Expectation Disconfirmation As a Moderator of Brand Extension Evaluation

ABSTRACT - This research inspects the moderating role of consumer’s negative expectation disconfirmation on brand extension and parent brand evaluations. The stated issues are discussed with a conceptual two-step brand evaluation model and examined by laboratory experiments. Research results indicate that, similar to the typicality of brand extension, expectation disconfirmation on brand extension is more influential than the category similarity of brand extension both on parent brand and brand extension evaluations. Moreover, expectation disconfirmation affects brand extension evaluation directly and, via affecting the typicality of brand extension directly, affects parent brand evaluation indirectly.

Citation:

Joseph W. Chang and Yung-Chien Lou (2002) ,"Expectation Disconfirmation As a Moderator of Brand Extension Evaluation", in AP - Asia Pacific Advances in Consumer Research Volume 5, eds. Ramizwick and Tu Ping, Valdosta, GA : Association for Consumer Research, Pages: 316-322.

Asia Pacific Advances in Consumer Research Volume 5, 2002      Pages 316-322

EXPECTATION DISCONFIRMATION AS A MODERATOR OF BRAND EXTENSION EVALUATION

Joseph W. Chang, University of Regina, Canada

Yung-Chien Lou, National Chengchi University, Taiwan

ABSTRACT -

This research inspects the moderating role of consumer’s negative expectation disconfirmation on brand extension and parent brand evaluations. The stated issues are discussed with a conceptual two-step brand evaluation model and examined by laboratory experiments. Research results indicate that, similar to the typicality of brand extension, expectation disconfirmation on brand extension is more influential than the category similarity of brand extension both on parent brand and brand extension evaluations. Moreover, expectation disconfirmation affects brand extension evaluation directly and, via affecting the typicality of brand extension directly, affects parent brand evaluation indirectly.

INTRODUCTION

Consumers’ attitude changes are normally discussed in two dimensions of affection and cognition. In brand extension evaluation research, consumers’ attitudes toward brand extensions are identified by the cognition-based typicality of brand extensions to their parent brands, which is judged by the fitness of product features between the parent brands and the brand extensions (Loken and John 1993; John, Loken, and Joiner 1998). There is no affection-based moderator for parent brand and brand extension evaluations examined in past brand evaluation research. As feelings can influence consumers’ attitudes toward advertising and brands (Batra and Ray 1986; Burke and Edell 1989), an affection-based moderator for consumers’ attitude changes should also affect parent brand and brand extension evaluations. In consumer satisfaction research, one psychological dimension of satisfaction is whether a consumer’s expectation is confirmed or disconfirmed by product performance (Johnson and Fornell 1991). The primary antecedents of satisfaction are the expected and perceived product performances (Churchill and Surprenant 1982; Johnson and Fornell 1991; Oliver 1980), which induce a consumer’s expectation disconfirmation. As affection-based expectation disconfirmation affects consumers’ attitudes, parent brand and brand extension evaluations should also be affected by expectation disconfirmation. Both the cognition factor of typicality judgment of brand extension and the affection factor of expectation disconfirmation should be considered while estimating the reciprocal effect of brand extensions on consumers’ parent brand and brand extension evaluations. The determination role of expectation disconfirmation on brand evaluations is therefore important, but has not been examined (e.g., Ahlumalia and Gurhan-Canli 2000; Chang 2001; John, Loken, and Joiner 1998; Keller and Aaker 1992; Loken and John 1993; Sullivan 1990).

Moreover, brand extension evaluations are discussed as a singular procedure of information processing (e.g., John, Loken, and Joiner 1998; Keller and Aaker 1992; Loken and John 1993). However, several consumer evaluation models, as well as consumer satisfactory models (Churchill and Surprenant 1982; Johnson and Fornell 1991; Oliver 1980; Spreng, MacKenzie, and Olshavsky 1996), indicate that the consumer’s cognitive procedure is a two-stage process with two dimensions of information processing (Fiske and Pavelchak 1986; Kempf and Smith 1998; Loken and Ward 1987; Smith, Shoben, and Rips 1974; Smith and Swinyard 1982). This especially is the case when there is a comparison between current and past brand information, such as expectation disconfirmation. As being a function of expected (or: before) and perceived (or: after) performances of brand extensions, the affection-based expectation disconfirmation should be examined with a procedure of two-step information processing.

Therefore, the purpose of this research is to identify how the affection-based expectation disconfirmation moderates parent brand and brand extension evaluations with a conceptual two-step brand evaluation model.

THEORETICAL BACKGROUND AND HYPOTHESES: TWO-STEP BRAND EVALUATION MODEL

As consumers’ expectation disconfirmations are series of information processing procedures comparing expected and perceived information about brands, a two-step brand evaluation conceptual model based on consumers’ information processing models is developed to discuss the moderating role of expectation disconfirmation.

Two-step Evaluation Models

Fiske and Pavelchak (1986) propose a two-step information-processing model discussing the concept of societal categorization. In the first step, consumers attempt to find out the fitness of the new category member with the existing category members. The evaluation process is completed if the new member (brand extension) is perceived as highly matched with the category (parent brand). In contrast, if there is a moderate match between the category and the new member, the (attribute-based) piecemeal processing is evoked to assess the similarity between the two. The extent of affect transferring from the category to the new member (brand extension) is decided by the similarity of the new member to the category. Much the same as Fiske and Pavelchak’s (1986) model, Smith, Shoben, and Rips (1974) propose a two-step model identifying the membership of an instance or concept to a category. The processing of the first step is rapid and global, where subjects try to match the features of the category and the new objects. If there is a clear match between the two, the processing is completed. However, if there is a clear mismatch, the second and slower stage continues, where a more intensive comparison between the features of the category and the new object is elaborated to identify the membership of the new object to the category. Both models of Fiske and Pavelchak (1986) and Smith, Shoben, and Rips (1974) involve a two-stage process, but the former model stresses the affective response to the new instance and the latter model emphasizes the membership identification.

Smith and Swinyard (1982) develop an integrated information response model to differentiate the product evaluation effects of direct and indirect product experiences. The first stage is the information processing induced by indirect product experience, such as television advertising, which invokes lower order beliefs and affects and results in lower belief confidence and insignificant attitude-behavior consistency. The second stage is the process induced by direct product experience, which invokes higher order beliefs and affects and results in higher belief confidence and significant attitude-behavior consistency. Moreover, Kempf and Smith (1998) propose a refined integrated Ad/Trial model, which is based on the Smith and Swinyard’s (1982) model, to identify how advertising information (indirect product experience) interacts with brand trial experience (direct product experience) and eventually generates overall brand attitudes. An observation emerges from a review of the above models that a conceptual two-step brand evaluation model is differentiated.

FIGURE 1

TWO-STEP BRAND EVALUATION MODEL

The Integrated Two-Step Brand Evaluation Model

Based on the above theories, an integrated two-level brand evaluation model is proposed to clarify the moderating roles of expectation disconfirmation and brand extension typicality in brand (extension) evaluation (figure 1).

The first step: Lower Order Information Processing. At the first stage, while a consumer is exposed to indirect product information about a new brand extension, s/he makes the similarity judgment of brand extension an forms expectation on the attribute performance of brand extension based on previous direct product experience of parent brand. The similarity judgment is identified by the fitness of category between the parent brand and the brand extension, which is called the category-based similarity judgment. Under the circumstances, as only indirect product information is provided, such as the information from product package or television advertising, only the lower-order psychological procedure with limited product information processing is elaborated (Smith and Swinyard 1981, 1982). The judgment is heuristic and fast (Fiske and Pavelchak 1986; Smith, Shoben, and Rips 1974). As only the lower-order psychological process is involved, expectation disconfirmation might be observed, but not significant. The first-step information processing is more cognition-oriented with lower level attitudes.

The second step: Higher Order Information Processing. At the second stage, the category-based typicality is adjusted with respect to the perceived detailed attribute information of the brand extension, the attribute-based typicality. The overall typicality of brand extension is decided by integrating the category-based and the attribute-based typicality of brand extension (Gurhan-Canli and Maheswaran 1998; John, Loken, and Joiner 1998; Loken and John 1993). Moreover, the expectations on brand extensions are disconfirmed if the expected and the perceived performances of the brand extension are unparallel (Churchill and Surprenant 1982; Johnson and Fornell 1991; Oliver 1980). The expectation disconfirmation on brand extension indicates the differences between the expected and the perceived performances of the brand extension, which also means that how well a consumer’s expectation on a brand extension is disconfirmed. More negative expectation disconfirmation results in more negative reciprocal effects on parent brand and brand extension evaluations. Accordingly, perceived brand extension performance is attribute-based higher order attitudes activated by direct product experience (Kempf and Smith 1998; Smith and Swinyard 1982) and expectation disconfirmation is a function of expected and perceived performances (Churchill and Surprenant 1982; Johnson and Fornell 1991; Oliver 1980) of brand extensions. Therefore, expectation disconfirmation is higher order attitude activated by direct product experience as well. Similar to attribute-based typicality, which moderates parent brand and brand extension evaluations (Loken and John 1993; Loken and Ward 1990), expectation disconfirmation should also moderate, and is more influential than category-based similarity, on parent brand and brand extension evaluations. Whenever there is significant negative expectation disconfirmation, there is significant negative effect on parent brand and brand extension evaluations, regardless of the category similarity of brand extension. Therefore,

H1: Expectation disconfirmation dominates (or: is more influential than category-based similarity on) brand extension evaluations, regardless of the category similarity of brand extension.

H2: Expectation disconfirmation dominates (or: is more influential than category-based similarity on) parent brand evaluations, regardless of the category similarity of brand extension.

METHOD: LABORATORY EXPERIMENT

Experimental Design

The experimental study includes sixty-five students as subjects in a 2x2 factorial design. Each experiment group consists of 15 to 20 subjects. A total of one hundred and forty-nine subjects participate in this research, including fifty-five respondents in pilot and pre-tests and thirty subjects in two control groups.

The first factor is the product category-based similarity of brand extension toward the parent brand of Sprite products. Two new brand extensions of Sprite orangeades and Sprite washing-up liquids in different product categories of orangeades and washing-up liquids represent the similar and dissimilar brand extensions respectively to the parent brand category of lemonades. The second factor is the expectation disconfirmation (E_d) on the performance of brand extension. There are high and low expectation disconfirmations for the similar and dissimilar categories of orangeades and washing-up liquids respectively. E_d is manipulated by respondents’ attitudes toward brand extensions before experimental treatments (A_be1). High and low A_be indicates low and high E_d respectively. Therefore, the experiments include four brand extensions in four experimental groups of high E_d similar (HE_dS), low Ed similar (LE_dS), high Ed dissimilar (HE_dD), and low E_d dissimilar (LE_dD). Moreover, two control groups are examined in order to clarify the possible biases of experimental treatment effects. The experimental treatments of the control group I and II are high E_d similar and high E_d dissimilar brand extensions of 7-Up products, which is an unrelated parent brand to tested brand extensions in the same product category of lemonades as Sprite products.

Stimuli

The selection of the parent brand. In line with past research (Aaker and Keller 1990), the strong parent brand of Sprite products is selected from the lemonades product category for the reasons that Sprite is a popular brand name with quality image and elicits relatively specific positive associations, such as lemon/lime flavor, sparkling/fizzy/bubbly, refreshing, etc.

The package designs of the tested products. The favorable (or: high A_be1) Sprite orangeades and unfavorable (or: low A_be1) Sprite orangeades are products of Fanta orangeades and Asda Farm Stores orangeades respectively. The favorable (or: high A_be1) Sprite washing-up liquids and unfavorable (or: low A_be1) Sprite washing-up liquids are products of Fairy washing-up liquids ($1.25 for a half liter bottle) and Asda Farm Stores washing-up liquids ($0.22 for a one liter bottle) respectively. ("Asda Farm Stores" is a low quality and low priced brand) Four specifically designed hypothetical labels with Sprite brand names replace the package labels of the four products. The label of the favorable Sprite orange (500ml) is similar to that of Sprite lemonades, but the color is changed from green to orange. The label of the unfavorable Sprite orangeades is similar to the label of Asda Farm Stores orangeades, but the "Asda Farm Stores" logo is replaced by the "Sprite" logo. The label of the favorable Sprite washing-up liquids is similar to the Sprite lemonades (500ml), but the label size is enlarged to fit the Fairy washing-up liquids bottle (500ml) and the label color is changed from green to deep blue, which implies a hygienic product. The label of the unfavorable Sprite washing-up liquids is similar to that of Asda Farm Stores, but the "Asda Farm Stores" logo is replaced by the "Sprite" logo. All the four tested products are in 500ml bottles for the purposes of standardization and ease of comparison. The stimuli of unfavorable similar and dissimilar brand extensions of 7-Up are similar to the unfavorable similar and dissimilar brand extensions of Sprite products, despite the "Sprite" logos are replaced by the "7-Up" logos.

Independent Variables

Category-based similarity of brand extension is measured by the question of "In my opinion, orangeades (or: washing-up liquids) is ____ lemonades" followed by a seven-point bi-polar scale with endpoints labeled "Dissimilar to" (1) and "Similar to" (7) (John, Loken, and Joiner 1998; Keller and Aaker 1992; Loken and John 1993).

Attitudes toward brand extensions before treatments (A_be1) are measured by six seven-point bi-polar scales of brand attitude measures with endpoints labeled "Bad"/"Good", "Dislike"/"Like", "Unfavorable"/"Favorable", "Low quality"/ "High quality" (Hastak and Olson 1989; Kempf and Smith 1998; Smith 1993), "Not at all likely to try"/"Very likely to try" and "Inferior product"/ "Superior product" (Jacobson and Aaker 1987; Keller and Aaker 1992).

Expectation disconfirmation (E_d) on the performance of brand extension is measured by two questions. The first question is "How much does the Sprite orangeades (or: washing-up liquids) differ from what you expected?" followed by a seven-point bi-polar scale with endpoints labeled "Not at all different" (1) and "Very different" (7). The second question is "Please rate the extent to which the Sprite orangeades/washing-up liquids is:" followed by two seven-point bi-polar scales with endpoints labeled "Totally unexpected" (1)/ "Totally expected" (7) and "Not surprising at all" (1) / "Very surprising" (7) (Gurhan-Canli 1996).

Dependent Variables

Typicality of brand extensions (T_be) is measured by asking "In my opinion, the Sprite orangeades (or washing-up liquids) are ______ the Sprite products" followed by four seven-points bi-polar scales with endpoints labeled "Dissimilar to" (1) / "Similar to" (7), "Inconsistent with" (1) / "Consistent with" (7), "Atypical of" (1) / "Typical of" (7) and "Unrepresentative of" (1) / "Representative of" (7) (John, Loken, and Joiner 1998; Keller and Aaker 1992; Loken and John 1993; Loken and Ward 1990).

Attitudes toward brand extensions and parent brand (A_be2 and A_p) after the experiment treatments are measured by the identical measures of attitudes toward brand extensions before treatments (A_be1).

Subject and Procedure

The Pilot Pre-test and Pre-test. This research is comprised of three data-collecting stages of pilot pre-test, pre-test and experiments. The pilot pre-test stage is the process of developing and revising questionnaires for the pre-test and experiments. The pre-test collects data of category similarities and unaided brand awareness of lemonades, orangeades and washing-up liquids. As validity and reliability are concerned, the questionnaires have been revised around 30 times before being eventually implemented for the experiments at the final stage. It takes about 5 and 15 minutes respectively for a respondent to complete the pre-test and experiment questionnaires.

The Experiment Procedures. In the beginning of the experiments, participants are advised that the research purpose is to learn about consumers’ responses toward new products, which will be launched by a famous manufacturer. All respondents are invited volunteers and users of lemonades, orangeades and washing-up liquids. Qualified participants are selected and filtered with screening questionnaires and allocated randomly to one of the four experiment and two control groups. Experiments are conducted in small groups with an average size of three persons. In order to prevent possible social influences on product evaluations, respondents are advised that there is no discussion allowed during the experiments. Each respondent is asked to taste or use a sample product of orangeades or washing-up liquids, which will be launched by a real manufacturer and, then, fills out Part I questionnaires evaluating the sample product. (For the experiment groups of washing-up liquids, participants are advised to try the sample products of washing-up liquids at home for two days and use them as usual as they used other washing-up liquids for dish-washing) They, then, taste and evaluate the real products of Sprite lemonades. After that, the participants are advised that the Sprite Company will be developing a new brand extension of Sprite orangeades or Sprite washing-up liquids and asked to indicate their expectations on performance of the brand extension, which is an experiment arrangement to activating their higher motivation for the information processing about the brand extension. Later on, subjects are advised that the sample products of orangeades or washing-up liquids that they tried in the beginning of the experiments are exactly the brand extension that Sprite Company will be launching. Simultaneously, the real Sprite orangeades or Sprite washing-up liquids with package designs are shown to them. They, then, indicate their typicality judgments of, and expectation disconfirmations on, the performances of brand extensions and re-evaluate the brand extensions and the parent brand of Sprite products with the identical measures before the experiment treatments to verify their attitude changes. Finally, participants answer selected personal demographics questions, such as age, gender etc., and are dismissed with thanks and rewards. Each participant receives a four-dollar worth reward of Coca Cola, Sprite lemonades or Fanta orangeades in successfully completing the experiments.

For the two control groups, respondents experience the same experiment procedures and answer the similar questions with the same measures as those for the four experiment groups, despite the different settings of brand extensions. The experiment treatments of the control group I and II are unfavorable similar and dissimilar brand extensions of an unrelated parent brand (7-Up) respectively, which are expected to rule out the possible biases of the experiment treatments of unfavorable similar and dissimilar brand extensions.

RESULTS

Manipulating Check

Group homogeneity

The Levene’s tests of equality of error variances indicate that both the error variances of the brand attitudes of parent and original brands are equal across the six groups (F=.42, p>.05; F=2.24, p>.05), which indicates that the four experiment groups and the two control groups are homogeneous.

Independent variables

Analysis results of one-way ANOVA and t-test for equality of means indicate that the independent variables are properly manipulated:

1. The orangeades category is perceived as extremely dissimilar to the category of washing-up liquids (M=5.97 vs. 2.14, F=146.96, p=.00). (Similarity)

2. The product attitudes of favorable Sprite (Fanta) orangeades are much better than the product attitudes of unfavorable Sprite (Asda Farm Stores) orangeades (M=4.98 vs. 3.74; F=7.78, p<.01) and the product attitudes of favorable Sprite (Fairy) washing-up liquids are significantly much better than the product attitudes of unfavorable Sprite (Asda Farm Stores) washing-up liquids (M=4.89 vs. 3.50; F=11.76, p<.01). (Attitudes toward brand extensions)

3. The expectation disconfirmation (E_d) of the brand extensions of HE_d is significantly higher than that of the brand extensions of LE_d (M=5.40 vs. 4.10, F=17.30, p=.00). Moreover, the expectation disconfirmation (E_d) of the brand extensions of HE_dS and HE_dD are significantly higher than that of the brand extensions of LE_dS and LE_dD respectively (M=5.29 vs. 3.93, t=-2.68, p=.01; M=5.48 vs. 4.29, t=-3.05, p=.01) (Expectation disconfirmation)

Hypothesis Testing

Results of two-way ANOVA analyses (Chart 1 and 2) indicate that expectation disconfirmation (E_d) significantly affects respondents’ attitudes toward brand extensions (A_be2) and parent brand (A_p) (F=19.22, p=.00; F=5.71, p=.02). However, the factor of category-based similarity does not affect respondents’ attitudes toward brand extensions and parent brand significantly (F=.30, p=.58; F=.09, p=.76). Moreover, the interaction effect of these two main factors does not affect A_be2 and A_p significantly as well (F=.07, p=.79; F=.65, p=.42).

The results suggest that, in general, expectation disconfirmation moderates, and is more influential than the similarity of brand extensions on, the evaluations of brand extensions and parent brand. Therefore, hypotheses H₁ and H₂ are supported.

Relationships among E_d, T_be, A_p and A_be2

Correlation and regression analyses are performed to identify the relationships among the four variables of E_d, T_be, A_p and A_be2 (Table 1 and 2). Whilst being more influential than the category-based similarity both on the evaluations of brand extensions and parent brand, expectation disconfirmation does not differentiate respondents’ attitudes toward parent brand significantly between the two similar brand extensions of HE_dS and LE_dS (M=5.48 vs. 4.66, F=3.09, t=1.76, p=.09) and between the two dissimilar brand extensions of HE_dD and HE_dD (M=5.19 vs. 4.78, F=2.51, t=1.58, p=.12). Moreover, E_d and A_p is not significantly correlated (r=.01, p=.94). However, E_d is significantly high correlated with T_be and A_be2 (r=-6.1, p=.00; r=-.36, p=.00). The above analyses suggest that E_d affects T_be and A_be2 directly and A_p indirectly. Moreover, analysis results indicate that T_be is significantly correlated with E_d, A_p and A_be2 (r=-.61, p=.00; r=.27, p=.03; r=.37, p=.00), which suggest that T_be affect the three variables of E_d, A_p and A_be2 directly.

Analysis results (Table 2) indicate that E_d predicts A_be2 well (F=9.17, p=.00), but is not a good predictor for A_p (F=.01, p=.94). On the other hand, T_be predicts both A_p and A_be2 well (F=4.72, p=.03; F=9.75, p=.00). Moreover, E_d and T_be jointly predict A_p and A_be2 even better than that E_d or T_be predicts A_p and A_be2 individually (F=3.99, p=.02; F=6.00, p=.00). The analysis results also suggest that E_d affects A_be2 directly and A_p indirectly and T_be affects both A_be2 and A_p directly.

Based on the above analyses, Figure 2 illustrates the relationships among the four variables of E_d, T_be, A_p and A_be2. Expectation disconfirmation is verified as a moderator affecting brand extension evaluations directly and parent brand evaluation indirectly. Expectation disconfirmation affects parent brand evaluation in an indirect way via affecting the typicality of brand extension directly.

CHART 1

MAIN EFFECT ON A_be

CHART 2

MAIN EFFECT OF A_p

TABLE 1

CORRELATIONS AMONG E_d, T_be, A_p, and A_be2

TABLE 2

E_be AND T_be AS PREDICTORS FOR A_p AND A_be2

IMPLICATIONS AND LIMITATIONS

Theoretical Implications

The research findings indicate that expectation disconfirmation is a moderator affecting brand extension evaluations directly and parent brand evaluation indirectly. Parent brand and brand extension evaluations are not only cognitively affected by the typicality of unfavorable brand extension, but also affectively affected by negative expectation disconfirmation on the performance of unfavorable brand extension. Expectation disconfirmation works because consumers’ brand evaluations are series of cyclic information processing based on previous direct consumption experiences on parent brands. However, in terms of the effect of efficiency, the typicality of brand extension is more influential than expectation disconfirmation on brand extension evaluations. Moreover, this research also verifies the interactions among variables of E_d, T_be, A_p and A_be2 and suggests that expectation disconfirmation affects parent brand evaluation indirectly, instead of directly.

FIGURE 2

RELATIONSHIP AMONG E_d, T_be, A_p AND A_be2

Managerial Implications

As brand evaluation is not simply affected by the typicality of brand extension cognitively, the affect dimension of consumers’ negative expectation disconfirmation can make the evaluations of brand extensions and parent brand to be even worse. Therefore, while implementing stretch-down brand leveraging strategies, marketers need to consider the possible negative effects both from the typicality of unfavorable brand extension and negative expectation disconfirmation on the performance of unfavorable brand extension. The negative reciprocal effect on parent brand and brand extension may occur whenever there is negative expectation disconfirmation, regardless of the category similarity of unfavorable brand extension. Stretch-down brand leveraging strategy might be a good idea to expand market segments and generate higher sale profits during the era of economy regression. However, the threats induced by lower quality brand extensions may lead to negative expectation disconfirmations and, eventually, weaken parent brand images and brand equities.

Limitations and Future Research

As the tested Sprite products are low involvement goods, the implication of this research might be restricted to products with similar features to the tested products. As consumers’ loyalties to high involvement products, such as motorcar, computer, etc., are much higher than those for low involvement products, the influence of expectation disconfirmation on high involvement products should be different from that on low involvement products and, eventually, result in different research conclusions. On the other hand, this research only measures how negative expectation disconfirmation affects brand evaluations. As negative brand information is more detrimental than positive brand information to brand evaluations (Weinberger and Dillon 1980), the effect of positive expectation disconfirmation on brand evaluations probably will be less significant than that of negative expectation disconfirmation. Moreover, in order to build up a credible model, confirmatory factor analysis, model fit, and path analysis of the conceptual two-step brand evaluation model will need to be analyzed by more powerful modeling analysis tools, such as LISREL for structural equation modeling (SEM).

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