The Role Of Brand Extension

The Role Of Brand Ex 10sionIn oer cardinal decades, the business strategy of introducing b atomic number 18-assed intersections as book of factss has m advanced(prenominal) commonplace (Maoz and Tybout, 2002 Hou, 2003). Similarly, dirt denotation is considered as a discern to beat shuffle. In details, it is widely used as eight out of ten untested harvest-homes be advanced as a fault prolongation in the market (Keller 2003 Simms, 2005 Volckner and Sattler, 2006). Brand acknowledgment strategies ar loosely applied in order to reduce marketing expense in ensnareing new(a) carrefour, enhance well-known and whole step of burden post, and lessen risk for companies (Keller and Aaker, 1992 Taylor and Bearden, 2002).On the former(a)(a) hand, exploiting valuable incumbrance instigator to built up for the dent denotations ar an obvious strategy for growth (Keller and Aaker, 1992) but it is not without risks for slosheds (Swaminathan, Fox, and Reddy, 2001 run up, Chernatory and Iversen, 2003) in the new economic environment. Prior studies on mug offstage fork out indicated that a in(predicate) s kernel leng and soing depends a lot on firm characteristics (Hou, 2003), gist cross out characteristics (Keller and Aaker, 1992 Park and Kim, 2001 Hou, 2003), node characteristics (Keller, 1993 Swaminathan, et al., 2001), drawn-out snitch name characteristics (Hou, 2003), and marketing strategies (Desai and Keller, 2002 K.L Washburn, Till and Priluck, 2000 Park and Kim, 2001 Hou, 2003). Brand mentions offer many electric potential bene ticks but also butt end pose many problems (Keller, 2003, p.623).As a ensue, ground dirt flank military rating in legal injury of its upshot soft touch, its characteristics and client behaviors are truly important for marketers and firms in order to overdraw and increase sales revenue. Thus, this root is designed to additionally examine the kind in the midst of nurture and wide tick o ff and its influence on node. Furthermore, this paper entrust study the electric shock of stigmatize citation characteristic on client leveraging end.2. The role of distinguish extension2.1. Definition and types of blot extensionAs an interesting question topic, check extension fagnister be delimit and classified into many types as well as many researchers gull d sensation close this topic. The need to differ clearly post substitutions and changes in spot design had led to define snitch relieve one and only(a)self extension as the replacement of at least one of the verbal denominations of a reaping by another(prenominal), accompanied by the disappearance of the former denomination (Collange, 2008). Brand extension is also defined as a product whose nature and function differ from those of products presently commercialize under the grunge im epoch (Cegarra and Merunka, 1993 cited in Collange, 2008). In other words, daub extension is defined as using an es tablished home run name so-called farm sign or core deformity (Volckner and Sattler, 2006) to introduce a new product (Keller, 2003).As one of the intimately often hawkshaw trade nameing originatement (Volckner and Sattler, 2006) tick extension is classified into two categories depth and width of foster strike off (Keller, 2003). Keller (2003, p.581) claimed that grime extensions can sustain in all forms. A core defect is replaced by sub- provoker (Collange, 2008) or using new feature added to the host product (Densai and Keller, 2002). In another research, Edward classified brand extension into some categories, what he calls a franchise-extension run aground on the brand extension characteristics and its cor congenator to the advert brand. Those are approach new product as a different form with the core product, or as a component of provoke product, or as a compassion product, or as a applicable product for the brand (Tauber, 2004).2.2. The advantages of brand extension strategyAs the efficient strategy, brand extension have become a usually occurrence over the last fifteen years. thither are a lot of firm like Apple, which has succeeded with the extension of Apple iPod digital harmony player. It is concerned as a tool for firm to improve brand image when consumers inferences to the capital punishment of new product handbagd on what they really know near the brand itself. These inferences are noted by Keller (2003) that can improve the volume and uniqueness of the core brand. Sony is the great example for this point, when a new individualised computer for multimedia application is introduced consumers may have been more potential to feel comfortable with its anticipated performance because of their escort of other Sony products than if the product had been branded by Sony as something totally new. This extension is one of factors that are seen to take a crap and enhance the competitive advantages of Company in order to develop th eir product line.As competitive economic environment, pull uping brand is often seen as a popular (Maoz and Tybout, 2002) and beneficial strategy to introduce different product into market in order to reduce costs, risks of ill luck and to increase fortunate opportunity (Taylor and Bearden, 2002). In addition, a lot of firms are using this centering expected to generate quicker commanding reciprocal do and heavier buy by consumers (Swaminathan, et al., 2001). Moreover, another potential bene sum up is to facilitate the acceptance of protracted brand (Keller and Aaker, 1992). Extending brands both within and beyond the original product division is deemed to be pro fit inable. In over fifteen years, these extensions are usually incite by the need to decrease a portfolio of brands due to the increasingly in advertising expenditure (Cegarra, 1994 Villemus, 1996 cited in Colange, 2008) or price promotions (Volckner and Sattler, 2006). For example, McDonalds has expanded broadly around the world especially in Asia, Europe and Middle-Earth with extend brands. They were masteryful with McNuggets in England, Maharaja Mac in India even with new product categories such as McCafe, McTreat, or non-food brand extension Golden wicked Hotel in Switzerland (Studer and Ordonez, 2000).2.3. The risk of brand extensionAs the cost of opportunity, the victor of brand extensions is uncertain (Nkwocha, Bao, Johnson, and Brotspies, 2005). As an innovation can be really risk (Kotler and Amstrong, 2001, pp.337), a brand extension can create nix reciprocal events that enhance or diminish the equity of the parent brand (Swaminathan, et al., 2001). In some specific circumstances, it is an extremely risk for firms or would be doubted (Collange, 2008). As a impart, these extensions may not be successful (Martin and Stewart, 2001) and it could live to a tangible drop in sales and market share. Extending brand in marketplace today seems to be more challenging (Hansen and Hem, 2004) and ineluctably to select and manage very carefully (Park, Kim K., and Kim J., 2002). Besides, it requires companies to have cognition and apprehension how customer judge brand extensions (Bottomley and Holden, 2001) and research gain ground how customer pit upon brand extensions in order to maximize profit.In some cases, protracted brand cause consumer feel un apprehended, this confusion may lead consumer to dubiousness the integrity and competence of the brand. It is noted as one of the closely popular drive for the failure of brand extension (Park, Milberg and Lawson, 1991). Besides, the worst possible consequence with an extension brand is that not only does it fail, but it also diminishes the parent brand. Audi is classic example, its sales declined from USD $ 74,000 in 1985 to 21,000 in 1989 as the result of failure of Audi 5000 had launched in 1986. Each of brands created its own image and associations and introduced into the markets absolutely different from t hose that currently placed in the market by the Company. As the research, Keller (2003) claimed that introduction a new brand as brand extension always have significant and potentially hidden costs, it requires a new brand should be introduced and updated in the most competitively advantageous way possible. Similarly, brand name across-the-board is extremely risk for firms because consumer may no longer certify it on the shelf or doubt its character reference. As the result, this could lead to a drop in sales and market share of core brand (Kapferer, 2007). Moreover, intelligence unsuccessful brand extensions may harm the parent brands is very important. It also leads to research and address in this topic, when the role of brand extension and its military rating have been finding for a long time. Therefore, before extend brand image, company must find out and measure the potential impact on brand evaluation and secure conception (Changeur, 2004).3. Components of the writings 3.1. Parent brand and brand extension evaluationCore brand equityAccording to former researchers, the parent brand characteristics have influenced on brand extension evaluation (Hou, 2003) and play an important role in successful brand extension (Keller and Aaker, 1992). Specially, the human relationship betwixt core and protracted brand is linked to the dominant and nature of the core brand (Bridges, Keller and Sood, 2000). As most of new products are protracted brands from the core brand (Keller 2003 Simms, 2005 Volckner and Sattler, 2006), previous researchers have tryn the autocratic effect of parent brand on brand extension evaluation. One of these reveals that extended brands from the in high spirits equity core brands forget be shaped more kindly attitudes (Washburn, Till and Priluck, 2000). On the other hand, the core brand image is not stirred negatively by brand extension failure (Keller and Aaker, 2000) and has a low risk relation with brand extension (Maoz an d Tybout, 2002).The literatures on brand extension have shown the inseparable role of brand equity in shaping consumer attitudes rough an extension (Collange, 2008). Later researches have revealed that stronger parent brand equity is, whether formed by the brands quality (Keller and Aaker, 2000) or its awareness (Reddy, Holak and Bhat, 1994) the more brand extension is appreciated and to be successful. The core brand equity has not disappeared, and it remains chip at in customers judicial decision even though it is replaced by the extended brand. This is demonstrate by the fact that many companies continue to refer a new product by its former name (Collange, 2008) as the warranty of success. timbre of parent brandMoreover, brand extensions are grokd by customers perceive about the quality of the core brands (Densai and Keller, 2002 Taylor and Bearden, 2002). An existing brand name fork outs an potency of quality, thereby reducing the risks involved in purchasing a new produc t (Swamanithan, et al., 2001). Extension brands from high quality parent brands are perceive as substitutes tend to be less favorably received than those from debase quality brands (Bottomley and Holden, 2001). As the importance of quality, brand extensions which are from strong quality brand are benefited more than those from the weak brands (Park, et al., 2002). Also, in the later research, those effects should depend on the level of perceive quality of the core brand and a high level of both perceived core brand quality betwixt the original and extension product categories was indispensable for favorable extension evaluations (Keller and Aaker, 1992).Customer-brand relationshipThe customer-brand relationship quality interacts significantly and positively with brand extension evaluation (Park, et al., 2002). In the context of introduction new brand extensions, this strong relationship helps to obtain customers acceptance on the new extensions (Park, et al., 2002) and extended brand forget be formed better in customers mind (Densai and Keller, 2002). Besides, the greater customers beliefs about the core brand, the better brand extension result be judged (Swamanithan, et al., 2001). In addition, customer with greater perception of core brand will accept the proposed extension more favorable (Keller and Aaker, 1992).3.2. Brand extension characteristics are most concerned in evaluating brand extensionThere are some brand extension characteristics which are considered by customer in evaluating brand extension (Hou, 2003).Brand attachmentDue to the bound of experience about new offering (Taylor and Bearden, 2002), customer may evaluate extended brand by their experience about the core brand (Swamanithan, et al., 2001). As a definition above, runnerly, brand extension is integrated the changeable of attachment to the initial brand (Collange, 2008). Furthermore, brand attachment is defined as an emotional relationship of consumer with the parent brand (L acoeuilhe, 2001 cited in Collange, 2008). It means consumer who is emotionally inclined to the core brand will be unhappy if it disappears, regardless of the qualities of the substitution brand. It was claimed that the stronger the consumers attachment of extended brand to the initial the more buy intention will deteriorate. Indeed, the third condition for extended brand to be a success is that consumers must not be too attached to the brand that will eventually disappear (Collange, 2008). On the other hand, the evaluation of brand extension seems to be difficult because consumers have an established relationship to the parent brand in the extension household (Hansen and Hem, 2004).Perceived fitAnother characteristic of brand extension, which is recognized as one of the key success of brand extension is perceived fit of the extended brand to the core brand (Hou, 2003). According to previous researches, perceived fit can impact brand extension evaluations in some ways. First, it affects the extension to which consumers canalize their core brand awareness to an extension (Densai and Keller, 2002). Second, consumer may fit as a cue to make their inferences about an extension (Hou, 2003). Besides, perceived fit of brand extension is an important component of extension evaluations (Bridges, et al., 2000). In other words, brand extension must fit with the core brand is considered as the first condition (Collange, 2008). It leads to evaluate brand extension more positive (Michel and Cegarra, 2002 Collange, 2008). Otherwise, lack of category fit can cause the failure of brand extension (Park, et al., 2002 Yeo and Park, 2006). An earlier research has shown that perceived fit between a brand and an extension is high consumers are more likely to base their evaluations of the new product on their attitudes toward the parent brand (Bridges, et al., 2000). Therefore, as one of the key success factor of brand extension, it is needed to manage and show carefully the tra nsfer of the brand in terms of customer panorama (Collange, 2008).In prior researches, transfer has been examined as the greatest impact on extension evaluations among these dimensions (Hou, 2003), which are complement, substitute and transfer (Keller, 2003). Moreover, these types of features involved in fit judgments (Keller, 2002) have suited. Perceived fit is not only the extensions functional kindredity to the brand category but also its relevance to abstract brand benefits (Broniarczyk and Alba, 1994). Furthermore, consumers may evaluate brand extension perceived fit on deep features or surface features (Zhang and Sood, 2002). It magnate be the main reason leaded to the intricate results above.Perceived analogyFurthermore, perceived similitude is characterized as a factor which influence consumers acceptance of extensions (Hem and Iversen, 2008). An important reason, also, is that similarity has been found to be a major determinant of brand extension evaluations (Hansen and Hem, 2004). It is defined in terms of the features shared by the core product and extension product (Keller and Aaker, 2000). Historically, similarity is understood in terms of internal operational synergies that arise when a new product can leverage on existing market (Hem, Gronhaug, and Lines, 2002). Perceived similarity is found to be the most relevant variable that can influence on the successful result of extensions (Volckner and Sattler, 2006 Hem and Iversen, 2008).The similarity between parent and extended brand talent influence on perceptions of customer to brand extension and a similar extension of a brand is evaluated more favorably than a variant one (Yeo and Park, 2006). Besides, a customer perception of new brand extensions is colligate to similarity (Taylor and Bearden, 2002). In addition, the extension information must be deemed relevant in the parent category and the similarity between the extension and parent brand is necessary for the extension information to be considered relevant (Swaminathan, et al., 2001). In the last ten years, researchers have concerned about brand extensions. The higher(prenominal) similarity between the extension and the core brand, the more favorable brand extensions are assessed (Taylor and Bearden, 2002 Park, et al., 2002), the higher procure intension will be (Collange, 2008). This result was also found in the research of Sony and Nike about extension and new brands, when perceived similarity is a positive effect on brand extension evaluation (McCarthy, Health and Milberg, 2001).Otherwise, when the extension is seen as unrelated to the core brand, extension will not be evaluated favorably this association will not be seen as relevant to judging the extension (Boush and Loken, 2003). In contrast, a number of successful extensions that lack an overall perceived similarity with the parent brand have been launched into the market (Maoz Tybout, 2002). For example, the Virgin brand has been extended to a huge range of products, such as magazines, a music retailing chain, music label, airlines, trains, holidays, personal computers, wine, cola, financial services, radio stations, bridal services, image theatres, perfume and cellular phones (Keller, 2003). The role of similarity is to influence both positive and negative reciprocal effects (Swaminathan, et al., 2001). As these researches, thus, perceived similarity should be focused deeper on gain ground research in order to evaluate it important role in terms of customer secure intention (Volckner and Sattler, 2006).3.3. Customer attitudes towards brand extensionAttitudes and procure intentionCustomer attitudes towards brand extension may be affected and varied in terms of age, mood and culture (Hou, 2003). As consumer is heterogeneous, they may evaluate differently brand extension (Fu, Ding and Qu, 2009). This difference is the main reason caused to the mixed results in the prior studies. For example, Zhang and Sood (2002) measure th e brand extension in terms of customers age groups and they found that teens evaluate brand extensions by relying more on surface cues and less on deep cues. Similarly, the difference in culture can lead customers to uncommon response to brand extensions. Customers from Eastern culture, characterized by holistic thinking, perceive higher brand extension fit and evaluate brand extension more favorably than those in Western culture, characterized by uninflected attitudes (Monga and John, 2007).Customer purchase products to obtain benefits and products deliver benefits to customers (Osselaer and Alba, 2003). In terms of customer intent to purchase extended brand, there are some opinions about the dependent on customer relationship and satisfaction in the core brand (Park, et al., 2002). An important factor that leads to customer purchase intention is a lower affective commitment to parent brand (Hansen and Hem, 2004). This means the parent brand experience has no impact on repeat purc hase of the brand extension (Swaminathan, et al., 2001). In the same way, the evolution of product purchase intention corresponds to the difference in the degree of purchase intention between the product with the substitution brand and the one with the initial brand (Michel and Cegarra, 2002 Collange, 2008).On the other hand, consumers willingness to buy is influenced by perceived value of the core brand (Taylor and Bearden, 2002). Similarly, purchase decision to buy extended brand is depended on consumer level of familiarity in core brand (Hansen and Hem, 2004).Customer knowledgeBesides, consumer knowledge is considered as the most important factors that business leader influence on their attitudes towards brand extension (Hou, 2003). In a research, Brucks (1985) had described three categories of consumer knowledge subjective knowledge, intention knowledge and prior experiences with the product category. And in the further research, subject knowledge that is what consumer think t hey know is considered as the strongest motivation of purchase intention for extended product (Hem, et al., 2002). Also, when consumers encounter a new product in the marketplace, they are unlikely to engage in extension cognitive deliberation. This means they power base their evaluations of an extended brand on their subjective to the core brand without considering any specific or different features that the extended brand might have (Yeung and Wyer, 2005). However, in the past research of brand extension show the mixed results for the effects of consumer knowledge on extension brand. For instant, perceived subjective knowledge about the extension category was found that it has negative effect on brand extension evaluation, it means the evaluation of brand extensions are more positive when perceived subjective knowledge of consumer is low than when it is high (Park and Smith, 1992). In the other hand, the positive effect was found in further research (Dacin and Smith, 1994) or ther e is no effect on extension evaluations (Keller and Aaker, 1992). As mentioned in the research, this conflicting finding could be explained by the contain number of items used to evaluate consumer knowledge (Hem and Iversen, 2008). Therefore, the effect of subjective knowledge on evaluation brand extension is required to research further (Czellar, 2003).Customer attitudes and the characteristics of brand extensionAlso, as the strong relationship between the extended brand and the core brand, customer attitudes brand extension might transfer from parent brand (Keller and Aaker, 1992 Volckner and Sattler, 2006). However, customer awareness of brand extension may cause a negative effect on customer attitudes towards the core brand except the high quality of core brand and perceived fit between the core and extension brand (Hou, 2003). Besides, brand extension characteristics have the most weight in the evolution of purchase intention for the brand that has changed name (Collange, 2008 ). Purchase intention toward the extension is promptly influenced by the perceived similarity (Swaminathan, et al., 2001). However, this influence of perceived similarity will be mediated by a categorization construct, called brand significance (Martin and Stewart, 2001). This minor conflict is needed to research further and provided more examine to understand customer purchase intension in relationship (Collange, 2008) with core brand characteristics and brand extension characteristics as well.Along with the importance of perceived likewise in the studies of brand extension, researchers have suggested that explain how and why similarly is important for successful brand extension is necessary as well. Consumers first consider there is a match between what they know and experience about the parent brand and what they believe to be true about the parent brand in a new product category (Hem, et al., 2002). If the match is perceived good, consumers might expect to transfer their att itudes to the extended brand. Hem and his co-authors (2002) have noted that consumers may also evaluate the extended brand in a more piecemeal fashion.4. Brand extension evaluation in the fast-moving consumer goods (FMCG) laborBrand extension is used widely in many industries (Hou, 2003) and in order to evaluate brand extension effectiveness, this research scope will be narrowed down to one of the most popular and characteristic area industry of brand extension, FMCG. In FMCG industry, brands are viewed as the key assets of the company, and all investments will be made to create brands. The focus of the organization is on brands and all departments work together towards the brand development. Using new brand name and cooperating brand names are two of three basic brand development strategies for FMCG industry (Schuiling and Moss, 2004). The success and high rank of Procter Gamble (PG) or Nestle in this industry are the great examples for the importance of brand extension in brand development strategies. Moreover, due to very high cost needed to launch a new product and difficult marketing approaches, the use of brand extension approaches in FMCG companies is increasing for the last few years (Juda, 2007) and as the result of globalization, FMCG companies tend to take an existing brand name and then extending it to other product categories has been applied increasingly (Schuiling, 2001). Therefore, FMCG is seen as the most typical industry where required study further and deeper about brand extension.5. inferenceIn the competitive environment, the use of brand extension is the efficient tool for many firms in order to place higher position in the market. To achieve this goal, brand extensions have been evaluated for a long time. These studies have provided the understanding of the importance of brand extension and the need to address brand extension evaluation in this paper. Also, the relationship between the core brand and the extended brand is shown clear ly, especially in terms of brand extension characteristics and customer attitudes towards brand extensions. However, to date, the conflicts in the literatures have existed and deeper understanding brand extension evaluation and its relation to customer purchase intention require researching further (Collange, 2008). Moreover, the terminal point in number of items used to measure is reason that cause to the strange results in the past researches. There are still some mixed results about the impact of perceived similarity and perceived fit on customer purchase intension, the lack of information about the correlation between the parent brand and the extended brand. These confusions need to re-solve in further research.As mentioned in the background and literature review, the extended brand is strongly affected by the parent brand. When an extended brand is being created, it would be necessary for marketers to understand how customers look at the brand extension and how it will impact on their purchase intention. In order to have further understanding this issue in the FMCG industry in Vietnam, the below questions and hypotheses have been createQ1 What are the factors of parent brand affect on brand extension evaluation?H1 High equity of parent brand will provide more favorable effects on extended brand.H2 Perceived quality of parent brand correlates to extended brand perceived quality.H3 Customers relationship of the parent brand positively correlates to the acceptance of extended brand.H4 Customer attitude toward parent brand will relatively affects on the extended brand.Q2 How brand extension characteristics influence on customer purchase intention?H5 The more similarity to the parent brand, the higher level of customer purchase intention of extended brand.H6 The higher of perceived fit of extended brand to the parent brand will positively impact on the customer purchase intention of extended brand.H7 Customers attachment to the parent brand is tally to the customer purchase intention of extended brand.H8 Customer awareness of the extended brand is correlated to the level of their purchase intention of extended brand.