Positive and Negative Effects of Brand Extension and Co-Branding

Citation:

Allan D. Shocker (1995) ,"Positive and Negative Effects of Brand Extension and Co-Branding", in NA - Advances in Consumer Research Volume 22, eds. Frank R. Kardes and Mita Sujan, Provo, UT : Association for Consumer Research, Pages: 432-434.

Advances in Consumer Research Volume 22, 1995      Pages 432-434

POSITIVE AND NEGATIVE EFFECTS OF BRAND EXTENSION AND CO-BRANDING

Allan D. Shocker, University of Minnesota

OBJECTIVES OF THE SESSION

Research on consumer behavior has had a strong history of important applications in arenas of managerial relevance. One substantial success has been that related to brand equity, where consumer research has provided virtually all the theoretical and empirical support for the benefits and risks of brand leveraging. An objective of this session was to encourage this research stream in new directions. It does this by demonstrating the relevance of psychological theory which has not previously been applied in marketing (the "concept combination" or "attribute inheritance" theory of Hampton [1987] and Smith, et al. [1988]). This theory is used to suggest how branded product concepts might combine to produce the concept for a co-branded product (i.e., the placing of two (or more) brand names on a single product). It further suggests that the name of the product category name itself possesses properties similar to a brand and that this theoretical perspective may afford a means for helping managers make successful conventional brand extension decisions. Additionally, the theory and empirical research presented in the session is able to examine both positive and negative feedback effects from co-branding and brand extension.

FOUR PRESENTATIONS

Four papers comprised the session: 1. The first was "On the Strategic Use of Branding Decisions for Inducing Positive Feedback Effects," by C. Whan Park (University of Pittsburgh, Sung Youl Jun (State University of New York at Binghampton), and Allan D. Shocker (University of Minnesota). The presentation began by noting that previous brand equity research has focused upon direct brand extensions (e.g., Special-K waffles), and primary attention has been paid to the negative effects of brand extensions upon the parent brand and its implications for managing brand equity. Negative feedback effects were found to be mainly due to either failure of the extension product or the lack of fit between the original and extension product categories (Keller and Aaker 1992; Loken and John 1993; Park, et al. 1992; Romeo 1991). Little attention has been paid to positive effects from strategic alliances, repositionings, and other possible branding strategies (Park, et al. 1994). Although the tasks of brand repositioning and enhancing brand equity usually have been attributed to advertising decisions, the authors postulated that creative branding strategies can also effectively contribute to such purpose. In the present study, they examined one specific cobranding strategy which uses an existing brand possessing complementary attribute associations to reposition an existing branded product (e.g., Jaguar sedan by Toyota). The study investigated whether this kind of co-branding enhanced the perceived attribute saliences and performance levels of the original or header brand concept (Jaguar sedan) and whether it had positive or negative effects upon the second or modifier brand (Toyota).

Pretests were used to identify an appropriate product class and brands; to generate an attribute set relevant to all brands; to verify complementarity of the brands chosen; to check the perceived fit between the brands and the sedan product; to verify that the description of the co-branded product resulted in the two brands conforming to roles sepcified for them by theory; and testing the believability, plausibility, and realism of the co-branded product. Subjects were 78 MBA students, randomly assigned to control and experimental groups in a "between-subjects" design. They rated their familiarity with each of the brands [manipulation check], each branded concept's attribute salience and performance, the favorableness of their attitude and purchase intention toward each branded concept, the perceived fit between the constituent brands, and the degree of uniqueness and plausibility of the co-branded concept. In order to examine feedback effects experimental subjects responded to questions about one constituent brand concept (i.e, Jaguar sedan or Toyota sedan) after exposure to the co-branded concept. Control subjects responded to both constituent brand concepts in the absence of exposure to the co-branded concept.

Study hypotheses were suggested by concept combination theory. The empirical findings were as follows:

H1: When an attribute is salient to at least one of the constituent brands, it will also be salient to the composite brand. This hypothesis was supported.

H2: When either one of the constituent brands is perceived to perform well on an attribute, the perceived attribute performance level of the composite brand will also be high. This hypothesis was also supported.

H3: When attitudes toward the modifier brand are favorable and the modifier is complementary to the header brand in attribute salience and performance levels, a composite branding strategy will lead to a more favorable evaluation of the composite brand than of the original header brand. This hypothesis was also supported.

The "Jaguar sedan by Toyota" concept had significantly higher evaluation in terms of attitude and purchase intention than did the Jaguar sedan alone.

H4: When attitudes toward the modifier brand are favorable and the modifier is complementary to the header brand: (a) a composite branding strategy will lead to positive reciprocity effects on the header brand; and (b) a composite branding strategy will have neutral effects on the modifier brand. This hypothesis was generally supported.

The Jaguar sedan overall evaluations made after exposure to the co-branded concept were significantly higher than was the original Jaguar sedan evaluation. However, some attribute performance ratings were lower (i.e., luxury, status symbol). The Toyota evaluations made after exposure to the co-branded concept were not significantly different than the original Toyota concept in overall evaluation, attribute salience, and attribute performance.

2. The second presentation was entitled, "Attribute Inheritance: Its Role in Product Expectations and Competitive Evaluations of Brand Extensions," by Kalpesh Kaushik Desai, Wayne D. Hoyer, and Rajendra K. Srivastava (all of the University of Texas at Austin). Their study also contributes to the brand extension literature by shifting the focus of extant research from achieving favorable extension evaluation to ways of improving the extension's performance against competition in the new category. To succeed in the new category, the extension (EX) has to be evaluated favorably relative to the competition [i.e., the "brands in consumers' consideration sets" (CSB)]. This is possible when the EX is perceived as less similar to brands in the new category (i.e., it has something unique to offer) and the EX's performance on important attributes of the new category is better compared to that of the CSB. To determine the degree of perceived similarity of the EX with brands in the new category, we outline a methodology (Hampton 1987) that uncovers consumers' expectations about the EX (Pringles Pretzels) as comprised of attributes "inherited" from the parent product (Pringles) and the extension category (Pretzels). Limited inheritance of attributes from the extension category relative to the parent product will make the EX less similar to the brands in the extension category. The authors experimentally manipulate the degree of uniqueness of the parent product and the differentiation (variety) of the extension categoryCthe two factors influencing the relative contribution of extension category and parent product to the nature of extension.

The hypotheses were tested across eight extensions in a 2 X 2 (uniqueness X differentiation) "between subjects" design. Results indicate that EXs of unique products are not only perceived as different from the brands in the extension category but their performance on the important attributes is also closer to that of the CSB. Also, though the extensions in less differentiated categories are not perceived as different from the brands in the extension category, their performance on the important attributes is closer to that of CSB. Despite the better performance on important attributes, the EXs of unique products and EXs in less differentiated categories were always evaluated less favorably (though quite close) compared to CSB. This demonstration suggested that EXs need to have more than unique features and better performance in the new category to overcome the equity advantage of the CSB. Also, knowing consumers' expectations about the precise nature of the EX might help the firm to develop the product and to emphasize appropriate features in its advertising.

3. The third presentation, "Extensions of Strong and Weak Brands: Some Perils of Being Direct," was by Paul M. Herr and Ken Chapman (both of the University of Colorado at Boulder). Their work builds on Farquhar, Han, Herr, and Ijiri (1992). They presented the results of an experiment in which the method of brand extension and strength of brand in parent category prior to extension were manipulated. Consumers were exposed to print ads for three types of brand extensions; 1) direct extensions, in which the parent brand name was also the extension name (e.g., Nike Tennis Rackets), 2) indirect extensions, in which the parent brand endorsed the new product (e.g., The Avenger tennis racket by Nike), and 3) a new product introduced without benefit of brand extension (e.g., the Avenger tennis racket). Measures of liking for the extension, liking for the parent brand, and measures of the association following extension were collected. The results supported the authors' notion that different strategies should be employed for extending master brands than for extending weaker brands, and addressed the psychological basis for both category extensions and the appropriate strategies for managing them.

More specifically, the presence of a sub-brand (between the parent brand and the product name appears to have several interesting prophylactic effects on master brands. Although the commonly reported findings of superior affect transfer to close extensions by dominant brands (Aaker and Keller; 1990; Farquhar, Herr, and Fazio, 1990; and others) is replicated via sub-branding, subjects seem to be overtly unaware of the influence of the parent brand in the extension. Thus, a liked or disliked extension seemed to have no reciprocal impact on the liking of the parent brand at a later time. This was not the case when direct extensions were considered, i.e., no sub-brand intervened between the parent name and the extension category. In those instances, the parent brand was tarnished or enhanced as a function of the subjects' liking of the extension. Overall, consumers' judgments of direct extensions were positively correlated with their subsequent judgments of the parent brand, while indirect extension judgments were uncorrelated with the parent. Measures of specific associations with the extensions suggested a number of processing models that may mediate these results.

4. The final paper, "Spillover Effects of Brand Extensions: Can They Spread to a Firm's Established Products?" was presented by Deborah Roedder John, Barbara Loken, and Christopher Joiner (all of the University of Minnesota-Twin Cities). They investigated the extent that consumer perceptions and reactions to brand extensions spill over to the parent company. And, if there is a spillover effect, they asked what are the potential risks or benefits to the parent company? To date, research addressing these issues (e.g., Loken and John 1993) has focused on whether spillover exists for perceptions of the brand name. Studies in this vein have measured whether consumer perceptions, beliefs, or overall affect toward the brand name are affected by the introduction of brand extensions. In contrast, their paper examined whether spillover exists for perceptions of individual products marketed under the brand name. The focus here was upon changes in consumer beliefs about individual products (e.g., Ivory shampoo, Ivory detergent) rather than changes in consumer beliefs about the brand name (e.g., Ivory), in general.

They considered several theoretical perspectives making different predictions about the types of products most likely subject to spillover effects. Based on ideas from categorization theory and attitude theory, these perspectives suggested that some individual products will be more affected than others, though they differ in predicting which products will be affected the most. The general prediction from the categorization perspective is that individual products that are most typical of the parent brand offerings will be subject to the greatest spillover effects. In contrast, the general prediction from the attitude strength literature is that individual products for whom consumer beliefs are the weakest will be subject to the greatest spillover effects.

These opposing predictions were tested in an experimental setting by examining changes in consumer beliefs about a variety of established products in the face of a brand extension (marketed under the same brand name) that either performed well (possible positive spillover) or poorly (possible negative spillover) on a particular attribute. The findings indicate that positive spillover effects are negligible, but that negative spillover effects are evident for some types of established products. Consistent with the attitude strength perspective, we found dilution effects for individual products when consumers had weak beliefs about the focal attribute. No support was found for the categorization prediction that dilution effects would be greatest for individual products higher in typicality.

CONCLUDING REMARKS

The favorable results reported by all authors indicate that co-branding and other strategic uses of brand names represent a fruitful area of additional inquiry. The presentations brought new theoretical insights to bear on this arena and demonstrated that they may provide a useful framework for prediction, and possibly explanation, of positive as well as negative effects on brand equity. At a minimum, the research provided evidence of consumers striving for cognitive consistency and that concept combination (attribute inheritance) and the other theories may capture the essence of the heuristics they use. Further research could more rigorously defend criteria of brand and product complementarity necessary for these theories to predict well. Much of the research was based upon complementary attributes and benefits; added research needs to examine what happens when conflicting, idiosyncratic, or irrelevant attributes are brought to the combination by different brand and product partners. Branding can be looked upon as a way of transfering meaning and preference across products; research to better understand what gets transferred and when and how is at the heart of the studies presented here and can generalize to other domains (e.g., price-quality). The research results at best reflected consumer expectations; how these might be moderated by actual product experience seems worthy of further research. Concept combination theory has generally involved the combination of only two names. What happens when three or more are involved? Does the product category function similarly to a brand name in forming such combined concepts? These thoughts are suggestive of the richness of the arena and the session will hopefully stimulate much additional inquiry and insight.

REFERENCES

Aaker, David A. and Kevin Lane Keller (1990), "Consumer Evaluations of Brand Extensions," Journal of Marketing, 54 (February), 27-41.

Farquhar, Peter H., Paul M. Herr, and Russell H. Fazio (1990), "A Relational Model for Category Extensions of Brands," in Marvin E. Goldberg, Gerald Gorn, and Richard W. Pollay (eds.) Advances in Consumer Research, Vol.17, Provo UT: Association for Consumer Research, 856-860.

Farquhar, Peter H., Julia Y. Han, Paul M. Herr, and Yuji Ijiri (1992), "Strategies for Leveraging Master Brands," Marketing Research, 4, 32-43.

Hampton, James A. (1987), "Inheritance of Attributes in Natural Concept Conjunctions," Memory & Cognition, 15 (1), 55-71.

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Park, C. Whan, Sung Youl Jun, and Allan D. Shocker (1994), "Composite Brand Extension: Its Process, Outcomes, and Promise," Working Paper, Minneapolis: Carlson School of Management, University of Minnesota.

Romeo, Jean B. (1991), "The Effect of Negative Information on the Evaluation of Brand Extensions and the Family Brand," in Rebecca H. Holman and Michael R. Solomon (eds.) Advances in Consumer Research, Vol.18, Provo UT: Association for Consumer Research, 399-406.

Smith, Edward E., Daniel N. Osherson, Lance J. Rips, and Margaret Keane (1988), "Combining Prototypes: A Selective Modification Model," Cognitive Science, 12, 485-527.

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