The Effects of Dissociative Segment Adoption of Brand Extensions on the Evaluation of the Parent Brand

Claudio Alvarez, Boston University, USA
Remi Trudel, Boston University, USA
Brand extensions may bring new sources of revenue growth through expansion into new customers segments (e.g., Porsche Panamera) or through more conservative moves within the existing customer base (e.g., Clorox’s home cleaning products). A major concern when branching out into new customer segments is the potential negative impact on the image of the original brand, particularly when current customers perceive this new customer segment as a dissociative reference group. We make the novel prediction that perceived fit between the new product extension and the brand will moderate the effect of dissociative segment adoption, so that a brand extension adoption by a dissociative segment (versus an ingroup) will negatively impact the parent brand when product category similarity is high, but will not have an impact when similarity is low. Our initial results are consistent with this prediction. The implication to managers is that parent brand dilution effects would be minimized by targeting current customers with more similar brand extensions, whereas dissimilar brand extensions may be a viable alternative that generates lower dilution risks when targeting dissociative customer segments.
[ to cite ]:
Claudio Alvarez and Remi Trudel (2011) ,"The Effects of Dissociative Segment Adoption of Brand Extensions on the Evaluation of the Parent Brand", in NA - Advances in Consumer Research Volume 39, eds. Rohini Ahluwalia, Tanya L. Chartrand, and Rebecca K. Ratner, Duluth, MN : Association for Consumer Research, Pages: 847-848.