Research On The Influence Of Brand Extensions’ Price On Brand Extension Evaluation

As brand extension has many advantages, such as reducing risks, improving brandassets, it has been the common strategy companies introduce new products andservices, but the practice proves that brand extension strategy is not always effectivein any cases, the success of brand extension strategy is largely dependent onconsumers’ brand extension evaluation. While it is affected by many factors, amongwhich extension product price is one of the most important factors consumersconsider.This research uses theoretical and empirical research methods.Firstly, this research reviews the foreign and domestic research on brand extensionevaluation, through which we find extension product price is the main factorinfluencing the evaluation. Based on the past study, this research investigates how theextension product price influences consumers’ evaluation from the new view—brandtrust. Besides, service and product have significant differences. Therefore, thisresearch further studies how the extension service price influences the service brandextension evaluation and compare the influence with product brand extensionevaluation.Studying the effects of extension product price on product brand extensionevaluation, this research selects two Fast Moving Consumer Goods (FMCG) brandsand two Durable Consumer Goods brands, then evaluates the brand extension fromthree dimensions (perceived quality, perceived value and purchase intension);Studying the effects of extension service price on service brand extension evaluation,this research uses the same experimental method.Results show that for both product and service brands, extension product (service)price has no influence on perceived quality, while significant effects on perceivedvalue and purchase intention of FMCG brands under both higher and lower trustlevels, Durable Consumer Goods brands under higher trust level and service brandunder higher trust level, but no significant effects on perceived value and purchaseintention of Durable Consumer Goods brands and service brands under lower trustlevel.