows, for each scale, the num-ber of items used and the sources to which they refer.

3.3. Pre-testThe objective of the pre-test was to identify the product categories percei-ved as “similar” or “different” with regard to the main original categoriesin which Apple-Macintosh works (personal computers). Adopting thesame procedure used by Keller and Aaker (1992), a sample of 42 partici-pants was asked to rate, on a scale of 1 (no similarity) to 7 (perfect simi-larity), the perceived fit between the traditional product of the Apple-Macintosh brand and the following product categories: mobile phones,digital cameras, video consoles, televisions, pocket-size computers, andsportswear. The results are shown in table 2.

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Variables Scales of measurement Number ofitems

Sources

Brand relationship quality Scale 1 (total disagreement) – 7 (totalagreement)

34 Park et al. (2002)

Category fit Likert Scale 1 (no similarity/coherence)– 7 (high similarity/coherence)

2Hem & Iversen (2003)

Consumers evaluation of theextension

Likert 1 Scale (low quality ) – 7 (highquality)

5 Zhang & Sood (2002);Park et al. (2002)

Familiarity of the consumerswith the product category inwhich the extension is produced

Likert 1 Scale (no familiarity) – 7 (highfamiliarity)

2 Alba & Hutchinson(1987)

Probability of extensionpurchase

Likert 1 Scale (no probability) – 7 (highprobability)

1

Table 1. The scales of measurement: a synthesis



On the basis of the pre-test, we decided to propose the extension ofApple-Macintosh brand to pocket-size computer (high category-to-cate-gory fit) and sportswear (low category-to-category fit). Brief descriptionsof these extensions have been predisposed.

Regarding to the name of the new product, in the case of predominan-ce of the parent brand we selected the brand “APPLE Ergos”, while in theother condition (predominance of the sub-brand) the proposed brand was“ERGOS by Apple”. Table 3 shows the descriptions of the products usedin the experiment, while figure 1 synthesises the stimuli to which the sam-ple was exposed.

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Similarity between personal computer Average scores Average squared-deviation

Mobile phone 3.7976 1.21002Digital camera 4.1786 1.37407Video console 4.8690 1.19480Television 4.0476 1.46008Pocket-size computer 6.3690 0.84145Sportswear 1.8571 1.15972

Table 2. Average and average squared-deviation of the similarity opinions between personalcomputers and the other product categories


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APPLE ErgosAPPLE Ergos is a very light, handy, pocket-size computer.It uses an operative system (Mac OS M) made expressly byApple-Macintosh and has an Intel processor, whichguarantees reliability and speed. It has a wide display and64/128 MByte of RAM memory.It offers a wide and very complete range of functions,among which is included a telephone connection throughGSM/GPRS networks, a GPS receptor with the possibilityof installing satellite navigation programmes, wirelessconnection with Bluetooth technology and a 2.0 Mega pixelcamera. It is available in two colours (black and white).

ERGOS byAppleERGOS by Apple is a very light, handy, pocket-sizecomputer. It uses an operative system (Mac OS M) madeexpressly by Apple-Macintosh and has an Intel processor,which guarantees reliability and speed. It has a widedisplay and 64/128 MByte of RAM memory.It offers a wide and very complete range of functions,among which is included a telephone connection throughGSM/GPRS networks, a GPS receptor with the possibilityof installing satellite navigation programmes, wirelessconnection with Bluetooth technology and a 2.0 Megapixel camera. It is available in two colours (black andwhite).

APPLE ErgosAPPLE Ergos is a line of sportswear aimed at satisfyingthe needs of both amateurs and professionals.It has a wide range of very technical garments (T-shirts,shorts, all-in-ones, sleeveless T-shirts etc.) aimed for use ina large number of sports (running, fitness, gymnastics etc.)They are lightweight, resistant and breathable. Designed toadequately fit the needs of the most demandingsportspeople, they have been made with technologicallyadvanced materials and they are characterised by a widerange of bright, vivacious colours.

ERGOS byAppleERGOS by Apple is a line of sportswear aimed atsatisfying the needs of both amateurs and professionals.It has a wide range of very technical garments (T-shirts,shorts, all-in-ones, sleeveless T-shirts etc.) aimed for usein a large number of sports (running, fitness, gymnasticsetc.) They are lightweight, resistant and breathable.Designed to adequately fit the needs of the mostdemanding sportspeople, they have been made withtechnologically advanced materials and they arecharacterised by a wide range of bright, vivacious colours.

Table 3. The descriptions of the product given to the interviewees



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Prominence

Parent-brand Sub-brand

High

Category

Pocket-size computerAPPLE Ergos

Pocket-size computerERGOS by Apple

fit

LowSportswear lineAPPLE Ergos

Sportswear line ERGOS by Apple

Figure 1. Synthesis of the proposed stimuli

3.4. Sample Selection and InterviewsConsidering the variety of market segments targeted by the Apple-Macintosh brand, we decided to focus on consumers aged between 18and 60. Participants were approached outside some computer stores,they were asked to fill in individually a questionnaire which contained afilter question at the beginning, in order to select only participants witha high knowledge of the Apple-Macintosh brand. The final sample wasmade of 248 subjects (58% men and 42% women). These subjects wererandomly divided into four groups; to each group was given a productcard corresponding to one of the four possible extensions showed inFigure 1.

After reading the product descriptions, the subjects involved in the sur-vey were asked to evaluate the extension presented. Afterwards, they res-ponded to questions aimed at measuring brand relationship quality, theirfamiliarity with the product category of the extension (control variable),perceived fit between this category and the Apple-Macintosh traditionalproduct. Finally, some information about the socio-demographic profile ofthe participants was collected.



3.5. Scales of measurement validity and manipulation checks We used factor analysis to verify the consistency of the measurement scalesand calculated Cronbach’s α in order to check their validity. All the factoranalyses have given satisfactory results. Regarding brand relationship quality,we confirmed the existence of different dimensions of the construct (Love,Self connection, Commitment, Intimacy, Brand partner quality). However,for the objectives of the study, we decided to treat brand relationship qualityin line with the solution adopted by Park and Kim (2002). Table 4 summari-zes the Cronbach’s α coefficients for all the measurement scales.

Finally, the adequate comprehension of the stimuli given to the intervie-wees has been verified through the T-test. The perceived fit between the ori-ginal product category and each of the two categories in which the hypothe-tical extension have been placed, has turned out to be very different (2.35 forsportswear; 5.95 for pocket-size computer, t(247) = -36.473, p<0.001).

3.6. Data analysis and test of the hypothesis In summary, the study is based on an experimental 2x2x2 between-sub-jects design. The independent variables taken into consideration have been:category fit between traditional product and the extensions (high vs. low);the naming strategy for the new product (prominence of the parent brandvs. sub-brand); brand relationship quality (high vs. low). As dependentvariable we considered the consumers’ evaluation of the extension.

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Variable Cronbach’s αBrand Relationship quality 0.,96

Category Fit 0.79 (sportswear)0.82 (pocket-size computer)

Consumers evaluation of theextension

0.92

Familiarity of the consumerswith the product category inwhich the extension is produced

0.83

Table 4. Scales validity



Participants involved in the experiment have been subdivided into 2groups, characterised respectively by low and high brand relationship quality(BRQ). For this aim, we decided to split the data using as a base the meanvalue (2.70) of the global index of the BRQ. In this way it has been possibleto assign 124 subjects to the first group (low BRQ, mean = 1.97) and 124 sub-jects to the second (high BRQ, mean = 3.77). The validity of this subdivisionhas been verified by a t-test, which confirmed that the BRQ values are signi-ficantly different: t(246) = 492.7, p<0.0001. Based on the subdivision carriedout, each of the eight experimental cells was made up of 31 subjects.

We tested the research hypothesis by using analysis of variance; resultsare shown in table 5.

As we can see, the analysis of the variance confirms the existence ofa main effect both for category fit (p = .000) and brand relationship

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SourceType III Sum

of SquaresDf Mean Square F Sig.

Corrected Model 233.711(a) 16 14.607 20.556 .000

Intercept 303.034 1 303.034 426.450 .000

Età 1.61E-006 1 1.61E-006 .000 .999

BRQ_Group 129.861 1 129.861 182.749 .000

FIT 56.635 1 56.635 79.700 .000

STRAT (Naming Strategy) .893 1 .893 1.257 .263

Gender 1.488 1 1.488 2.095 .149

BRQ_Group x FIT 14.737 1 14.737 20.740 .000

BRQ_Group x STRAT .494 1 .494 .695 .405

FIT x STRAT 3.649 1 3.649 5.136 .024

BRQ_Group x FIT x STRAT 7.156 1 7.156 10.070 .002

Error 164.148 231 .711

Total 6425.080 248

Corrected Total 397.859 247

a R Squared = .587 (Adjusted R Squared = .559)

Table 5. The results of the analysis of the variance



quality (p = .000). The two-way interactions: a) product fit and namingstrategy (FIT x STRAT); b) brand relationship quality and category fit(BRQ x FIT), are also statistically significant (p = .024 and p = .000).These interactions are further specified by the three –way interactionbetween category fit, brand relationship quality and the naming strategyfor the new product (BRQ x FIT x STRAT, p = .002), as we will showlater.

The main effect for brand relationship quality and the contrast analy-sis (F(3) = 91.08, p = .000) confirm the hypothesis H1: as can also be seenin figure 2, the subjects who associate the brand with a high level of brandrelationship quality evaluate the extension more favourably than those forwhich these levels are modest, whatever the level of category fit is. Thepositive inclination of the lines shows the main effect of brand relationshipquality, while the main effect of category fit can be captured by observingthat, on the graph, the line corresponding to high category fit is alwaysabove that referring to low category fit.

Figure 2 highlights also the two-way interaction between category fitand brand relationship quality: the line corresponding to low category fitis more inclined than the line indicating the high category fit. This meansthat the effect of the brand relationship quality is greater when the cate-gory fit of is low or, in other words, that a high level of brand relationshipquality can make an extension be accepted by consumers although itimplies the entrance in a product category very different from the originalone.

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The three-way interaction (BRQ*FIT*STRAT) and the contrast analy-sis confirm the hypothesis H2a and H2b (Fig 3 and Tab 6). In fact, obser-ving figure 3a and table 6, we can see how, in the case of low category fit,the name given to the new product has an effect only when brand rela-tionship quality is high. In this condition, consumers evaluate more positi-vely the extension characterized by the prominence of sub-brand (F(3) =58.874, p < .000).

On the other hand, in the case of high category fit (Fig. 3b), the namingstrategy chosen for the new product choice influences the extension eva-luation only when brand relationship quality is high. However, in this con-dition, consumers’ evaluation of the extension is greater if the parent-brand is more prominent (F(3) = 12.501 p< .07).

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4.95

3.45

5.44

5.92

Figure 2. The interaction between category fit and brand relationship quality



4. Discussion and Managerial implicationsSome methodological limitations of the study should be taken intoaccount. First, the study has been arranged in a laboratory setting, thusfailing to consider some aspects of actual purchase situations. So it wasimpossible to evaluate the effects due to factors such as the marketingand retailing mix, as well as the influence of sales representatives.Second, the stimuli used involved a brand of consumer durable goods,

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5.00

4.89

5.7

6.1

3.483.4

5.83

5.02

Figure 3. The three-way interaction between category fit, brand relationship quality and naming strategy

Level of BRQ Extension with low category fit(pocket-sized computer)

Extension with high category fit(sportswear)

Evaluation of the extension Parent-brand Sub-brand Parent-brand Sub-brandLow BRQ 3,48 3,40 4,89 5,00High BRQ 5,02 5,83 6,1 5,7

Table 6. Estimated mean evaluations of the extensions



for which the extension hypothesized had extremely high or low levels ofcategory fit; however, a comprehension of the observed phenomenawould be enhanced by taking into account other brands and productcategories.

In spite of these limitations, the findings here presented have someinteresting managerial implications. Above all, the importance of thebrand relationship quality is confirmed: given the current competitivescenario, where greater information availability enhances consumers’power of purchase within an increasingly number of brand options, thecreation and maintenance of strong and lasting relationships with con-sumers plays a fundamental role in building an increasing brand value.In regards to extension strategies, such relationships allow to account ona solid and loyal base of consumers that may support the brand in com-petitive scenarios different than the original one. Our findings supportthis assertion by showing a strong correlation between brand relations-hip quality and consumers’ attitude towards the extension. Brand rela-tionship quality is thus the basic premise to the potential of brand exten-sion.

From a managerial perspective, it follows that fundamental relevanceshould be conferred to the development and maintenance of the brandquality relationship has a crucial relevance. This implies the need to worktowards the abstraction of the meanings and value proposition of thebrand. Clearly, only complex processes that involve consistent investmentsover time on multiple business activities (e.g., communication and corres-ponding brand associations development) could satisfy such need. Moreo-ver, the development of the brand relationship quality can generate a sig-nificant increase in cash flows. High levels of brand relationship qualitypositively affect consumers’ behavior, by enhancing their attitudes towardsextensions. The latter are often profitable because of the transfer to thenew competitive context of:

– premium price established in the original business;– solid relationships with customers (both intermediate and final),

which in turn lead to lower market penetration costs;

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– sources of bargain power towards the retail, which allow for grea-ter control of intermediate margins and for the possibility to levera-ge sales channels.

Another interesting aspect that our findings suggest relates to the rele-vance to be given to naming decisions on brand extension strategies. Pre-vious research has investigated the influence of naming of the extension onconsumer, disregarding the level of brand relationship quality. However, inthe current study we show that the naming choices of a new product havea fundamental effect on favouring the acceptance of the extension for con-sumers that associate with the brand a high level of relationship quality,rather than those who don’t.

More specifically, we focus on the prominence of parent brand versus sub-brand in the naming strategy chosen for the extension that becomes particu-larly significant in situations of high brand relationship quality. When categoryfit is high, a parent-brand prominence emphasizes the associations with theextended brand; in the opposite case (limited or null category fit), however, theprominence of the sub-brand indicates that the new product does not have aclose correlation with the other products of the same brand. In this case, whi-le consumers may be less inclined to transfer the original brand associations tothe new product, the brand extension strategy should not produce relevantspill over effects, given the perception of greater reciprocal distance.

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