The Verification Study Of The Smith-Park Effect Mode Of Brand Extension In China

As a brand strategy, brand extension is adopted by more and more domestic enterprises, and more and more scholars focused on brand extension study since 1990's. How to evaluate the monetary influence brought by brand extension is very important to make the accurate brand strategy and lead the actualization of brand strategy. In recent more than ten years, in the researches of brand extension the research model of Smith and Park is very remarkable. Because Smith and Park used the data in their country to test the model, so if the domestic enterprises want to adopt the brand extension effects model of Smith and Park, first we should adopt our domestic datum to test the model.The paper detailed expatiated the summarization of domestic and overseas scholars of brand extension, summarized the conception of brand extension based on the study of other scholars, concluding the correlative academic basement, and expounded the effects of brand extension. And it importantly discussed the applicability of Smith-Park model in China market. For testifying this viewpoint and analyzing the degree of effect, they analyzed from three aspects: brand characteristics, extension product characteristics and characteristics of the extension product market, make eight hypotheses. The author thought it was feasible to validate the Smith-Park model by analyzing the market environment and the actuality of consumers in China.Because there are many differences between American and China, such as the difference of consumer psychology, consumers purchasing behavior, consumers'purchasing power and the disequilibrium of market development etc., all these should result to the difference between the results of the paper and the primary results. By validating the Smith-Park model in China market, the paper obtained the following conclusions: first, brand extension can enter market and take up the market share by fewer investments than individual brand. Brand extension can obtain the market share of average more than 3% than new brand, and can reduce the advertising cost/sale rate of 3.2%. Secondly, the extent of the difference on cash flow is affected by three basic elements: brand characteristics, extension product characteristics and characteristics of the extension product market. The result is the same as the result of Smith-Park. At last, the difference in cash flow will alter over time. When the new product turned to the old product, the difference of market share reduced to 1.32% and the difference of advertising cost/sale rate reduced to 1.58%. The result also is thesame as the result of Smith/Park in American. But the extent of reduction is little.I hope I can give some advices to those enterprises that have adopted and haven't adopted brand extension, namely when they adopt brand extension, they must think of the brand characteristics, the extension product characteristics and the characteristics of extension product market. And they should think of the actual condition of themselves to rationally adopt brand strategy.