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The effect of brand extensions on product brand image

ge Arslan and Oylum Korkut Altuna F . Mu


School of Economic and Administrative Sciences, Marmara University, Istanbul, Turkey
Abstract Purpose The purpose of this study is to investigate the effects of t, familiarity, perceived quality and attitude towards the brand on product brand image after an extension and also to examine whether the product image of a brand is diluted as a result of brand extension. Design/methodology/approach The model adopted for the study is based on that developed by Martinez and de Chernatony. A questionnaire consisting of seven constructs (general brand image, product brand image, quality, familiarity, t, attitude, and demographic characteristics) was administered to 474 respondents. Convenience sampling and face-to-face survey methods were used. The brands and extensions used in the study were the same as in the Martinez and de Chernatony study. The difference between these two studies is that, while Martinez and de Chernatony have investigated the effects of brand extension on both general brand image and product brand image, in this study general brand image is examined only before the extensions in order to compare the two brands. The results of the pre-tests showed that Turkish consumers could not assess the effects of hypothetical extensions on the general brand image. Therefore, as for the effects of brand extensions, only the product brand image after the extension is investigated. Findings The results show that brand extensions affect the product brand image negatively, whereas the t between the parent and extension brands decreases the negative effect. The drop of image as a result of extension is greater when the perceived image and quality of the parent brand are higher. Perceived quality of the brand, consumers brand familiarity, t perceived by the consumer, consumers attitudes towards the extension have a positive effect on the product brand image after the extension. Research limitations/implications Owing to the sample size and sampling method, the study has its own limitations in terms of external validity. In addition, only two brands and two extensions were tested and the extensions used were hypothetical, which may lead to a lack of generalizability. Practical implications The higher the image of a brand, the more the dilution that occurs, which means that companies should take caution when extending into different product categories. Originality/value The study is one of the very few research efforts conducted in the Turkish market concerning brand extensions and the sample used in the research consists of consumers rather than students. Keywords Brand image, Consumer behaviour, Brand awareness Paper type Research paper

An executive summary for managers and executive readers can be found at the end of this article.

1. Introduction
Fierce competition forces rms to adopt strategies that create a competitive advantage for the rm. Creating a brand name with well-established associations is one way of achieving this aim. Firms invest heavily in developing a brand. It is a very costly process but has many returns once success is achieved. However, rms do not always have the nancial strength or do not want to invest so heavily in creating a new brand name each time they develop a new product. Usually a more economical strategy is used to introduce a new product. Instead of creating a new brand name for the new product category, an existing well known and successful brand name is extended into the new product category; in other words, brand extension is used. It is a well-known fact that
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Journal of Product & Brand Management 19/3 (2010) 170 180 q Emerald Group Publishing Limited [ISSN 1061-0421] [DOI 10.1108/10610421011046157]

developing a new brand requires much more investment than creating a brand extension which is what motivates rms to prefer brand extensions more than creating a new brand. For this reason the last decade shows that many rms use brand extension strategies to enter new markets. Brand extension is dened differently by some academics. Some dene it as a new product introduced within a certain product line (i.e. introducing banana avored yogurt within the existing yogurt product line) which is actually dened as line extension by many academics. On the other hand, brand extension may imply introducing a new product line to the rm by using an existing brand name; in other words extending an existing brand name into new product categories (i.e. developing motorcycles under an established automobile brand name). This study assumes the second denition for brand extension using an existing brand name to enter new product categories. Another classication for brand extensions names two categories of extensions, which are horizontal and vertical. Introduction of a new product in either a related product class, or in a product category completely new to the rm is categorized as horizontal extension. On the other hand, vertical extension usually refers to the introduction of a new extension in the same product category but at a different price and quality level. In horizontal extensions, mostly the existing brand names are used for the new extensions whereas in vertical extensions, a 170

The effect of brand extensions on product brand image ge Arslan and Oylum Korkut Altuna F . Mu

Journal of Product & Brand Management Volume 19 Number 3 2010 170 180

second brand name or descriptor alongside the core brand name is used (Kim and Lavack, 1996, p. 24). On inspection of brand extension literature, it can be seen that one of the pioneering and most-cited studies is that of Aaker and Keller (1990). Their study has been replicated by various academics using the same variables and similar brands and brand extensions in order to test whether the model of brand extension applies to different settings and cultures as well. It is always important to test models in different cultures in order to be able to generalize the results. As Martinez et al. (2008) stress in their study, there are only a limited number of studies on brand extensions from an international perspective and since quite a lot of brands are global and use international brand strategies, it is important to conduct brand extension studies in as many different countries as possible. Hence, this study contributes to the brand extension literature by being one of the rst to be applied in a Middle Eastern culture. Martinez and de Chernatony have analyzed how variables related to the parent brand and the extension inuence brand image after the extension (Martinez and de Chernatony, 2004, p. 39). This model proposed by Martinez and de Chernatony (2004) has been considered as a basis for this study. In order to be able to make comparisons and verify the model, the same global brands (Nike and Puma) and brand extensions (Nike jeans, Nike camera, Puma jeans and Puma camera) were used in this study. The same variables were used but some minor changes were made on the attributes that make up the variables. In the Martinez and de Chernatony (2004) study product brand image after introducing the extension was measured using ve attributes whereas in the current study it was measured by asking only a single variable (what would the image of Nike jean be? 1 Bad, 5 Good). Besides, Martinez and de Chernatony measured the effects of brand extensions on both the general brand image and product brand image after the extensions whereas in this study, only product brand image is examined after the extensions. The reason for these changes is that, the pretests conducted before the application of the questionnaire showed that the respondents could not assess the image of a hypothetical brand extension in such detail alas, only one question was asked to measure this variable. Besides, pre-tests also revealed that, Turkish consumers could not assess the effects of hypothetical extensions on the general brand image. Therefore, as for the effects of brand extensions, only the product brand image after the extension is investigated. The objectives of the study are to determine: . Whether the product image of a brand is diluted as a result of brand extension. . Whether the extension with a high t will have a lower dilution effect on the product brand image as compared to the extension that has a lower t. . The amount of effect the variables of familiarity, t, perceived quality and attitude towards the brand have on product brand image. . Whether the brand extension model is valid in a Middle Eastern culture.

2. Theoretical background
The brand is one of the most important assets a rm owns. A rm with a high brand equity achieves high perceptions of the brand by the customers, greater loyalty by customers, less vulnerability to competitors marketing actions, high prot 171

margins, less negative reaction by customers to price increases, higher support of middlemen, higher marketing promotion effectiveness, increasing licensing and brand extension opportunities (Keller, 2008, p. 49). In order to achieve high brand equity the rm must invest heavily in the brand. Creating and maintaining a new brand is very costly. This fact leads rms to adapt cost effective ways of entering a new market. One of the most popular strategies of growth that is less risky and cheaper than creating a new brand is brand extension. Because the brand name is already known by customers, the extension usually gains easier acceptance in the market. Brand extensions provide a way to take advantage of brand name recognition and image to enter new markets (Aaker and Keller, 1990, p. 27). The consumer is more familiar with and has greater knowledge about the brand, so develops higher affect to the extension as compared to an entirely new brand name. In addition, when an existing brand name is used for a new product, less investment is made in advertising, point of purchase promotions, distribution channels, etc. Brand extension may be dened as utilizing an existing and successful brand name for entering a new product category. However, as mentioned earlier, brand extension is dened differently by different academics. Aaker and Keller (1990) dene it as, brand extension occurs when a rm uses an established brand name to introduce a new product into a new product category. According to Farquhar (1989), brand extension may be classied into two classes: line extension and category extension where a line extension occurs when the parent brand name is used for a new product that targets a different market segment within the same product category in which the new product is a new variety in the product line whereas a category extension occurs when the existing brand name is used to enter a new product category. Line extensions occur when new sizes, avors, etc, are introduced to a rms present product category using an existing brand name (Tauber, 1981, p. 36). Tauber (1981, p. 37) also uses the term franchise extensions to imply brand extensions and denes it as taking a brand name familiar to the consumer and applying it to products that are in a category new to the parent rm. As mentioned above, brand extensions may be in one of two different directions: horizontal extension or vertical extension. Horizontal extension is when the existing product name is used to extend into the same product class (line extension) or into a different product category (brand extension, category extension or franchise extension) (Aaker and Keller, 1990; Tauber, 1981). Vertical extension, on the other hand, is when a new product is introduced in the same product category but with a different price and quality balance (Pitta and Katsanis, 1995, p. 60). The vertical extension may be upward (prestige products) or downward (value products). Stretching the brand up or down usually harms the parent brand therefore sub-branding strategies are often required for the extension to be successful (Keller, 2008, p. 533). Subbranding is when the rm chooses to combine a new brand name with an existing brand name (e.g. Marriott Hotels, Courtyard Inn by Marriott) (Keller, 2008, p. 491). Downscale extensions of prestige products have negative impact on the customers whereas upscale extensions of prestige products are more favorably accepted (Pitta and Katsanis, 1995, p. 62). The reason why downscale extensions have a negative impact on brand image may be due to the changing perceptions the customers attain because the parent brand is associated with lower price and quality (Kim and

The effect of brand extensions on product brand image ge Arslan and Oylum Korkut Altuna F . Mu

Journal of Product & Brand Management Volume 19 Number 3 2010 170 180

Lavack, 1996, p. 27). In addition, Kim and Lavack (1996, p. 28) argue that even for upscale extensions, the consumers become confused and uncertain about the quality and image of the parent brand. Therefore, caution must be taken when extending the brand vertically. Ries and Trout (1986) also stress that, any kind of an inappropriate extension may create serious damage to the parent brand and it may be hard for the company to overcome this situation.

3. Research hypotheses
3.1 Product brand image and dilution Brand image is dened by Keller (1993, p. 3) as the perceptions about a brand as reected by the brand associations held in consumer memory. In other words brand image is what comes to the mind of the consumer when a brand name is mentioned. Keller (1993) goes on to explain that there are three important aspects of image: favorability, strength and uniqueness of brand associations. Moreover, the associations may be formed in one of the following categories: attributes of the product, benets achieved from the product or attitudes towards the brand. The aim of every rm is to create favorable and positive associations about the brand which results in a positive image of the brand (Keller, 1993). Some marketing tools that may be used to create brand image are, the product itself, its packaging/labeling, the brand name, the logo, the colors used, the point of purchase promotions, the retailer, the advertisements and all types of other promotions, pricing, owner of the brand, country of origin, even target market and users of product. Despite the many advantages gained by using brand extensions, they also have the potential of creating some problems for the rm, such as cannibalization, failure, partial failure and dilution even if the extension is successful (Pitta and Katsanis, 1995, p. 51). When a brand is extended into product categories that are not consistent with the original product or if different associations are created by the extension, this can damage the brands image. In other words, even successful extensions may harm the core brand image if the associations created by the extension alter existing associations (Keller, 1993, p. 16). Especially if excessive extensions are made, the differentiating association may be lost which may cause dilution of the image of the brand (Dacin and Smith, 1994; Aaker, 2004, p. 211). Brand extensions, especially unsuccessful ones, may dilute brand names by diminishing the favorable attribute beliefs consumers have learned to associate with the family brand name (Loken and Roedder John, 1993, p. 79). The result of an extension may be the cannibalization of sales of existing products and the dilution of the current image of the parent brand (Reddy et al., 1994, pp. 243-244). Pitta and Katsanis (1995) make a distinction between successful repeated extensions and their effects on brand equity (wear-out) and negative effects of unsuccessful extensions on brand equity (dilution). This study does not make such a distinction; all negative effects on the product brand image are considered as having a diluting effect on product brand image: H1. Any type of brand extension (t or no t) will have a dilution effect on the product brand image of the parent brand. The brand extension that ts the parent brand will have a higher product brand image than the brand extension that has no (or lower) t. 172

3.2 Perceived quality For customers the quality of the brand/product is an important aspect when forming a perception about the brand. The customer evaluates the brand according to his/her perceptions of quality which is sometimes more difcult than actually delivering high quality (Aaker, 1990, p. 48). Customers who have strong attitudes about the quality of a brand tend to transfer these positive attitudes to the brand extension (Aaker and Keller, 1990; James, 2006). In other words, consumers acceptance of the extension increases if the parent brand is perceived to be of high quality and therefore, perceived quality of the brand highly impacts the image of the extension. Hence, the perceived quality of the brand will positively affect the product brand image following extension. Therefore: H3. The perceived quality of the brand will have a positive effect on the product brand image of the parent brand after the extension.

3.3 Familiarity with brand How well a customer knows a brand shows how familiar he/she is with the brand. Keller (1993, p. 10) denes brand familiarity as the number of product related experiences that have been accumulated by the consumer (through product usage, advertising, etc.). Any type of experience with and exposure to the brand increases familiarity. Research shows that customers tend to buy brands that they are familiar with. Experiments show that even if customers are shown some words that have no meaning and later are motivated to pick the names that they like, most of them choose the nonsense words they have been shown before (Aaker, 2004, p. 203). The same applies to brand names. When a customer is familiar with a brand name, he/she has more favorable attitudes towards it as compared to brand names he/she is not aware of. Knowledge of the brand-specic association is required for consumers to appreciate the appropriateness of the brand in the extension category (Broniarczyk and Alba, 1994, p. 216). Therefore, if a customer is familiar with the brand, this will have a positive effect on the image of the extended product. Hence, the following hypothesis may be stated: H4. Consumers familiarity with the brand will have a positive effect on the product brand image of the parent brand after the extension.

H2.

3.4 Brand t Brand t is how closely related (or similar/congruent) an extension is with the parent brand. Brand t is not only restricted to product category similarity. Park et al. (1991, p. 185) also stress the fact that: two different bases that consumers may use to evaluate an extensions goodness of t with the brand category are product feature similarity and brand concept consistency where brand concept consistency implies consistency with brand associations. A t may exist in any one of the associations that are made about the brand. Product associations may be based on product category, product attribute/functional benets, application, technology, channel, user and brand personality/self-expressive benets (Aaker, 2004, pp. 205-206). The strength of a brand highly depends on the associations that the consumers make when they come across the brand name. If a brand has strong associations, it will evoke positive attitudes in customers. A meaningful association that is common to both the brand and

The effect of brand extensions on product brand image ge Arslan and Oylum Korkut Altuna F . Mu

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the extension can provide the basis of t (Aaker, 1990, p. 51). Therefore, a t may exist in any one of these mentioned areas. It is important to note that how a business is dened affects the direction the brand extension is going to take. The denition of the business actually affects the associations made about the brand. For example, BIC is dened as a disposable pen and being disposable is the core association of the brand and thus it was possible to successfully extend the brand name into disposable razor and lighter product categories (instead of stationary as would have been expected) (Tauber, 1981). On examining brand extensions in a competitive context, Han (1998) found that when there is a low t between the extension and the parent brand the extension is perceived to be of lower quality as compared to extensions with higher t and neither the ad format nor the type of attribute could overcome the negative effects of low t. Prior studies show that when there is a t between the extension and the parent brand, the customers evaluate the extension more positively (e.g. Aaker and Keller, 1990; Boush and Loken, 1991; Park et al., 1991; Dacin and Smith, 1994; Broniarczyk and Alba, 1994; Han, 1998; Barett et al., 1999; Gronhaug et al., 2002; Martinez and de Chernatony, 2004; Story and Loroz, 2005; James, 2006; Kim and Roedder John, 2008). Hence: H5. Fit perceived by the consumers will have a positive effect on the product brand image after the extension.

3.5 Attitudes toward the extension Attitudes are the overall evaluations of the brand by the consumer (Keller, 1993, p. 4). The attitude the consumer has about a brand determines whether he/she will like the product, buy the product, become loyal to the product, etc. When a negative attitude is formed, it is almost unchangeable and usually leads to the avoidance of the brand by the consumer. Therefore, attitude towards the extension is an important variable in determining whether the extension is accepted by the consumer or not. If the attitude towards the extension is high, this will have positive effect on the product brand image, if it is low, there will be a negative or negligent effect on product brand image. Therefore, it could easily be said that the success of a marketing program depends on creating favorable brand associations (Keller, 1993, p. 5) and these positive attitudes have a positive impact on product brand image. Hence, it could be hypothesized that: H6. Consumers attitudes towards the extension will have a positive effect on the product brand image after the extension.

4. Literature review
One of the advantages of well-known brands is, over time consumers form expectations about the performance of the brand (Keller, 2008, p. 497) and hence create certain associations about the brand. The reason why rms introduce brand extensions to the market instead of creating a new brand rests highly on this fact. When a brand extension is introduced to the market, it is easily accepted by consumers especially if there is a high t between the extension and the parent brand regarding product category (Aaker and Keller, 173

1990; Park et al., 1991) or associations (Park et al., 1991, Broniarczyk and Alba, 1994). Perceived t between the extension and the parent brand may depend on the transferal of current skills or assets to making the extension; the perceived product class complementarity; and the perceived product class substitutability (Aaker and Keller, 1990). In the same study Aaker and Keller (1990) also stress the fact that the customers perceptions of the difculty of making the extension has a positive relationship with the evaluations of the extension i.e. if it is more difcult to manufacture an extension, the consumer has a more favorable attitude towards the extension as compared to an easily manufactured extension. Another important area of study concerning brand extensions is the impact of an unsuccessful extension on the parent brand. In their study, Loken and Roedder John (1993) found that quality perceptions on the parent brand was negatively affected when the extension was in a similar product category with the parent brand and almost unaffected when it was in a dissimilar product category with the parent brand. In other words if the unsuccessful extension is similar to the parent brand it has a more negative impact on the parent brand compared with an unsuccessful extension that is distant (dissimilar) from the parent brand. Another important issue pointed out in the brand extension literature is the impact of brand extension on parent brands image (Ries and Trout, 1986; Pitta and Katsanis, 1995; Kim and Lavack, 1996; Martinez and Pina, 2003; Martinez and de Chernatony, 2004; Martinez et al., 2008, Salinas and Perez, 2009). Most of those studies reveal that together with the components mentioned above (perceived t, perceived quality, familiarity with the brand, perceived quality of the extension) the brand extension strategies may inuence the brand image after the extension. Some other areas of research conducted concerning success of brand extensions are: sequential introduction of brand extensions and their effects on parent brand (Aaker and Keller, 1990), effect of the number of previous brand extensions on the success of brand extension, effects of variance of quality on extension and interrelatedness of extensions with parent brand (Dacin and Smith, 1994), impact of consumer knowledge of product class on the success of the brand extension (Smith and Park, 1992), relevance of the extended associations with that of the parent brand (Broniarczyk and Alba, 1994), symbolic value of the parent brand (Reddy et al., 1994), effects of brand extensions on brand alliances (James, 2006), the impacts of brand extensions on brand personality (Diamantopoulos et al., 2005), the effects of brand concept consistency and product feature similarity on the success of extensions (Park et al., 1991); the role of technology and technology congruence in consumers perceptions of extensions (Story and Loroz, 2005).

5. Preparation of the questionnaire


As mentioned above, the model adopted for this study is based on the model developed by Martinez and de Chernatony (2004). The questionnaire consists of seven constructs that are general brand image, product brand image, quality, familiarity, t, attitude and demographic characteristics of respondents. In order to make direct

The effect of brand extensions on product brand image ge Arslan and Oylum Korkut Altuna F . Mu

Journal of Product & Brand Management Volume 19 Number 3 2010 170 180

comparisons, the brands and extensions of the original study are adopted. The original scale uses a seven point Likert scale whereas this study uses a ve point Likert scale due to the fact that Turkish respondents cannot perceive the differences between the intervals of a seven-point scale. Most studies conducted in Turkey use a ve point Likert scale. Martinez and de Chernatony have investigated the effects of brand extension on both general brand image and product brand image, in this study general brand image is examined only before the extensions in order to compare the two brands. The results of the pre-tests showed that, Turkish consumers could not assess the effects of hypothetical extensions on the general brand image. Therefore, as for the effects of brand extensions, in this study only the product brand image after the extension is investigated. The original items were translated and back translated by a linguistic expert. In accordance with the comments of the expert and the results of the pilot study, some items were corrected. Minor changes were made on the original scale. Instead of using ve attributes to measure product image after the extension, only one attribute was used in the Turkish version due to the fact that during the pilot study, the Turkish respondents showed difculty in perceiving such detailed description of a hypothetical extension. The dependent measure used in the study is image (image of extension product brand image). The independent measures used are perceived quality of the brand, consumers familiarity with the brand, perceived t of extension with parent brand and attitude towards the extension. For the study, in order to be able to make comparisons, the brands Nike and Puma and their hypothetical extensions of jeans and camera were chosen as in the Martinez and de Chernatony (2004) study. Since these two brands are global and also taking into consideration that according to the results of the pre-tests conducted before the study, the most popular sports wear brands in the Turkish market came out to be Nike, Adidas, Puma and Converse, the selection of these two brands seems not to be posing any methodological problems.

Table I Respondents prole


Characteristic Frequency 50 237 187 218 252 81 256 113 20 8 64 82 149 168 % 10.5 49.9 39.6 46.4 53.6 17.2 54.5 24 4.3 1.7 13.6 17.4 31.6 35.7

Age 15-17 18-21 22-25 Gender Female Male Education Elementary High school Graduate school Postgraduate Income (YTL) 0-500 501-1,000 1,001-1,500 1,501-2,000 2,001 and above

7. Findings and results


Before conducting any analysis on the data collected, the reliability of the scales were measured using Cronbachs Alpha coefcient. The results of the reliability analysis are given on Table II. As seen from Table II, the internal consistency estimates of all the scales except for one (Puma jeans-GBI 1) are above the cutoff point of 0.7 as recommended by Nunnally and Bernstein (1994). Therefore, it could be said that the data obtained for the study is highly reliable. In order to assess the general brand image before extensions and product brand images of Nike and Puma brands both before and after the extensions, independent sample t-tests were conducted. As in the Martinez and de Chernatony (2004) study the quality and image perceptions are high for both brands but Nike seems to have a relatively higher general image, product image and quality perception (mean for quality 4.32, t 2.58 and p 0.01; mean for general brand image 3.78 and product brand image 4.39) than Puma (mean values for quality 4.13, general brand image 3.63 and product brand image 4.11). Statistically testing the Table II Reliability analysis for the scales (Cronbachs alpha coefcients)
Samples Nike Puma Puma Nike camera jeans camera Total jeans Variables (n 5 119) (n 5 125) (n 5 113) (n 5 117) (n 5 474) QUA GBI 1 PBI 1 FAM FIT ATT 0.768 0.827 0.768 0.815 0.901 0.886 0.713 0.789 0.695 0.852 0.852 0.883 0.887 0.534 0.868 0.828 0.852 0.913 0.779 0.873 0.883 0.793 0.906 0.889 0.800 0.705 0.831 0.822 0.822 0.913

6. Sample selection
Four different questionnaires were prepared to collect data for the four different extensions (Nike-Jean; Nike-Camera; Puma-Jean; Puma-Camera). The data were collected in May 2008. The rst part of the questionnaire consists of questions regarding the general brand image and product brand image (before extension), perceived overall quality of the brand before extension and familiarity with the brand. The second part of the questionnaire consists of questions about product brand image (after extension), perceived quality (after extension), t of the extension to the parent brand and attitudes toward the extension. The last part of the questionnaire consists of questions concerning the demographic characteristics of the respondents (age, education, gender, household income). Face to face surveys were conducted with 474 respondents in Istanbul Turkey. The frequency analysis for the respondent prole is given in Table I. Similar number of questionnaires were collected for each of the extensions (Nike Jean n 125, Nike Camera n 112, Puma Jean n 113, Puma Camera n 114). 174

The effect of brand extensions on product brand image ge Arslan and Oylum Korkut Altuna F . Mu

Journal of Product & Brand Management Volume 19 Number 3 2010 170 180

signicance of the results, independence samples t-test was conducted for the two brands concerning the general brand image before the extension (t 1.77, p 0.077) where no statistically signicant difference was found and product brand image before the extension (t 4.89, p 0.000) where a statistically signicant difference was found. The familiarity scores for both brands are: (mean 3.43 for Nike and 3.36 for Puma; independent samples t-test t 0.83, p 0.40). This shows that there is a greater score of familiarity for the Nike brand as compared to Puma and there is no statistically signicant difference between the familiarity mean scores of the two brands. After the respondents were informed about the extensions, in order to test whether there are any signicant differences between the sub-samples of extensions regarding product brand image and perceived quality with the brand, independent samples t-tests were conducted. The results showed that there were no signicant differences among the sub samples of extensions concerning the evaluation of the parent brands. As for the results of Nike brand after the extension, the mean of the perceived quality scores are 4.29 for jean and 4.34 for camera. The results showed no statistically signicant differences among the two sub samples of extensions (p 0.64). As for the results of independent samples t-tests for the Puma brand, following with the product brand image, the independent samples t-test showed no statistically signicant differences (p 0.09) with mean values 4.04 for jean and 4.19 for camera. The results of the independent samples t-test for perceived quality showed no statistically signicant differences for the Puma sub samples of extensions (p . 0.16) with mean values 4.05 for jean and 4.21 for camera. 7.1 Dilution Concerning H1, the paired samples t-test results shows that the product brand image for both brands decreases after extension. The mean for product brand image before extension for the overall sample (n 474) is 4,26 whereas the mean of the product brand image after the extension is 3.09. In order to test the results for statistical signicance, a paired samples t-test was conducted (t 20.224, p 0.000). This shows that H1 is supported. In addition, product brand image was assessed for the brands and the extensions separately. For the Nike brand, the mean of the product brand image before the extension is 4.39 whereas it is 2.98 after both extensions (t 17.08, p 0.000) and for the Puma brand the mean of the product brand image before the extension is 4.11 whereas it is 3.21 (t 11.9, p 0.000) after both extensions. As for the product brand image scores for all of the extensions separately, the mean value of the product brand image for the Nike jean before extension is 4.37 whereas it is 3.56 after extension (t 7.44, p 0.000); for the Nike camera extension the mean for the product brand image before extension is 4.41 and after extension it is 2.42 (t 19.8, p 0.000). For the Puma jean extension, the mean of product brand image before extension 4.03 whereas it is 3.64 after the extension (t 5.02, p 0.000) and for the Puma camera extension, the product brand image mean value is 4.19 before extension whereas it is 2.80 after the extension (t 12.4, p 0.000). 175

Regarding H1, the means obtained for product brand image were compared. Table III shows the means, t-values and signicance values for the two brands in general (both taken into consideration), the two brands separately (but both extensions taken into account together), and the two brands and the two extensions separately. The scores achieved for product brand image before and after the extensions show that H1 is supported. No matter how the extension is (even if it ts with the parent brand or not) the product brand image after the extension is affected negatively by it. Table III shows that the overall product brand image drops when an extension is taken into account. When the extension ts the parent brand, the negative effect is less, when the extension does not t the parent brand then the product brand image is more affected by it (for Nike-Jean and Puma-Jean the drop is less than for Nike-Camera and PumaCamera). This shows that H2 is also supported. Table III also shows that for a brand with a higher perceived image and quality, the drop of product brand image is more when an extension strategy is used. In other words, when a brand has a high image and is perceived to have high quality, if an extension strategy is used the product brand image is more affected than for a brand that has a lower product brand image and lower perceived quality (the t-value for Nike is 17.08 whereas for Puma it is 11.90). 7.2 Product brand image In order to test H3, H4, H5, H6, H7 a multiple linear regression analysis was conducted where the product brand image after extension was used as the dependent variable and perceived quality of the brand, consumers familiarity with the brand, t perceived by the consumer and consumers attitudes towards the extension variables were used as the independent variables. Multiple regression analysis was rst conducted for the whole sample (n 474) and as a second step, separately for each type of extension (Nike-Jean, NikeCamera, Puma-Jean, Puma-Camera). As a result of collinearity statistics analysis, variance ination factors (VIF) indicate that the largest value is 4.048 and minimum tolerance value is 0.245. Since a VIF value above 10 and a tolerance value below 0.10 pose a multicollinearity problem, these values indicate that for this analysis there is no serious multicollinearity problem. When the sample is taken as a whole, the results of the regression analysis show that perceived quality of the brand, consumers familiarity with the brand, t of the extension to the parent brand as perceived by the consumer, consumers attitudes towards the extension have a positive effect on the Table III The mean values for product brand image
Mean Before After extension extension PBI (overall) Nike Puma Nike-Jean Nike-Camera Puma-Jean Puma-Camera 4.26 4.39 4.11 4.37 4.41 4.03 4.19 3.09 2.98 3.21 3.56 2.42 3.64 2.80

t-values ( t)
20.224 17.08 11.90 7.44 19.80 5.02 12.4

Signicance ( p) 0.000 0.000 0.000 0.000 0.000 0.000 0.000

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product brand image after the extension (see Table IV). All of the independent variables are statistically signicant and the total variance is quite high (0.711) showing that the model explains 71 percent of the variance in product brand image after the extension. Adjusted R-square is taken into account since small sample sizes result in articially inated R-square scores and result in optimistic estimation in models. From Table IV and the above given multiple regression formula it can be seen that for the whole sample, all of the independent variables have a positive and statistically signicant effect on product brand image after the extension. Therefore, it could easily be said that H3 is supported. Perception of the quality of the brand by the consumers (beta 0:391) has the highest positive effect on product brand image after extension, followed by t perceived by the consumer (beta 0:334), consumers attitude towards the brand extension (beta 0:180) and consumers familiarity with the brand (0.060), respectively. Although the effect of consumers familiarity with the brand (beta 0:060) is quite low, it is both positive and statistically signicant. Results of the separate multiple regression analyses for the four extensions are given in Table V. As can be seen from Table V, for Nike-Jean, Puma-Jean and Puma-Camera extensions the adjusted R-square scores are around 0.72-0.74 meaning that the three models explain approximately 72 percent of the change in product brand image after extension when analyzed separately. For NikeCamera, the adjusted R-square score is lower (0.511) Table IV Multiple regression analysis result for the whole sample (n 474)
Model Constant Perceived quality Familiarity Fit Attitude Standard. Coef. (t) 0.02681 0.391 (10.481) * 0.060 (2.179) * * 0.334 (7.516) * 0.180 (3.587) *

meaning that the model for this extension explains 51 percent of the change in product brand image after extension. For all four extensions, the VIF values are all below 10 and the tolerance values are all above 0.10. Therefore, it could be said that the models have no multicollinearity problems. Table V shows that for Nike-Jean extension, attitude towards the extension (beta 0.436) has the highest effect on product brand image after extension followed by t of the extension with the parent brand (beta 0.344). For this model perceived quality and familiarity variables are not statistically signicant; thus, have no signicant effect on product brand image after extension. For the Nike-Camera extension, perceived quality (beta 0.459) has the highest effect on product brand image after extension followed by t (beta 0.341); familiarity and attitude has no statistically signicant effect on product brand image after extension. For the Puma-Jean extension, perceived quality (beta 0.648) has the highest effect on product brand image after extension followed by familiarity (beta 0.186); t and attitude has no statistically signicant effect. For the Puma-Camera extension, perceived quality (beta 0.451) has the highest effect on product brand image after extension, t (beta 0.297) has the second highest effect; familiarity and attitude has no statistically signicant effect on product brand image after extension.

8. Discussion and managerial implications


This study tries to validate that, in a Middle-Eastern culture, extensions tend to deteriorate the product brand image, whether the extension ts the parent brand or not. Additionally, the effects of perceived quality, t of the extension to the parent brand, familiarity with the brand, attitude towards the extension on product brand image after the extension are also evaluated. Overall, it was found that the product brand image is diluted once an extension is made, whether it ts the parent brand or not. Moreover, when evaluated in general, the factors that have the greatest impact on product brand image after an extension is made are quality and t. The other two factors, attitude and familiarity, have less impact on product brand image after an extension. In fact, familiarity has a negligent but statistically signicant positive effect. When assessing the extensions separately, for both NikeCamera and Puma-Camera extensions, the same independent variables (perceived quality and t) have a positive effect on

Notes: R 0.845; R-square 0.714; Adjusted R-square 0.711; *p , 0.000; * *p , 0.050; VIF values are between 1.213-4.048 for the independent variables; Product Brand Image 0.391 (Perceived Quality)+0.334 (Fit)+0.180 (Attitude)+0.060 (Familiarity)

Table V Regression analysis results for the four extensions (Nike-Jean, Nike-Camera, Puma-Jean, Puma-Camera)
Model Constant (Unstand.) Per. quality Familiarity Fit Attitude R R-square Adj. R-square VIF values Notes: *p , 0.000; * *p , 0.050 Stand. Coef. (t) (Nike-Jean) 2 0.0791 (2 0.299) 0.120 (1.843) 0.072 (1.328) 0.344 (4.096) * 0.436 (4.678) * 0.865 0.747 0.738 1.313-3.853 Stand. Coef. (t) (Nike-Camera) 0.386 (1.320) 0.459 (5.102) * 0.009 (0.136) 0.341 (3.452) * 0.025 (0.214) 0.726 0.527 0.511 1.146-3.281 Stan. Coef. (t) (Puma-Jean) 0.105 (0.478) 0.648 (9.033) * 0.186 (2.608) * * 0.091 (1.105) 0.036 (0.359) 0.861 0.742 0.732 2.058-4.089 Stand. Coef. (t) (Puma-Camera) 2 0.210 (2 0.849) 0.451 (6.341) * 0.095 (1.629) 0.297 (3.839) * 0.148 (1.836) 0.855 0.730 0.720 1.398-2.645

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product brand image after extension, whereas the other two independent variables (familiarity of the brand and attitude towards the extension) have no statistically signicant effect. The reason for this could be that camera is seen as an extension that has a low t with the parent brand, therefore customers place importance to quality and the level of t when assessing the image of the product. Since a camera is an electronic gadget, it is quite ordinary for consumers to place importance on quality. For Nike-Jean and Puma-Jean extensions however, completely different independent variables (t and attitude for Nike; perceived quality and familiarity for Puma) have an effect on product brand image after an extension. In general, Nike is perceived to have a higher image and higher quality than Puma by the respondents. Therefore, the results show that for the brand that is perceived to have a higher image and quality, t and attitude are the two important factors that affect product brand image after extension; in other words, the higher the extension ts the parent brand and the better an attitude the consumer has towards the extension, the higher the perceived product brand image will be after the extension. But for a brand that is perceived to have a lower image and quality, perceived quality and familiarity are the variables that have an effect on product brand image after an extension; meaning that when the consumer has a lower perception of image and quality of a brand, he/she places importance to the quality of the extended product and how familiar he/she is with the brand when forming product brand image after the extension. As for dilution effects, as mentioned previously, the product image of a brand after an extension is made is diluted no matter what type of extension strategy is applied. These results are in line with the Martinez and de Chernatony (2004) study. However, compared with their study, dilution is more acute with the camera extension for both brands in the Turkish sample whereas it is more acute with the jean extension for the Nike brand in the Spanish sample. In other words, the highest dilution is with Nike camera followed by Puma camera extension in the Turkish sample whereas it is more acute with the Nike jean extension in the Spanish sample. This result may be due to the fact that as Turkey is one of the major textile producers in the world, Turkish consumers may not expect an apparel producer to be an expert in technological products (camera). Therefore, when an apparel producer tries to extend into a technological product category, dilution of the product brand image is more as compared to extending into a similar product category (jean). As for managerial implications, in situations where the quality of the extension is an important feature for the customer, companies could be better off adopting a vertical brand extension strategy using a different brand name, or even a sub-brand, rather than the parent brand name in order to avoid dilution of the image of the parent brand. Additionally, to achieve success with this new category, it would be better for companies to plan and execute separate brand communication strategies for their new products. The results also reveal that t, familiarity, attitude and perceived quality do not alter this perception. Furthermore, the higher the image of a brand, the more the dilution that occurs no matter what type of extension strategy is applied. When the sample is taken as a whole, the results show that perceived quality of the brand, consumers familiarity with the brand, t of the extension with the parent brand as perceived by the consumer, consumers attitudes towards the extension 177

all have a positive effect on the product brand image after the extension. Among these independent variables, perceived quality has the highest effect on product brand image followed by t, attitude and familiarity. These results suggest that, in order to be able to at least maintain product brand image after an extension, companies should focus their brand communication strategies for the extension on quality. Moreover, when t is higher between the extension and the parent brand, less dilution will occur on product brand image after the extension. Results show that in Turkey the Nike brand has a higher image as compared to Puma brand in general but when an extension is made, the product brand image of Nike drops more as compared to the drop of product brand image of the Puma brand. In accordance with this result, those brands with higher product brand image should be very cautious when creating extensions. The gains from the extension should be very justiable since no matter how high the quality, nor the t, any type of extension causes dilution. If companies still choose to extend, care should be taken that the extensions t the parent brand as much as possible. Compared with the Martinez and de Chernatony (2004) study, although the general brand image of Nike is higher than Puma in both the Spanish and the Turkish cultures, the results also reveal some minor differences between these two cultures. Taking into consideration that Nike and Puma are global brands, the levels of perception and the degrees of effects of attitudes towards the extension, familiarity with the brand, perceived quality and t of the extension with the parent brand on product brand image after the extension are slightly different. In addition, the Martinez et al. (2008) study shows that UK and Spanish consumers respond similarly to brand extensions. Since the results of this study conducted in the Turkish market are also quite similar to the study conducted by Martinez and de Chernatony (2004), it could be said that in a Middle-Eastern culture, respondents approach to brand extensions of global brands are quite similar to that of UK and Spanish cultures. Hence, global brands may use very similar communication strategies in all of the three cultures mentioned, maybe with minor local adaptations. It is noteworthy that for the Spanish market the consumers attitudes towards the extension have a positive effect on product brand image after the extension, whereas for the UK market this is not true (Martinez et al., 2008). In the Turkish market, consumers attitudes towards the extension also have a positive effect on product brand image after the extension. Therefore, it could be said that considering the consumers attitudes towards the brand extension, Turkish consumers are more similar to Spanish consumers as compared to UK consumers. This could be due to the fact that both Spain and Turkey are Mediterranean countries, so the Turkish culture may resemble the Spanish culture more than the UK culture, hinting that global brands could use very similar marketing strategies for countries located in the same region even if the cultures seem to be different (Western and Middle-Eastern). As with all studies, this study also has some limitations. First of all, the sample size and the sampling method used in this research (convenience sampling method) may lead to a decrease in external validity. Yet, the sample consists of consumers rather than students in this research which means that, although the results may not be generalized due to the

The effect of brand extensions on product brand image ge Arslan and Oylum Korkut Altuna F . Mu

Journal of Product & Brand Management Volume 19 Number 3 2010 170 180

sample size and method, the sample strongly carries the ability of representation of the consumers. In addition, the ndings are based on only two brands and their hypothetical extensions (jeans and camera) so generalization beyond this set should be made with caution. Further studies should be applied to different product categories and brands. In addition, using real applications of extensions instead of hypothetical ones would be more realistic and give better results. Furthermore, more accurate results may be obtained via longitudinal research and experimental designs. As seen with the results of the pretests, consumers have difculties assessing the hypothetical extensions effects on product brand image. Therefore, instead of producing hypothetical extensions on paper and asking the respondents to evaluate the extension and the general and product brand image after the extension, further studies may result in more accurate ndings if they apply experimental designs with concrete and embodied extensions that subjects can see and touch. Controlled tests (and commercialization) may be a good alternative such as incorporating with a brand to produce and launch an extension in a specic region (a particular geographic region or a specic retail store) and collecting data for further analysis. When hypothetical extensions are introduced, the respondents cannot accurately make judgments about the brand image in general and product brand image after the extension. Conducting brand extension studies in different countries and differing cultures would shed light on existing brand extension literature as well as being a guide to rms acting globally.

References
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Gronhaug, K., Hem, L. and Lines, R. (2002), Exploring the impact of product category risk and consumer knowledge in brand extensions, Brand Management, Vol. 9 No. 6, pp. 463-76. Han, J.K. (1998), Brand extensions in a competitive context: effects of competitive targets and product attribute typicality on perceived quality, Academy of Marketing Science Review, Vol. 1, pp. 1-14. James, D.O. (2006), Extension to alliance: Aaker and Kellers model revisited, Journal of Product & Brand Management, Vol. 15 No. 1, pp. 15-22. Keller, K.L. (1993), Conceptualizing, measuring, and managing customer-based brand equity, Journal of Marketing, Vol. 57 No. 1, pp. 1-22. Keller, K.L. (2008), Strategic Brand Management: Building, Measuring and Managing Brand Equity, 3rd ed., PrenticeHall, Upper Saddle River, NJ. Kim, C.K. and Lavack, A.M. (1996), Vertical brand extensions: current research and managerial implications, Journal of Product & Brand Management, Vol. 5 No. 6, pp. 24-37. Kim, H. and Roedder John, D. (2008), Consumer response to brand extensions: construal level as a moderator of the importance of perceived t, Journal of Consumer Psychology, Vol. 18, pp. 116-26. Loken, B. and Roedder John, D. (1993), Diluting brand beliefs: when do brand extensions have a negative impact?, Journal of Marketing, Vol. 57, July, pp. 71-84. Martinez, E. and de Chernatony, L. (2004), The effect of brand extension strategies upon brand image, Journal of Consumer Marketing, Vol. 21 No. 1, pp. 39-50. Martinez, E. and Pina, J.M. (2003), The negative impact of brand extensions on parent brand image, Journal of Product & Brand Management, Vol. 12 No. 7, pp. 432-48. Martinez, E., Polo, Y. and de Chernatony, L. (2008), Effect of brand extension strategy on brand image: a comparative study of the UK and Spanish markets, International Marketing Review, Vol. 25 No. 1, pp. 107-37. Nunnally, J.C. and Bernstein, I.H. (1994), Psychometric Theory, 3rd ed., McGraw-Hill, New York, NY. Park, C.W., Milberg, S. and Lawson, R. (1991), Evaluation of brand extensions: the role of product feature similarity and brand concept consistency, Journal of Consumer Research, Vol. 18, September, pp. 185-93. Pitta, D.A. and Katsanis, L.P. (1995), Understanding brand equity for successful brand extension, Journal of Consumer Marketing, Vol. 12 No. 4, pp. 51-64. Reddy, S.K., Holak, S.L. and Bhat, S. (1994), To extend or not to extend? Success determinants of line extensions, Journal of Marketing Research, Vol. 31, May, pp. 243-62. Ries, A. and Trout, J. (1986), Positioning: The Battle for Your Mind, McGraw-Hill, New York, NY. Salinas, E.M. and Perez, J.M.P. (2009), Modeling the brand extensions inuence on brand image, Journal of Business Research, Vol. 62 No. 1, pp. 50-60. Smith, D.C. and Park, C.W. (1992), The effects of brand extensions on market share and advertising efciency, Journal of Marketing Research, Vol. 29, August, pp. 296-313. Story, J. and Loroz, P.S. (2005), Technological congruence and perceived quality of brand extensions, Journal of Product & Brand Management, Vol. 14 No. 7, pp. 438-47.

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Tauber, E.M. (1981), Brand franchise extension: new product benets from existing brand names, Business Horizons, Vol. 24 No. 2, pp. 36-41.

Corresponding author
F. Mu ge Arslan can be contacted at: mugearslan@marmara. edu.tr

Executive summary and implications for managers and executives


This summary has been provided to allow managers and executives a rapid appreciation of the content of the article. Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benet of the material present. A recognized brand name is one of the most powerful weapons in any rms armory. Many benets can be attained by companies able to boast high levels of brand equity. For instance, consumers develop stronger positive attitudes toward the brand, become more loyal and therefore less susceptible to the marketing efforts of rivals. A more sympathetic response to price increases is another feasible outcome. Organizations can also expect greater marketing effectiveness and additional opportunities to launch licenses or brand extensions. The high costs involved in brand development and sustenance prompts many rms to seek cheaper and less risky alternatives when entering new markets. Brand extensions fall into this category. That the brand name is already familiar to consumers forms the rationale behind this strategy. New products carrying the existing name are more readily accepted in the market, while the company also benets because of the lower investment needed for such as promotional and distributional activities.

cannibalization of sale of existing products is likewise noted. Other key factors are: . Brand quality. Consumers are more likely to accept an extension when they perceive brand quality to be high as positive views of the brand are transferred to the extension. . Familiarity with the brand. This can be acquired from product usage and exposure to the brand through advertising. The premise here is that people will feel positive about an extension when they are already familiar with the brand. . Brand t. Congruence between the parent brand and the extension can be achieved by various means like similarity in product category or product attributes. There is also the possibility of t existing in any of the product associations that are formed. It has been found that consumers perceive an extension to be of inferior quality when the extension ts poorly with the parent brand. The opposite effect is likelier when a close t exists. . Attitude. Research suggests that consumers who are positive towards a brand will buy the product and become loyal to it. A negative attitude is equally likely to be inuential and result in brand avoidance. On this basis, it is proposed that a favorable attitude towards an extension will positively impact on product brand image. An opposite effect will materialize if the attitude is unenthusiastic. Earlier research has shown greater favorability towards extensions that are more difcult to manufacture. How unsuccessful extensions impact on the parent brand has likewise received attention. In this case, studies indicate that a negative effect is likelier when the parent brand and extension are in a similar product category. Among other factors previously explored are sequential brand extensions, number of previous extensions, the parent brands symbolic value and consumer knowledge of the product class. Research and ndings Arslan and Altuna explore the above issues in a study of 474 respondents in Turkey. The survey was based on earlier work involving hypothetical jeans and camera extensions of Nike and Puma brands, selected because of their popularity within the Turkish market. The ndings indicated that: . quality and image perceptions are high for both brands but highest for Nike; . respondents were more familiar with Nike than Puma, although the difference was statistically insignicant; . a decrease in product brand image after extension for both brands; . reduction in product brand image after extension is greater for brands with higher perceived image and quality than for brands where perceived image and quality is lower; . consumer perception of brand quality has greatest positive impact on product brand image following extension; and . product brand image is less negatively affected when the extension ts the parent brand and more negatively affected when the t is poorer. While quality and t generally have the largest effect on product brand image after extension, the impact of attitude 179

Key issues Scholars differentiate between line extensions that refer to new launches within the same product category and brand extensions that are introduced into a new one. Both types of extension can be classied as horizontal as opposed to vertical extensions related to differences in price and quality. Downscale vertical extensions can negatively affect consumer perceptions of the brand while a more favorable response to upscale extensions is the norm. However, any resulting confusion about quality and image can be damaging to the parent brand. Image reects consumer perceptions of a brand created through a variety of associations linked to features or benets of the product and attitudes toward the brand. In addition to the product itself, marketers typically create brand images through channels that include packaging, logo, color, advertising, the retailer and country of origin among others. Studies have shown that extensions that create new associations different from the original ones can dilute or even damage the brands image. This risk prevails whether the extension is successful or not, according to analysts who also claim that the threat is greater when the number of extensions created becomes excessive. The potential for the

The effect of brand extensions on product brand image ge Arslan and Oylum Korkut Altuna F . Mu

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and familiarity is much less signicant. This also applies to the camera extensions for the two brands. In the authors opinion, the cameras status as an electronic gadget and low t with the parent brand will raise the importance of quality. A different impact occurs where the jeans extensions are concerned. The variables t and attitude impact most on product brand image for Nike, while with Puma it is quality and familiarity. Arslan and Altuna conclude that: . for brands perceived to have high image and quality, extensions that closely t the parent brand and favorable consumer attitude towards the extension will positively effect product brand image; and . quality of extension and consumer familiarity with the brand will have most impact on product brand image for brands considered lower in image and quality. Marketing suggestions and further study Where extension quality is important to consumers, vertical brand extensions are recommended. In such situations, marketers are encouraged to use a sub-brand or a different brand name altogether in order to prevent the parent brand being negatively affected. Separate brand promotional strategies for new products could also be deployed. In general, companies need to emphasize quality within brand communication strategies for extensions and should

aim for a t between the extension and parent brand. Where higher product brand image is evident, potential benets must justify the action and t should be as close as possible. Survey responses were similar to those produced by UK and Spanish participants in the prior study. Hence, the authors propose that marketers might employ similar communication strategies with minor local adaptations when promoting global brands within these cultures. Furthermore, the comparable attitudes between Spanish and Turkish respondents invites the assumption that utilizing similar strategies may be feasible for nations within the same region, even where cultural differences exist. Additional study within different countries and cultures is advised, however. While survey respondents were considered representative, further study using a larger sample size may allow generalization of ndings. Restricting the investigation to two brands and using hypothetical extensions are also acknowledged as limitations. It is therefore suggested that longitudinal research involving different brands and product categories is undertaken so that attitudes toward real extensions could be accurately measured. cis of the article The effect of brand extensions on product (A pre brand image. Supplied by Marketing Consultants for Emerald.)

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