Study On The Impact Of Brand Extension Strategies On Brand Equity

Based on the theory of customer-based brand equity, this article studies the impact of brand extension strategies on brand equity theoretically and empirically. Concerning the horizontal extension, the article theoretically discusses the different characteristics of the factors that constitute the brand equity in the extension process, and it also discusses the internal mechanism of the process. Then the article establishes a theoretical model for describing the transfer of brand equity value in horizontal extension process. As to the vertical extension, it empirically analyses the impact of different extension strategies and brand types on brand equity.This research has done the following constructive works on the basis of previous studies:Previous researches put forward different ideas on the meaning of brand equity and its constituting factors. Our research analyses the meaning and mutual relations of three important concepts that closely relate to the concept of brand equity: Brand Asset, Brand Equity and Brand Value, thereby providing referrence for brand equity study.2. Although there are abundant empirical researches on horizontal extension, previous studies pay little attention to the internal mechanism of extension process. Therefore, this article studies the impact of horizontal extension on brand equity from this angle.3. This article studies the vertical extension, which are less studied by previous scholars. Meanwhile, it adopts empirical study method in the research, which is a good compensation for domestic academic study in this area.The article studies both the horizontal extension and vertical extension, which aims to reflect the effect of extension strategies on brand equity more completedly. It concludes as follows:1. Brand Asset is the static description of brand from asset categorization angle; Brand Equity describes the dynamic forming process of Brand Asset and the interaction of its influencing factors; Brand Value describes the essential existing reason of Brand Asset from the economics angle. Among the three concepts, Brand Equity is the core; the customer-based brand equity reflects the essence of brand, especially. 2. Brand extension process can be considered as the multi-closed-loop process of control system. In every closed-loop, there exists both positive transferring process and feedback process. The positive transferring process means the process of brand equity value transferring to the target market of the new products. The feedback process means the counteractive process that the development of new product in target market impacts brand attributes and brand equity value. The transferring degree of brand equity depends on the correlation degree between the target market and the core products target market.3. The results of the experiment indicate that from the customers' angle, the step-down extension has a negative impact on brand equity; the step-up extension has a positive impact on brand equity. Meanwhile, the hypothesis that the impact of step-down extension on the superior brand is more negative than that on the inferior brand has been supported. However, the hypothesis that the impact of step-up extension on the superior brand is more positive than that on the inferior brand has not been supported.Both the extension direction and the brand type have great impact on brand equity. The interaction between extension direction and brand type significantly affects brand equity as well.In the Chinese cultural and economical background, this research adjusts the scale studied by western scholars according to the pre-test. The adjusted scale proves to be with high reliability and validity by practical application, thereby providing a beneficial tool for further researches. This indicates that the research tools and methods used by western scholars, which are deserved to be borrowed and referred to, can be used universally.While studying our own problem, people ought to take into considerations of the special cultural and economical background of China...