“FINAL YEAR PROJECT”

“LITERATURE REVIEW”

TOPIC: “BRAND EXTENSION AND IT’S IMPACT ON

BRAND IMAGE”

NAME: USAMA ASIF

ID: BBA-62820
SUPERVISOR: SIR NAEEM BHOJANI
 Deliverable 3: Literature Review

1. Literature Review:

Even though in most firms’ extensions of brands are used, but the success of extension

depends on how the strategies are being implemented [ CITATION pMi94 \l 1033 \m Dav00] . firm

use these strategies while offering new product with parent brand name to reduce cost and to

increase the chances of success of the extension. Although extension of the brand may affect

the image of the parent brand, by creating new association in the mind of consumers. this could

confuse the emotion and beliefs of consumers regarding the parent brand [ CITATION AlR86 \l

1033 ]. Sometimes perceptions produced by novel product can be favorable and can help to

improve both the reputation of the brand and the equity of the brand [ CITATION CWh86 \l 1033 ]

However, depends on how well the extended item is viewed, they are more likely to develop

negative associations that impact the brand image [ CITATION Den95 \l 1033 ].

The model of brand extension begins with brand familiarity. Positive relation have been

found between image and familiarity by several authors [ CITATION Geo00 \l 1033 \m Jos03 \m

DKa]. Since familiarity reflects customers indirect and direct experience of brand [ CITATION

Jos87 \l 1033 ], other studies also observed the relation between image and experience. The

proportion of individuals with a specific attitude towards a brand has been shown to be directly

linked to the proportion of users. A brand's consumers thus value its characteristics more than

non-users [ CITATION JHo00 \l 1033 ] Familiarity may directly impact the assessment of brand

extensions.

To direct their decision, consumers rely on familiarity [ CITATION Way90 \l 1033 ],

decreasing associated risk [ CITATION Kev03 \l 1033 ]. In a research [ CITATION Geo00 \l 1033 ]

found that, depending on the degree familiarity of brand, brand associations, which involve
brand image, differ. Using structural equation modelling, [ CITATION WPa01 \l 1033 ] found that

the relationship of customers with the company determines their buying decision for extension

of brand, both in related and different extensions. Suggested by [ CITATION Ric \l 1033 ] that the

reactions of customers to brand extensions are conditioned by familiarity with the brand’s

product category. The prior brand experience of customers has been shown to influence

extended product testing, but not repeat purchases [CITATION VAN01 \l 1033 ]. It has been found

that parents brand customers react more strongly to line extensions [ CITATION Amn99 \l 1033 ]

Marketers should understand the relationships of variables in order to effectively

manage the brand extension and strategies related to extension of brand that may affect image

of the brand. In most researches on brand extension the center point of the research is the

factors relating to consumers’ assessment of extension instead of impact on image of the brand.

Moreover, their focus is on small number of variables and do not consider the relationship

between the independent variables. [CITATION HSa02 \l 1033 ]

The quality of the extension is the opinion of the customer about the brand's superiority

or excellence. Although the relationship between brand image and perceived quality is ongoing

debate in the literature, it is possible that before any extension, the perceived quality of that

brand will affect the perception that consumers have of that brand. ([CITATION GRD \l 1033 \m

AMe93].

The image of the brand or company is regarded by customers as representative of the

quality of the services and good of the brand [ CITATION Tor98 \l 1033 ]. Before an extension,

we will expect perceived quality of brand to affect the attitudes of customers towards the

expansions. A brand extension approach is based on the premise that the extension can pass

views or perceptions about the original brand [ CITATION Pau94 \l 1033 ] . A relationship between
the competitive quality or prestige of a brand and the performance of the extension has been

shown by more recent work [ CITATION WPa01 \l 1033 ].

Brand image is a significant element in determining the attitude towards extension,

especially because of how it minimize the perceived risk of consumers. Brand extensions are

considered superior by brands with a high-affective component [ CITATION Dan94 \l 1033 ]. The

same can be stated for brands that have significant reputations a priori [ CITATION KGr02 \l 1033 ]

and prestige relative to practical brands that are perceived to be of lower quality [ CITATION

cWH91 \l 1033 ]. [ CITATION Rod01 \l 1033 ] analysed various image dimensions and found that

attributes such as assurances, social identity and status influence the adoption of brand

extensions by customers. A good image leads to the possibility of a profitable extension

regarding corporate brands and service brands. Positive customer views of both current

products [CITATION Tom97 \l 1033 ] and extensions of brand are promoted by strong company

brands. In the experiment of [ CITATION Kod001 \l 1033 ], individuals with a brand name have a

more optimistic attitude to service extensions compared to a control group that lacked any

brand image.

In the brand extension assessment process, the similarity or perceived fit is very

important. Many of the studies shows that customers prefer high-perceived fit extensions,

whether related to tangible product extensions, facilities [ CITATION Lei03 \l 1033 ] , or industrial

brands [ CITATION DCS95 \l 1033 ]. Similarly, research in the literature on line extension

continues to observe that fit has a beneficial impact on the expansion’s performance [ CITATION

WPa01 \l 1033 ]. In studies considering fit globally [ CITATION Rob94 \l 1033 \m Mar05] and in

past studies based on the dimensions of image fit and category fit [ CITATION cWH91 \l 1033 ], the

positive influence of fit exists. Another interaction, we would expect to see an impact on the
final brand image of the fit, because the connections generated or changed by the new service

or product are indirectly captured by these two components.

2. Theoretical Background:

Brand expansion strategies are advantageous because they minimize the introduction of

new product, and increase the probability of success due to them [ CITATION Mar05 \l 1033 ] . As

a marketing strategy where new product development costs are high and could be consumed a

lot of time, brand expansion has become more appealing in the current situation, so its cost-

effective to use a strategy that consumers know. The launch of brand expansion capitalizes on

the capital name or corporate name or business name of the already established brands leading

the market. Consumer familiarity with the current core brand name facilitates the entrance into

the market of new products, thereby allowing brand extension to rapidly capture new consumer

segments [ CITATION Pau94 \l 1033 ]. Thus, because of the reduction in the cost of introducing

new products, brand extension strategy is always perceived as advantageous, advertising costs

increased the likelihood of succeeding due to its high preference extracted from core brand

equity and market analysis. Brand extension also creates potential reciprocal effects that boost

the equity of parent brands.[CITATION VAN01 \l 1033 ] work confirms that the use of brand

extension strategy could lead to induction of brand trial equity and recognition among loyal

customers of the parent brands.

[ CITATION Dav10 \l 1033 ] point out that the fundamental concept driving the use of

brand extensions is that parent brands that consumers consider to have high quality have

significant leverage for extensions than lower quality brands associated with customers.

Therefore, in modelling the relationship between quality parent brand service and customer

brand extension assessments, a brand image specific attribute of service quality needs
 consideration. Furthermore, [ CITATION MSK06 \l 1033 ] stated that a brand extension is

advantageous to a business by moving well-established brand equity to the extended brand in

an existing product. The company can thus save the money, effort and time involved in

building the new brand image and raising the consumer's level of awareness of the new brand.

2.1 Brand Image:

Two main concepts arise within the two viewpoints, corporate and customer, from

which the brand can be described [ CITATION deC98 \l 1033 ] : brand identity and brand image.

[ CITATION Dav00 \l 1033 ] characterize brand identity as a set of brand associations that the

brand strategist aspires to create or maintain" Several factors, such as the ideal positioning and

personality [ CITATION deC99 \l 1033 ], must be taken into account in brand identity, which are

attenuated by the corporate culture and staff relationships with stakeholders. Facilitated by

contact processes [ CITATION Jea97 \l 1033 ] , brand identity forms associations that result in a

brand picture in the mind of the customer. Both definitions are interrelated and this helps

businesses to optimize their brand strategy by accessing the agreement between brand identity

and image.

There is a stream of literature that considers the image of the brand to be explicitly

connected to the category of the product under which the brand is advertised. [ CITATION

Geo00 \l 1033 ] suggest that there are three multidimensional and interrelated principles within

brand associations, such as brand image, perceived quality and brand attitude. They developed

a brand image calculation protocol based on the category of the product.

In recent studies [CITATION Kev99 \l 1033 ], calculating brand value, based on product

type, has been used in various ways. However, they have often taken into account that the
 physical characteristics of the products must not only be taken into account, but also the

functional, mental and emotional characteristics of the products.

2.2 Quality:
Brand quality is a component of the assets of brand equity that defines the factor of

image of the brand. The perceived quality of the product directly affects consumer purchasing

decisions, i.e. when a customer is trained or motivated to perform an informative purchase

analysis. It can also maintain a standard price, leading to an increase in the profitability of the

brand and in general brand equity [ CITATION Dav08 \l 1033 ]. Perceived quality is what the

customers think or make as compared to other alternatives out of the superiority of a product

over its intended purpose.

In their study, [ CITATION Bar13 \l 1033 ]found that when the extension was in a product

category that is similar to the parent brand and not affected when it was not in the similar

category of the product parent brand, perceptions of quality on the parent brand were

negatively impacted. That is, in the event that the extension resembles the parent brand, its

effect on the parent brand will be greater than that of an extension which is not in the same

category or which is far from the parent brand.

 H1: Quality of a new product positively affects Brand image.

2.3 Perceived fit:

The relation between the parent brand and an extension is the brand fit. Uh, [ CITATION

WPa01 \l 1033 ] stressed that products feature brand concept consistency and similarity that is

implied by brand consistency with brand associations are the distinct basis that could be used
by customers in evaluating the quality of an extension of fit with the category of brands. In any

connection made concerning the brand, a fit can exist. The category of product-based,

functional benefits/product attribute, technology, application channel, brand and consumer

personality/self-expression of advantages may be product associations [ CITATION Dav08 \l

1033 ]. The strength of brands is highly dependent on the association of customers when the

brand name is found.

A brand possesses great elasticity if the new and original categories are similar.

[ CITATION Dav101 \l 1033 ] , although the connection to functionality or perception of prestige

could be relative to the brand. Therefore, while not only bound to prestige and functionality, the

characteristics of products remain the deciding factors for brand elasticity. There are two fit for

extension motives: one is that perceived consistency is transferable between brands because all

product types are completely consistent.; Secondly, it is due to poor fit that not only weakens

the transfer of beneficial associations, but also the undesired support opinions and associations.

Customers do not allow simple extensions if an extension needs fit, as it does not justify

charged price due to inconsistency in its application to the essential class [ CITATION Dav101 \l

1033 ]. [ CITATION Pet04 \l 1033 ] noted that in concurrent extensions, extensions that survive and

thrive in many ways reduce the fit effect.

Extending a brand to a different product category makes it equivalent to current and

new products. The perceived fit principle contributes to a pattern of continuity between the

expanded and parent brands [ CITATION pan03 \l 1033 ] . In studies previously performed, the user

construct of perceived fit can be interpreted in two dimensions. Fit and product category at

brand level [ CITATION WPa01 \l 1033 ]

H2: Perceived fit of extension positively affects Brand image.

2.4 Familiarity:
Familiarity describes how the product is viewed by customers because of numerous

related experiences with brands: they do this for their own or family use, ads, connection or

friends. Familiarity influence buying decisions on the purchase of low involvement goods.

Brand customer awareness shows the brand familiarity [ CITATION KLK08 \l 1033 ] of established

product-related interactions (through advertisement and use that consumers acquire. Any form

of experience with brand exposure improves familiarity. Research has shown that consumers

choose to buy products familiar to them and when customers are shown meaningless terms and

later inspired to select names, they like the most nonsensical words that have been seen before.

Awareness of brand-specific associations is expected by consumers in the extension category

for brand appropriateness appreciation [ CITATION Sus04 \l 1033 ]

Clarity in the role of familiarity in brand image creation and the role of customer

extension assessments of familiarity is still not apparent. The confidence of the consumer in the

quality of the brand and the familiarity of assessments when there is a low degree of brand

knowledge.

 H3: Familiarity positively affects Brand image.

2.5 Attitude:
The attitude of customers towards a brand decides whether they are going to buy the

product, become loyal to the product or like the product. The development of negative attitudes

contributes to the consumer's rejection of products. The development of attitudes towards

extension is a critical factor in evaluating the consumer's acceptance of extension. If the

customer has a strong market attitude, the picture of the brand project would be positively
influenced by this. When it is low, the reputation of the company would be negatively affected.

Thus, it can be inferred that the effectiveness of marketing campaigns depends on the formation

of favorable brand associations. [ CITATION KLK08 \l 1033 ] and attitudes that affect the brand's

image positively. The attitude of products is vital due to the selection process of the brand base.

Brand attitudes are models that are defined as a combination of consumer perceptions about a

service or product.

Consumers will typically have developed attitudes about the parent brand, either

unfavorable or favorable, before the brand extension of any product category occurs [ CITATION

pan03 \l 1033 ]. Reflecting the corresponding aspects of affective and cognitive attitudes.

Alternatively, the cognitive component is the awareness of brand categories identified in the

long-term memory of the customer in relation to product and non-product related associations

linked to brand or product categories. [ CITATION KLK08 \l 1033 ]

 H4: Attitude positively affects Brand image.

2.6 Parent Brand:

When a brand (organization) goes for an extension it is necessary for them to launch a

campaign that relates their original brand with new brand. Awareness of the parent brand in the

mind of the consumers allows them to consider the new product more quickly. A positive brand

image of a parent brand can play a most important role to adopt the new brand.

We stated and finalized that more fit is there between the PBA and the extension, the greater

image of the brand consumer will get. (Ferguson, Lau & Phau, 2016)
The extension in the brand is like a stimulus so, with the launch of every new brand by parent

brand, consumer reflects the image and reputation of parent brand towards the new extension /

new brand. Abhishek & Marrilees, (2013)

Martinez, Polo & De Chernatony, (2008). Hoping, quality of the brand before the extension

happens affects the attitude of the consumer to the new extension.

 H5: Parents brand positively affects Brand image.

 3. Conceptual Framework:

3.Theoretical Foundation of study:

In the light of two theories in the subject field, debates on the effect of brand extension

techniques on the success of an organization can be discussed: the theory of Associative

Network memory and the Entity Theory.

3.1 The Associative Network theory:

The theory serves as the central theory for the interpretation and input outcome of brand

extension valuations. The perception of consumer memory brands is preserved as the network

data of nodes brands referred to [ CITATION KLK08 \l 1033 ]. In general consumers have a positive
 relationship with an initial brand relative to a brand extension launch that could be reversed

once launched, so favorable values and behaviors are transferred to extension due to the

interconnectivity of the memory nodes. If customers are satisfied with an expansion, positive or

negative, connections derived from expansion are creations that move to the scheme of parent

brands, resulting in feedback [ CITATION DAS00 \l 1033 ]. The parent brand assessment is

operationalized as a market-perceived parent brand equity that refers to the aggregate consumer

awareness of brands consisting of associations of well-known brands. Brand extensions draw

on the equity found in parent brands.

3.2 Brand Relationship Theory:

[ CITATION Eve02 \l 1033 ] advanced this theory and pointed out that relationships

between human beings exist. As a consequence, the brand partnership is characterized by their

brand relationship and relational values that are more personalized in the minds of customers.

Individual relationships are created by individuals based on the understanding, brand

perceptions, and sense of individual brand values. Customers apparently build the brand

through contact in many contexts (Kirsti, Lindberg Repo, 2009). Previous studies have

explored the elements of the intimate relationship between a brand and its consumers. The

consumer relationships and desires to have with businesses have been investigated by

[ CITATION SFo \l 1033 ] . He claims that the quality of the brand relationship is multi-faceted and

consists of six dimensions that transcend engagement or loyalty with various customer brand

relationships: engagement or sentimental attachments, behavioral interdependence, affection,

love/passion, quality of the brand partner and intimacy. He proposed the following typology of

metaphors for depictions of customer-brand relationships: casual friends/buddies, arranged

marriages, committed partnerships, best friendships, comfort marriages, split friendships,

 childhood friendships, courtships, dependencies, flings, kinships, relationships guided by

rebounds/avoidance, enmities, enslavements and secret affairs. Because all positive

relationships are included in this typology, several possible neutral and negative typologies

may be overlooked.

4. References

Aaker, D. A. (2008). Brand Portfolio Strategy: Creating Relevance, Differentiation, Energy, Leverage and
Clarity. New York, NY,: Free Press.

Aaker., D., & Keller, K. L. (2010). Consumer evaluations of brand extensions. Journal of Marketing, 54,
27-41.

Alba., J. W., & Hutchinson, J. W. (1987). “Dimensions of consumer expertise”. Journal of Consumer
Research, Vol. 13, pp. 55-9. .

Andreassen., T. W., & Lindestad, B. (1998). “Customer loyalty and complex services. The impact of
corporate image on quality, customer satisfaction and loyalty for customers with varying
degrees of service expertise”. International Journal of Service Industry Management, Vol. 9 No.
1, ., pp. 7-23.

Broniarczyk., S. M., & Alba, J. (2004). “The importance of the brand in brand extension”. Journal of
Marketing Research, 214-28. .

Chernatony, d. (1999). Brand Management Through Narrowing the Gap Between Brand Identity and
Brand Reputation. Journal of Marketing Management, 15, 157-179.

Czellar, p. (2003). Consumer attitude toward brand extensions: An integrative model and research
propositions. International Journal of Research in Marketing, 20 (1), 97-115.

Dacin., P. A., & Smith, D. C. (2004). "The effect of brand portfolio characteristics on consumer
evaluations of brand extensions". Journal of Marketing Research,, 229- 42 .

David A. Aaker, & Keller, K. L. (2010). Consumer evaluations of brand extensions,. Journal of Marketing,
54, 27-41 .

Dowling, G. R. (2000). “Managing your corporate images”. Industrial Marketing Management, Vol. 15,,
pp. 109-15.

Fournier., S., & Glick, D. (n.d.). Rediscovering satisfaction. Journal of Marketing, 5-23.

Gummesson, E. (2002). Total Relationship Marketing: Marketing Management, Relationship Strategy,

and CRM Approaches for the Network Economy. Woburn, MA: Butterworth Heineman.

Gwinner., K. P., & Eaton, J. (1999). Building Brand Image Through Event Sponsorship: The Role if Image
Transfer. Journal of Advertising,, 47-57.
Herbig., P., & Milewicz, J. (1994). “Evaluating the brand extension decision using a model of reputation
building”. Journal of Product & Brand Management, Vol. 3 No. 1,, pp. 39-47. .

Hoyer., W. D., & Brown, S. P. (1990). “Effects of brand awareness on choice for a common, repeat-
purchase product”. Journal of Consumer Research, Vol. 17 No. 2,, pp. 141-8.

Kapferer, J.-N. (1997). Strategic Brand Management. London: Kogan Page.

Kazoleas., D., Kim., Y., & Moffitt, M. (n.d.). “Institutional image: a case study”. An International Journal,
Vol. 6 No. 4, pp. 205-16. .

Keller, K. L. (2003). Strategic Brand Management: Building, Measuring, and Managing Brand Equity.
New York, NY: 2nd ed., Prentice-Hall.

Keller, K. L. (2008). "Strategic Brand Management Building, Measuring, and Managing Brand Equity".
Upper Saddle River, NJ.: Prentice-Hall.

Kirmani., A., Sood., S., & Bridges, S. (1999). “The ownership effect in consumer responses to brand line
stretches”. Journal of Marketing, Vol. 63, pp. 88-101. .

Klink., R. R., & Smith, D. (n.d.). “Threats to the external validity of brand extension research”. Journal of
Marketing Research, Vol. 38, pp. 326-35.

Loken., B., & Roedder, J. (2013). “The negative impact of extensions: can flagship Products be diluted?”.
Journal of Marketing, 62, 19-32. .

Martinez., & Pina. (2005). “Influence of corporate image on brand extensions: a model applied to the
service sector”. Journal of Marketing Communications, Vol. 11 No. 4, pp. 263-82.

Menon., A., & Bharadwaj, S. (1993). “Determinants of success in service industries”. Journal of Services
Marketing, Vol. 7 No. 4, pp. 19-40.

Mihailovic., p., & de Chernatony. (1994). “Categorising brand strategies using the brand-bonding
spectrum”. Journal of BrandManagement, Vol. 1 No. 5, pp.310-18 .

PARK., c. W., MILBERG., S., & Lawson, R. (1991). “Evaluation of brand extensions: the role of product
feature similarity and brand concept consistency”. Journal of Consumer Research, Vol. 18, pp.
185-93. .

Park., W., & Kim, K. (2001). “Role of consumer relationships with a brand in brand extensions: some
exploratory findings”. Advances in Consumer Research, Vol. 28, Advances in Consumer Research,
Vol. 28.

Ries., A., & Trout, J. (1986). “Positioning: The Battle for Your Mind”. New York, NY.: McGrow-Hill.

Ruyter., K. d., & Wetzels, M. (2000). “The role of corporate image and extension similarity in service
brand extensions”. Journal of Economic Psychology, Vol. 21, pp. 639-59.

Sheinin., D. A., & Schmitt, B. H. (1994). “Extending brands with new product concepts: the role of
category attribute congruity, brand affect, and brand breadth”. Journal of Business Research,
Vol. 31 No. 1, pp. 1-10.
Smith., D., & Andrews, J. (1995). “Rethinking the effect of perceived fit on consumers’ evaluations of
new products”. Journal of the Academy of Marketing Science, Vol. 23, pp. 115-24.

Swaminathan., V., Fox., R., & Reddy, S. (2011). “The impact of brand extension introduction on choice”.
Journal of Marketing, Vol. 65, pp. 1-15.

Vázquez., R., Río., A. B., & Iglesias, V. (2001). “The effects of brand associations on consumer response”.
Journal of Consumer Marketing, Vol. 18 No. 5, pp. 410-25.