Brand concept and brand reach: A dual processing approach to extension evaluation

Marketing a new product under an existing brand name has been a widely used branding strategy. Rather than developing a new brand from the scratch, firms introduce new products using current brands resulting in faster adoption and higher marketing efficiency. Thus, major percentage of new product introductions comes as brand and line extensions. Despite the documented advantages of brand extensions, not all such endeavors prove their worth. Apple MacBook, Diet Coke, Tide Pen, Duracell Powermat Wireless Charger, or Virgin Atlantic Airways are some of the well-received extension of the recent decades. How about some of the underachievers? Zippo Woman Perfume, Heinz All-Natural Cleaning Vinegar, Dr. Pepper Marinade, and Hooters Air have all failed to impress their target market despite being backed up by a strong parent brand. Extending into laptop computers might be an intuitive strategy for Apple, a desktop computer brand at origin. That is a close reach. However, a music retailer into air travel? Is it too much of a stretch? How about a lighter company extending into women perfume? How far can a brand successfully reach? Existing brand extension literature agrees upon the benefits of close category extensions. However, the dynamics of far category extensions are still dubious. Attempting to address this issue, this dissertation studies the underlying process of how far a brand can stretch. Specifically, a novel, cognitive dual processing approach to enhance the understanding of the role of brand concept in brand and line extension success is introduced. It is suggested that the reach of a brand in terms of being able to launch successful extensions depends on whether its concept is aligned with its core product category or is a modified concept. A brand with a modified category concept (MCC) is described as a brand whose core brand associations are aligned with a concept (the modification) other than that of the core product category. In particular, drawing upon categorization and conceptual combination literatures, this research presents two cognitive processes for evaluating brand extensions, (1) a comparison of the brand’s core category and the extension category, and (2) a comparison of the concept modification within the brand’s original and new categories. Based on these processes, it is argued that when the extension category is close to the core category and the parent brand has a core category concept (CCC), the inter-category comparison process dominates the evaluation of the extension. As a result, the extension of a core brand concept is better evaluated than that of a modified brand concept. For instance, Campbell's Soup is a brand whose concept is strongly associated with the core product category, soups. Therefore, it would do better than a soup brand with MCC when extending into a close product category, say broths. However, when the extension category is far, say cookies, the modification-matching process dominates the evaluation of the extension, and therefore, the extension of a modified concept yields better evaluations for far categories. To illustrate, Chipotle, a restaurant brand, has a brand concept that is modified with the sustainability idea. Thus, it should do better than a restaurant brand with CCC when extending into far product categories. As an anecdotal evidence, Chipotle recently launched sustainable hoodies and outwear successfully although hoodies should be considered as a long stretch for a restaurant brand. These results are posited by the schema modification theory purporting that concepts (as a schema or a structured set of slots and fillers) may be modified as a result of conceptual combinations. When a concept is modified by another concept, either some of its slots will be filled out adjusting the salience of various attributes of the concept or its schema will be modified resulting in emergent slots and attributes for the combination. Based on these arguments, three hypotheses on (1) the role of brand concept in brand extensions, (2) the role of brand concept in product line extensions, and (3) the role of brand concept at the existence of a competitive environment are developed. The proposed hypotheses are tested by five laboratory and online experiments and three pretests that are conducted with 456 undergraduate students from a major US university. The results of the experiments support the proposed effects and yield significant theoretical and managerial implications for branding strategy.