The Mechanism Of Consumers' Brand Extension Evaluation

When companies choose to enter new product categories, the traditional way is to creating new brand names for the products. However, this branding strategy is not as effective as before since 1980's. On the one hand, the accelerating of globalization since 1980's makes the competition more and more severer, so companies have to pay much more money to win the advertising contracts and to launch promotion activities, which makes the cost of introducing new brands increasing sharply. On the other hand, severer competition and faster technology innovation cause the failure ratio of new products introduction to keep in a high level, and the introduction of new brands turns to be a high risky branding strategy. Influenced by these two reasons, more and more companies attach their importance to their established brand name, and use these famous brands to introduce new products in new categories. Nowadays, utilizing brand extension strategy to enter new product categories has become the dominant branding strategy, and the driving force for companies to gain strategic growth in the worldwide.Compared to introducing new brands, there are lots of advantages for brand extensions. However, the using of brand extension strategy should still be cautious. The imporper use of brand extension stragety can make parents brands at stake and weaken the brand equity that has been established. According to these reasons, since 1990's, the research about the mechanism of the brand extension, and factors influencing consumers'evaluation of brand extensions has become a main stream in marketing. Plenty of research work about brand extension has arrived at many useful conclusions. However, traditional research took brand extension as a static process, and paid excessively more attention to the internal validity, but neglected the investigation of situational variables related to specific market environment, which made the conclusions of these researches differ from marketing practice. Focusing on situational variables related to specific market environment from a dynamic view, and exploring their possible influence on consumers'brand extension evaluation is of great importance for improving the external validity of research conclusions, and guiding the brand extension practice.On the basis of thoroughly reviewing of brand extension literature, this thesis chose the question of how situational variables related to specific market environment influencing consumers'brand extension evaluation as the key research question. In order to investigate these variables'possible influence, perceived fit was also selected in this thesis to be studied together. So in this thesis, four independent variables were included, among these four variables, involvement, argument quality of extension product related messages and endorsements'attractiveness of extension products were the variables related to specific market environment, and the perceived fit between parent brand and brand extension was the variable that related to brand extension's inherent character, and was proved to have critical influence on consumers'brand extension evaluation in past research. Specificlly, this thesis investigated the possible influence and the mechanism of these factors on consumers'brand extension evaluation. Based on past research of brand extension and the dual process models, research hypotheses were advanced, and three experiments were operated to verify these hypotheses.Experiment 1 was a 2 (high involvement vs. low involvement)×2 (high fit vs.low fit)×3 (replicate) mix design. The purpose of this experiment was to test the influence of involvement and perceived fit on consumers'brand extension. Research results yield a significant main effect for perceived fit, indicating more positive evaluation was induced as perceived fit increased. In addition to the main effect for perceived fit, the two-way interaction of involvement and perceived fit was also significant, in the high involvement condition, perceived fit had more powerful influence on consumers'evaluation of brand extension.Experiment 2 was a 2 (high involvement vs. low involvement) x2 (high fit vs.low fit) x2 (high argument quality vs. low argument quality) between-subjects design. The purpose of this experiment was to test the influence of involvement, perceived fit and argument quality on consumers' brand extension. Research results yield a significant main effect for argument quality, indicating more positive evaluation was induced as argument increased. In addition to the main effect for argument quality, the two-way interaction of involvement and argument quality was also significant, indicating that in the high involvement conditions, argument quality had more positive influence on consumers'evaluation of brand extension. Further analysis was implemented to investigate the possible asymmetry effect of argument quality on consumers'brand extension evaluation under different perceived fit conditions. However, this hypothesis was only partially supported, and only under low perceived fit conditions, the extent of the influence of high argument quality and low argument quality was significantly different.Experiment 3 was a 2 (high involvement vs. low involvement)×2 (high fit vs.low fit)×2 (high endorsement attractiveness vs. low endorsement attractiveness) between-subjects design. The purpose of this experiment was to test the influence of involvement, perceived fit and endorsement attractiveness on consumers'brand extension. Research results yield a significant main effect for endorsement attractiveness, indicating more positive evaluation was induced as endorsement attractiveness increased. However, unexpected to the hypothesis, the three-way interaction of involvement, perceived fit and endorsement attractiveness was not significant.The findings of this thesis contribued to recent brand extension research mainly in the following three aspects. First, the results of this thesis indicate that the influence of perceived fit on consumers'brand extension evaluation is moderated by involvement for the first time, which is helpful for understanding the mechanism of perceived fit on consumers' brand extension evaluation theoritically, and provides support for the influence of involvement on consumers'brand extension evaluation. Second, this thesis indicates the influence of argument quality on consumers'brand extension evaluation and discovers the mechansim behind it for the first time, which enrichs the research foundings from the view of dynamic market conditions. Third, this thesis indicates the influence of endorsement attractiveness on consumers'brand extension evaluation and discovers the mechansim behind it for the first time, which is contributed to expanding the research of brand extension from the view of dynamic market conditions, and provides another perspective to detect the influence of market conditions.