Abstract
When a known brand extends into a product category that involves sophisticated and state-of-the-art technology, consumers face uncertainty and perceive a financial risk when considering the extension for purchase. This study explores how the brand's perceived expertise in the extension category and various brand traits (predictability, dependability, and faith) affect that consideration decision and how these interact with particular extension naming strategies (direct versus brand-bridging). Exploratory results from a field study give three insights. First, a consumer's faith in a brand appears to improve the extension consideration independent of what naming strategy is adopted. Second, brands with good predictability seem to benefit only by using a direct naming strategy in the brand extension. Third, a perceived lack of expertise appears to reduce the extension consideration even when a brand-bridging strategy is adopted. A discussion of these insights and their implications is provided.
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Notes
Faith as defined here is closely related to the concepts of commitment and benevolence discussed by others in trust-related research (i.e., the brand being committed to the consumer; see, e.g., Morgan and Hunt 1994).
At the time of the study, US$1 = RMB8.2.
Comparing the sample profiles of the respondents in each task overall and by city did not reveal any significant differences, enabling direct comparisons of the results.
In all the repetitive scales used in the interviews, the order of the items shown to the respondents was randomized. In subsequent analyses, the scale values were all centered for individuals to eliminate ambiguity in interpretation and to reduce potential multicollinearity in the model estimation.
In the analysis, the factor scores for the trust components are used as observations on the corresponding brand traits.
A separate analysis of the trust component scales on the respondents who were not familiar with the local brand showed that the ratings for the local brand on the three items were highly correlated with one another and with the local brand’s perceived expertise in flat-panel TVs.
As screen size and price are monotonic variables, only price is specified in the regression models to avoid adverse effects of multicollinearity in the model estimation.
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Acknowledgments
The author acknowledges the technical assistance in data collection and analysis provided by Ms. Vivian Lam. The author thanks three anonymous reviewers for their constructive comments.
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Appendices
Appendix A: Variables and their measurement
Variable | Definition and measurement |
|---|---|
DVD | Dummy variable that equals 1 if the flat-panel TV brand considered is identical to the DVD brand currently owned, 0 otherwise. |
TV-time | Variable that captures the number of hours per week spent watching TV. |
Age | Variable that captures the age of the respondent. |
Gender | Dummy variable with 0 = male, 1 = female. |
Income | Variable that captures respondent's monthly income. |
University | Dummy variable with 1 = university education (undergrad or higher), 0 = otherwise. |
Familiarity | Overall brand familiarity captured on 5-point scale (1 = not familiar at all, 5 = very familiar). |
Expertise | Perceived expertise in being able to manufacture reliable flat-panel TVs (−3 = does not have expertise at all; + 3 = very much has the expertise). |
Trust | Nine-item scale. |
Appendix B: Trust scale items
Factor analysis5 | |||||
|---|---|---|---|---|---|
Designated | Factor loadings6 | Variance | |||
Scale item1 | category2 | Factor 1 | Factor 2 | Factor 3 | explained |
1. I would not hesitate to buy a totally new electronic product made by Y.3 | F | – | 0.73 | – | 0.68 |
2. Y is a brand that keeps its promises. | D | 0.78 | – | – | 0.63 |
3. Y has proven to be trustworthy. | D | 0.79 | – | – | 0.66 |
4. When Y introduces a new product they did not make before, I would not be concerned. (R)4 | F | – | 0.64 | – | 0.79 |
5. Y is predictable. I know what they will do from one day to the next. (R) | P | – | – | 0.74 | 0.57 |
6. I have found Y to be unusually dependable, especially when it comes to products important to me. | D | 0.68 | – | – | 0.63 |
7. I feel that Y would not take advantage of me. (R) | P | – | – | 0.76 | 0.66 |
8. Y always behaves in a similar way. | P | 0.67 | – | – | 0.47 |
9. When buying a new product I never owned before, and know little about, I feel secure with brand Y. | F | 0.56 | 0.56 | – | 0.63 |
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Vanhonacker, W.R. Brand extension naming strategies: An exploratory study of the impact of brand traits. Market Lett 18, 61–72 (2007). https://doi.org/10.1007/s11002-006-9008-4
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DOI: https://doi.org/10.1007/s11002-006-9008-4