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The_impact_of_perceived_brand_.pdf
ORIGINAL EMPIRICAL RESEARCH
The impact of perceived brand globalness, brand origin image, and brand origin–extension fit on brand extension success
Christina Sichtmann & Adamantios Diamantopoulos
Received: 8 May 2012 /Accepted: 9 January 2013 /Published online: 27 January 2013 # Academy of Marketing Science 2013
Abstract This research investigates perceived brand glob- alness, brand origin image, and brand origin–extension fit as drivers of brand extension success that are mediated through parent brand quality and brand–extension fit. The authors present two complementary studies based on consumer samples from a mature and an emerging market respectively. In both studies, out of all drivers examined, the brand origin–extension fit has the strongest effect on brand exten- sion success both in terms of quality evaluations and pur- chase intentions. The findings further indicate that extension success is more influenced by consumers’ perceptions of the country from which the focal brand originates than by their perceptions of the brand’s global availability and reach. Implications of the findings for theory and practice are considered and future research directions identified.
Keywords Brand extension success . Perceived brand globalness . Brand origin image . Brand origin–extension fit
In a globalizing world, many international firms have moved from a multi-local to a global branding strategy (e.g., Özsomer and Altaras 2008; Steenkamp et al. 2003). A global branding strategy can be described as an approach “in which firms market their products on a global basis with only limited adaptation to local markets” (Özsomer et al. 2012, p. 2) and promises several advantages such as the reduction of costs
because of economies of scale in terms of R & D, manufac- turing, logistics, and marketing (for a detailed overview, see Douglas and Craig 2011). In addition, global brands benefit from a globally consistent brand image that accommodates worldwide mobile consumers who expect to find the brand everywhere in the same quality (Kapferer 1997). Nowadays, several companies pursue global branding strategies, including Coca Cola, Disney, Microsoft, Nike, and Sony.
A global branding strategy seems particularly useful for a company’s brand extension efforts, that is, the use of “an existing brand name on a new product in a new category to benefit from the existing brand name’s awareness and associ- ations” (Batra et al. 2010, p. 335). Since global companies can launch the same product innovations worldwide, a shorter time to market can be realized (Schuiling and Kapferer 2004) and the positive effects of brand extensions such as lower introduction costs and increased consumer acceptance (Tauber 1988) can be leveraged on a global scale; thus, “strong international brands… are prime candidates for brand extensions” (Douglas and Craig 2003, p. 272). For example, following a global branding strategy, Unilever extended the Dove brand from its core product (beauty soap) into such products as body washes, body lotions, deodorants, and sham- poo. These extensions were introduced quickly in a large number of country markets. A global branding strategy also helped Apple to extend its brand worldwide into the iPod (introduced in 2001), the iPhone (2007), and the iPad (2010) with a tremendous success.
Prior research (for reviews, see Carter and Curry 2011; Völckner and Sattler 2007) provides ample evidence that the two most influential drivers of brand extension success (measured by the evaluation of the extension’s perceived quality and the purchase intention for the extension) are: (1) the perceived quality of the parent brand, that is, “the con- sumer’s judgment about a [brand’s] overall excellence or superiority” (Zeithaml 1988, p. 3) and (2) the perceived fit between the parent brand and the extension, namely “the attribute or association overlap between an extension and
C. Sichtmann (*) Department of International Marketing, University of Vienna, Bruenner Strasse 72, 1210 Vienna, Austria e-mail: [email protected]
A. Diamantopoulos Department of International Marketing, University of Vienna, Bruenner Strasse 72, 1210 Vienna, Austria e-mail: [email protected]
J. of the Acad. Mark. Sci. (2013) 41:567–585 DOI 10.1007/s11747-013-0328-7
the parent [brand]” (Lei et al. 2004, p. 245).1 However, whether firms that follow a global branding strategy are better able to leverage these drivers is an issue that has only very recently been raised in the literature, and the same applies regarding the role of a brand’s origin in impacting extension success (Iversen and Hem 2011).
Against this background, we present two studies, one in a mature and the other in an emerging market, that consider three core constructs drawn from the international marketing literature in conjunction with the perceived quality of the parent brand and the parent brand–extension fit as drivers of extension success. First, we investigate the perceived glob- alness of the parent brand as an antecedent of the latter’s perceived quality and, through it, as an (indirect) driver of brand extension success. Perceived brand globalness refers to the extent to which “consumers believe that the brand is marketed in multiple countries and is generally recognized as global in these countries” (Steenkamp et al. 2003, p. 54) and has been found to positively impact a brand’s credibil- ity, prestige, and quality (Özsomer 2012; Özsomer and Altaras 2008).
Second, we assess the influence of the image of the country from which the parent brand appears to originate on perceptions of parent brand quality and, through it, on brand extension success. Brand origin image is defined as “the overall perception consumers form of products from a particular country, based on their prior perceptions of the country’s production and marketing strengths and weak- nesses” (Roth and Romeo 1992, p. 480), and prior research shows that it impacts brand quality as a dimension of brand equity (Pappu et al. 2006, 2007; Yasin et al. 2007).
Finally, we introduce a new construct, namely the per- ceived brand origin–extension fit, which captures the attribute or association overlap between the extension category and the brand origin. Consumer perceptions of this overlap are expected to impact brand extension success both directly and through enhancing the perceived parent brand–extension fit. This additional driver is conceptually rooted in prior country-of-origin research that considers the match between a country and a product category as an antecedent of brand image and quality (Hamzaoui-Essoussi et al. 2011) and pur- chase intentions (Roth and Romeo 1992; Usunier and Cestre 2007). We use signaling theory (Erdem and Swait 1998; Wernerfelt 1988) and categorization theory (Rosch and Mervis 1975; Fiske and Pavelchak 1986) as conceptual foun- dations for our investigation since these are the prevalent
theoretical perspectives applied in both brand extension re- search and research on brand globalness and brand origin image.
From an international marketing perspective, our study sheds light on the role of the perceived brand globalness construct in influencing brand evaluations and buying intentions relative to the brand origin image construct. In this context, while some authors have expressed res- ervations about the relevance of the latter construct in an era of global brands (e.g., Samiee 2010, 2011; Usunier 2006), other authors maintain that brand origins do in- deed impact consumers’ evaluations and purchase inten- tions (e.g., Josiassen and Harzing 2008; Magnusson et al. 2011). By simultaneously considering both a brand’s perceived globalness and its origin in our model, we contribute to resolving this persisting debate. Our study also responds to Usunier and Cestre’s (2007, p. 33) call that “further investigation into the associations consumers establish between products and countries is necessary.” We address this issue in the context of brand extensions and suggest that the brand origin–extension fit is another important driver of brand extension success. Because brand origin and perceived globalness effects seem “like- ly to be much stronger in developing than developed countries” (Batra et al. 2000), we examine the impact of perceived brand globalness, brand origin image and brand origin–extension fit in both a mature (Austria) and an emerging market (Bulgaria).
From a brand extension perspective, our investigation adds to extant literature by providing evidence that a brand’s perceived globalness, its origin, and the fit of this origin with the extension category should be considered as addi- tional drivers of extension success. Since brand extension strategies are very often used by brands that are sold glob- ally (Milberg and Sinn 2008), the three drivers analyzed in our study seem of particular relevance in this context. In addition, whereas most previous brand extensions studies have been conducted in developed countries, we analyze data both from a mature and an emerging market, thus enabling investigation of the relationships of interest in contrasting settings.
From a managerial perspective, our results should assist decision makers in determining whether they should posi- tion and market their brand as global when following a brand extension strategy. In addition, the findings should shed light on the question of whether it is beneficial to stress the brand’s origin in the positioning of the brand and high- light it in marketing communications that accompany the introduction of a brand extension. Finally, our findings should help managers choose appropriate extension catego- ries by revealing the extent to which extending into product categories that fit with the brand origin actually enhances extension success.
1 Beyond these two variables, several other brand extension success factors such as the parent brand experience (e.g., Swaminathan et al. 2001), consumer innovativeness (Hem et al. 2003), and marketing support (Reddy et al. 1994) have been identified in the literature. However, compared to the quality of the parent brand and the parent brand-extension fit, their effect sizes were relatively small (Ellis 2011) and are thus not considered further.
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Theoretical framework
Overview
In extending their brands, firms “enter a completely differ- ent product class” (Aaker and Keller 1990, p. 27), which means that brand extensions are, by definition, innovations. Because brand extensions are new market offerings, an information asymmetry (Connelly et al. 2011) exists since consumers cannot evaluate the perceived quality of the extension in advance. Therefore, they perceive a risk in buying the extension (Klink and Smith 2001).
Perceived parent brand quality is an important informa- tion signal to infer perceived extension quality and thus reduces risk (Erdem and Swait 1998; Smith and Park 1992). Similar risk-reduction mechanisms are known to be in force with regard to the impact of perceived brand global- ness and parent brand origin image on product evaluations (Iversen and Hem 2011; Özsomer and Altaras 2008). Therefore, we apply signaling theory, which “provides a unique, practical and empirically testable perspective on problems […] under conditions of imperfect information” (Connelly et al. 2011) to establish the effect of perceived brand globalness and brand origin image on brand extension success (see the conceptual framework of our study in Fig. 1).
The relevance of the parent brand–extension fit for brand extension success is theoretically explained by categorization theory (Rosch and Mervis 1975; Tversky 1977), which sug- gests that consumers classify objects into different cognitive categories to enable their improved understanding and pro- cessing. If consumers associate an extension as a member of a particular cognitive category, they evaluate the extension more positively (Boush and Loken 1991). Similar to brands,
brand origins may be viewed as categories to which an exten- sion can be classified according to the overlap with attributes associated with the country; in this context, “consumers make inferences about a brand’s attributes (e.g., value for money, durability, reliability) from their knowledge of the brand’s origin (i.e., the ‘category label’)” (Balabanis and Diamantopoulos 2011, p. 96). Therefore, we use categoriza- tion theory to explain the role of the brand origin–extension fit as driver of brand extension success (see Fig. 1).
Hypotheses based on signaling theory
Signaling theory suggests that consumers use an array of cues as information surrogates to infer the quality of a product and to reduce perceived risk (Connelly et al. 2011; Erdem and Swait 1998; Wernerfelt 1988). Signals represent product-related attributes that are extrinsic to the physical product such as the price, advertising, brand name, or brand origin (Olson 1972). Consumers use these signals to assess product quality when product-inherent attributes (e.g., qual- ity of ingredients) can be evaluated only at prohibitive costs, are not readily available, or are not easily understood (Dawar and Parker 1994).
Perceived brand globalness is an important quality signal (Özsomer 2012; Özsomer and Altaras 2008). Global brands are developed for a global market with their main characteristics being worldwide availability and recognition as well as standardization across countries (Dimofte et al. 2008). High brand globalness does not necessarily imply that the brand cannot also be rooted in the local culture. This may occur because the brand’s origin is the consumer’s home country (e.g., Harley Davidson in the USA, Nivea in Germany) or because the brand uses a local culture positioning strategy (Alden
Fig. 1 Conceptual model. Dashed arrows indicate relationships that are not formally hypothesized because they are already well- established in the brand exten- sion literature
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et al. 1999) that associates the brand with local identity, tradition, tastes, and needs (Ger 1999).
Global brands signal high quality because consumers as- sume that brands that are accepted worldwide should be of high quality, otherwise they would not be successful (Holt et al. 2004; Özsomer 2012; Steenkamp et al. 2003). In addition, perceived brand globalness can be interpreted as an implicit “bond” of quality (Özsomer and Altaras 2008). If a brand does not fulfil quality expectations of consumers, it faces the risk of losing its reputation and, therefore, endangers the specific investments in the brand (Wernerfelt 1988). For glob- al brands, there is even more at stake in case of poor quality products because they are sold worldwide. Consequently, consumers expect that global brands have a strong incentive to produce good quality extensions to avoid brand dilution effects.
Based on the above considerations, we hypothesize that consumers’ beliefs about a brand’s globalness serve as a signal that the brand should be of high quality (Özsomer 2012). Given that, consistent with prior research (e.g., Bhat and Reddy 2001; Martin and Stewart 2001), we also assume a positive perceived parent brand quality → perceived ex- tension quality → purchase intention chain, we expect that:
H1: By positively influencing perceived parent brand qual- ity, perceived brand globalness positively impacts brand extension success.
Note that a positive influence of perceived brand global- ness on the perceived quality of the parent brand does not necessarily imply the opposite effect for local brands. Thus, while quality advantages of global brands may be based on the mere characteristic that they are global, local brands may have quality advantages due to their embeddedness in the local culture or the fact that they could invest in quality over a more niche market.2
Prior research has shown that brand origin is another information signal that consumers use to infer the quality of a brand (Dinnie 2004; Papadopoulos and Heslop 2003; Shimp et al. 1993; Verlegh and Steenkamp 1999; Wilcox 2005); specifically, consumers may rely on the overall image they have from brands that originate from the same country (Roth and Romeo 1992). Thus, the brand origin can be conceived as “a file of information about various brands from a country that consumers develop over time, store in their memory in the form of overall evaluations of products from countries, and retrieve readily when evaluating brands” (Han 1990, p. 34). In the context of brand extensions, consumers’ per- ceptions of the brand origin image are therefore expected
to act as a signal that the parent brand should be of high quality (Pappu et al. 2007). Thus, we hypothesize:
H2: By positively influencing perceived parent brand quality, brand origin image positively impacts brand extension success.
Hypotheses based on categorization theory
Categorization theory suggests that consumers organize objects into different cognitive category schemes in their memories, enabling them to reduce complexity and better structure information processing (Rosch and Mervis 1975). These schemas reflect “cognitive structures of organized prior knowledge, abstracted from experience with specific instances” (Fiske and Linville 1980, p. 543). If consumers perceive a new object as a member of a particular cognitive category, they retrieve stored information from their memo- ry and transfer category associations and evaluative compo- nents to the new object (Mervis and Rosch 1981).
Brand extension research is built around the notion that parent brands are stored as categories in the memories of consumers (Klink and Smith 2001). The category overlap between the parent brand and the extension is the perceived parent brand–extension fit. The more similar consumers per- ceive the parent brand and the extension to be, the more likely they are to transfer their parent brand associations to the exten- sion (Boush and Loken 1991). Thus, perceived parent brand– extension fit positively moderates the link between perceived parent brand quality and perceived quality of the extension (e.g., Bottomley and Holden 2001; Völckner and Sattler 2006). Second, all things being equal, people tend to prefer stimuli that are consistent with their expectations and allow predictions (Mandler 1982). Extensions that are more similar to a parent brand can be more easily assigned to existing mental categories. In contrast, if the parent brand and the extension are very dissimilar, consumers may fail to integrate the new stim- ulus into their cognitive structure, leading to frustration and helplessness (Gierl and Hüttl 2011). Also, the lower the parent brand–extension fit, the higher the risk consumers perceivewith an extension because they have less information to evaluate the extension’s quality (Chang et al. 2011). This risk leads to more negative evaluations of the extension (Lei et al. 2004). Thus, parent brand–extension fit also directly (and positively) impacts the quality of the extension (e.g., Bottomley and Holden 2001; Shine et al. 2007; Völckner and Sattler 2006).
The mental category to which an extension is compared, however, is not necessarily only related to the parent brand (Shen et al. 2011). Park et al. (1991, p. 186) note that “category members also may ‘hang’ together because they are understood to share some concept.” This concept may be the brand origin because countries also represent cognitive categories in the memories of consumers that can be a2 We thank an anonymous reviewer for this observation.
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source of overlapping features (Alden et al. 1993). We coin this attribute or association overlap between the brand origin and the extension as brand origin–extension fit.
The category “country” relates to a rich network of associations that may include national stereotypes, knowl- edge, beliefs, experiences, affect, and products leading to specific country imagery (Askegaard and Ger 1998; Chattalas et al. 2008; Verlegh and Steenkamp 1999). Leclerc et al. (1994), for example, note that mentioning France triggers associations such as aesthetic sensitivity, refined taste, and sensory pleasure that create a unique hedonistic image of France. Their studies show that con- sumers transfer the specific country associations (e.g., he- donism with France) to products from that country (e.g., French products are more hedonic in nature). Companies may leverage this effect by adopting a foreign consumer culture positioning strategy, that is, positioning “the brand as symbolic of a specific foreign consumer culture” (Alden et al. 1999, p. 77) for the purpose of transferring specific attributes associated with the country to the focal brand.
The concept of brand origin–extension fit builds upon a similar mechanism as it refers to an overlap between attrib- utes associated with a country and those associated with the extension category; the higher the overlap, the higher the brand origin–extension fit. Note that the source(s) of this overlap can be diverse. Following Martin and Stewart’s (2001) classification, brand origin–extension fit may reflect feature-based similarity (i.e., prototypical products associat- ed with the brand origin are similar to the extension; e.g., Germany and cars), usage-based similarity (i.e., the brand origin and the extension product are associated in the same usage situation; e.g., Italy and swimsuits), and image con- sistency (the brand origin and the extension product share the same concept; e.g., France and a hedonic product such as nail polish).3
Similarly to the effects of the parent brand–extension fit, we expect a positive link between the brand origin–exten- sion fit and the perceived quality of the extension. Specifically, following Mandler (1982), we argue that con- sumers evaluate extensions more positively if they perceive their associations between the brand origin and the exten- sion as congruent. Prior research offers evidence for a pos- itive influence of the country-product match, that is, the extent to which the brand origin is perceived to be a typical origin for a product, on consumers’ product purchase
intentions (Agarwal and Sikri 1996; Roth and Romeo 1992; Usunier and Cestre 2007). For example, Usunier and Cestre (2007, p. 36) focus on product ethnicity, namely “the stereotypical association of a generic product with a particular [country-of-origin]” and find that the ethnic con- gruency of products leads to a higher willingness-to-buy.
Being able to integrate the extension into the existing mental category “country” disburdens consumers from searching information and allows making predictions about the extension based on the associations with the brand origin (Balabanis and Diamantopoulos 2011). As a result, the perceived risk of an extension is likely to be lower and extension evaluation higher when brand origin–extension fit is high (Chang et al. 2011). We thus hypothesize that:
H3: Brand origin–extension fit positively impacts brand extension success.
As previously mentioned, parent brand–extension fit is the result of categorization whereby consumers determine the degree of overlap between the extension and the parent brand by comparing their attributes (Park et al. 1991). One attribute of the parent brand is its brand origin (Iversen and Hem 2011), and the latter may be used as a criterion for comparing the parent brand and the extension for overlap- ping features. Hence, “the category label (i.e. the COO) serves as a signal that all members of a category (i.e. different brands) are likely to share some similar attributes” (Balabanis and Diamantopoulos 2011, p. 96). Brand origin– extension fit may also resolve mental inconsistencies in that consumers find an explanation why brands extend into specific product categories. For example, if an Italian coffee brand is extended into ice cream, consumers’ perceptions of the parent brand–extension fit may be influenced because the brand origin (Italy) is also well-known for ice cream (i.e., brand origin–extension fit is high); consequently, con- sumers can use this association as an explanation why the coffee brand extends into ice cream. Based on these consid- erations, we hypothesize:
H4: By positively influencing perceived parent brand–ex- tension fit, brand origin–extension fit positively impacts brand extension success.
Study 1
Empirical setting and stimuli
We conducted an empirical study in Austria which, in terms of GDP per capita, is similar to the countries-of- survey typically chosen in brand extension research (i.e., the United States, UK, Canada, and Germany). Austria
3 Martin and Stewart (2001) and Martin et al. (2005) also identify goal congruency, that is “the degree to which [two objects] are associated with common goals” (Martin et al. 2005, p. 277) as a basis for similarity judgments. However, the goal congruency notion may be difficult to apply to the brand origin-extension fit construct as countries may be associated with very different product categories which lack a “common thread” (e.g., Switzerland is simultaneously associated with chocolate and banking).
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has several bordering countries (eight in total), making its citizens likely to have been directly exposed to other countries, their people, and their products. In 2010, imports (goods and services) accounted for approximately 55% of its GDP. Moreover, Austria ranks among the top three countries in the KOF index of globalization, which takes into account economic, social, and political aspects of globalization (ETH 2012). Importantly, a wide variety of global and local brands in various product categories are available for sale in the Austrian market, making it an attractive setting for our research purposes.
Adopting an approach widely utilized in brand extension research (e.g., DelVecchio and Smith 2005; Mariadoss et al. 2010), we used a broad variety of real parent brands and hypothetical extensions as stimuli. The focus on real brands was necessary because “fictitious brands would not carry the well-formed associations and feelings that are a requisite for brand extension” (Martin and Stewart 2001, p. 474). To select appropriate parent brands, we first consulted prior studies that categorized brands as global or local (e.g., Johansson 2011; Steenkamp et al. 2003) as well as the 2011 “Best Global Brands” ranking by Interbrand and the 2011 “Eurobrand” ranking of the European Brand Institute. We then identified pairs of well-known parent brands (in 10 different product categories) that were expected to vary sufficiently in terms of perceived brand globalness and brand origin image. A wide variety of product categories (non-durables, durables, services) was considered in order to ensure generalizability of the results (Aaker and Keller 1990).
The above procedure resulted in the identification of 20 parent brands (two in retailing, four in durable goods, eight in FMCG, and six in services) for which we generated hypothetical brand extensions differing in fit. Whenever possible, we identified extensions that were used in prior studies for the same brand or at least for brands with com- parable product portfolios. For example, following Aaker and Keller (1990), we chose “light wine” as an extension for the brand Heineken. The selected parent brands with their associated extensions were subsequently subjected to a pre- test with 101 consumers who were asked to rate them in terms of perceived brand globalness and parent brand–ex- tension fit using measures drawn from Steenkamp et al. (2003) and Taylor and Bearden (2002) respectively. The pretest revealed five product categories where parent brands differed significantly with regard to perceived brand global- ness and also varied in their fit to the proposed extensions (Table 1).
Data collection
Data were collected through face-to-face interviews, using a quota sampling approach with regards to age and sex. The respondents (N=301) were recruited and surveyed by trained interviewers in shopping malls, supermarkets, cafés, etc. Fifty-two percent were female, and average age was 42.4 years (s.d. 14.9; range: 18 to 89) which is repre- sentative of the national population of Austria (51.3% of the population are women and mean age is 41.3). Of the respondents, 2.7% had an elementary education, 28.3%
Table 1 Selected parent brands and extensions
Product category Brand Perceived brand globalness Extensions (high fit, low fit)
Study 1 (Austria) Study 2 (Bulgaria)
Mineral water Evian 5.232a 1.587b *c 5.310 1.515 *c wellness hotel, outdoor clothing Vöslauerd/Gorna Baniae 4.027 1.446 4.101 1.976
Beer Heineken 5.452 1.574 *c 6.299 1.020 *c cheese biscuits, light wine Ottakringer/Zagorka 3.189 1.873 4.000 1.677
Coffee Segafredo 5.211 1.525 *c 5.567 1.229 *c cookies, ice cream Julius Meinl/Nova Brasilia 3.511 1.560 4.067 2.044
Online auctions Ebay 6.161 1.177 *c – – laser printer, insurance willhaben 2.744 1.408 – –
Airlines United Airlines 5.078 1.430 *c 5.908 1.234 *c wristwatches, direct banking services FlyNiki/Bulgarian Airlines 4.089 1.313 4.633 1.515
Banking services UniCredit Bulbank – – 5.280 1.880 *c internet provider, travel agency Purva Investizionna Banka – – 5.280 1.880
a mean value (7-point scale) b standard deviation c indicates significant differences between the two brands in terms of perceived brand globalness (p<.05) d Austrian local brand e Bulgarian local brand
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apprenticeship/technical school, 25.0% high school, and 42.0% university education; compared to the general popu- lation, the respondents are slightly better educated. Regarding employment, 56.7% were currently employed, 18.7% were students (slight overrepresentation), and 13.7% were retired (slight underrepresentation). Each respondent answered the questions for one specific brand and one brand extension, resulting in about 30 respondents per brand and 15 per extension.
Before completing the survey, respondents were asked whether they knew their allocated brand because other- wise the idea of capitalizing on brand associations by transferring them to an extension does not apply (Martin and Stewart 2001). In this context, in open questions 90.7% of respondents associated the brands correctly with their original product category (e.g., Heineken with beer) and 89.2% categorized the brand to the correct brand origin.
Construct measurement and measure validation
To measure most constructs comprising the research model in Fig. 1, established scales were drawn from the literature. More specifically, we measured the per- ceived quality of the extension using items drawn from Keller and Aaker (1992) and Broniarczyk and Alba (1994). The measurement of purchase intentions was based on items used by Aaker and Keller (1990) and Taylor and Bearden (2002) plus an item capturing the probability of purchase in percentage terms (ranging from 0 to 100%). The measurement of perceived parent brand quality was based on Völckner and Sattler (2006) while parent brand–extension fit was captured by Taylor and Bearden’s (2002) scale. Perceived brand globalness was measured using the scale developed by Steenkamp et al. (2003), and brand origin image was captured by the scale of Roth and Romeo (1992). Finally, to mea- sure brand origin–extension fit, we adapted the parent brand–extension fit scale by Taylor and Bearden (2002). We also included brand familiarity, defined as “the extent of a consumer’s direct and indirect experience with a brand” (Campbell et al. 2003, p. 293), as a control variable that might impact the four endogenous constructs in our model. It was measured by items previously used by Mishra et al. (1993) and Srinivasan and Ratchford (1991). Whenever possible, we used exist- ing translations from prior studies that were also con- ducted in German (e.g., Völckner and Sattler 2006). Scales for which no translation existed were translated (and back-translated) from English into German by bilin- gual translators (Behling and Law 2000). All measures together with their psychometric properties are listed in Appendix 1.
We investigated the unidimensionality, reliability, and validity of our measures with a confirmatory factor analysis (Anderson and Gerbing 1988) using Mplus 5.21 (Muthén and Muthén 2007). Overall fit was satisfactory (χ2=743.45, d.f. = 349; RMSEA=.061; SRMR=.047; CFI=.966). Factor loadings, t-values, Cronbach’s alpha, composite reliability (CR), and average variance extracted (AVE) all point to a high level of reliability and convergent validity of the scales (see Appendix 1). Discriminant validity was established with the Fornell and Larcker (1981) criterion. For each latent variable, the AVE was much larger than the squared correlation between it and the other latent variables included in the model (see Appendix 2).
We accounted for common method variance (CMV) through both ex ante and ex post procedures (Chang et al. 2010). With regard to ex ante steps, we assured respondents that their answers were anonymous and con- fidential and emphasized that there are no right or wrong answers. We further controlled for CMV ex post by applying Harman’s single factor test and including all construct indicators in an exploratory factor analysis. The unrotated factor solution revealed seven factors (with 25.55% being the most variance explained by any one factor), thus providing no evidence for CMV. In addition, we employed the marker variable approach proposed by Lindell and Whitney (2001). We used the item “How often do you use public transportation?” (measured on a seven-point scale with “very infrequently” and “very frequently” as anchors) as a marker variable which, from a theoretical point of view, is unrelated to the latent variables analyzed in our model. We conducted a partial correlation analysis among the indicators measuring our constructs in order to assess whether the significance of the zero-order correlations changed when partialling out the marker variable. The significance of the resulting coefficients did not change substantively. Furthermore, we re-estimated our model with the adjusted correlation matrix as input. The results of model estimation did not change materially suggesting that CMV is not a serious problem in our analysis. Finally, we included a common method factor in our model that was uncorrelated with all other constructs but loaded on each manifest variable (Podsakoff et al. 2003). The significance and the direc- tion of the path coefficients did not change, again indi- cating that our findings are not susceptible to CMV.
To assess whether multicollinearity might be biasing the model estimates, we first investigated the bivariate correlations of the manifest variables. The direction of the correlations all pointed to the relationships that we found in the model. Similarly, the bivariate correlations of the latent variables all had the same sign as in the structural model. We further examined the variance in- flation factors (VIFs) in each structural relationship. We
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found no evidence for multicollinearity with the highest VIF (1.348) being much lower than the critical value of 10 that would indicate potential problems (Cohen et al. 2003).
Finally, we accounted for omitted variables bias (OVB) by incorporating important control variables into our model. More specifically and following Steenkamp et al. (2003), we included brand familiarity as well as age and sex as controls. We further tested for OVB by following Hausman’s (1978) approach and compared the parameter
estimates produced by the maximum-likelihood estimator versus those generated by a two-stage least squares estima- tor (Klarmann 2008). The coefficients were similar under both estimation techniques. Thus, OVB does not appear to pose a major threat to our analysis.
Results
To test our hypotheses, we estimated a structural equation model with Mplus 5.21, which produced satisfactory fit (χ2=
*** p<.001, * p< .05
Fig. 2 Study 1: structural equation model results for Austria (standardized estimates)
Table 2 Effect decomposition (standardized) of antecedents on brand extension success
Independent variable Dependent variable
Perceived quality of the extension (QUALExt) Purchase intention (PINTExt)
Indirect effecta Direct effect Total effect Indirect effecta Direct effect Total effect
A. Study 1 (Austria)
Perceived parent brand quality (QUALBrand) .378 (100.0%) .378* .263 (100.0%) .263*
Parent brand extension–fit (FITBrand) .340 (100.0%) .340* .236 (100.0%) .236*
Perceived brand globalness (PBG) .056 (100.0%) .056* .039 (24.4%) −.121 (75.6%) −.082*
Brand origin image (IMAGEOrigin) .136 (100.0%) .136* .095 (100.0%) .095*
Brand origin–extension fit (FITOrigin) .142 (35.7%) .256 (64.3%) .398* .277 (100.0%) .277*
B. Study 2 (Bulgaria)
Perceived parent brand quality (QUALBrand) .095 (100.0%) .095x n.s. n.s.
Parent brand extension–fit (FITBrand) .221 (100.0%) .221* .150 (100.0%) .150*
Perceived brand globalness (PBG) n.s. n.s. n.s. n.s.
Brand origin image (IMAGEOrigin) n.s. .359 (100.0%) .359* .244 (100.0%) .244*
Brand origin–extension fit (FITOrigin) .166 (31.1%) .368 (38.9%) .534* .363 (100.0%) .363*
a significance of raw indirect effects was established with a bootstrap procedure (Zhao et al. 2010)
*p<.05 or better, x p<.10
574 J. of the Acad. Mark. Sci. (2013) 41:567–585
715.950, d.f. = 359, RMSEA=.062, SRMR=.055, CFI=.934). The estimated path coefficients are shown in Fig. 2.
We tested the significance of the hypothesized medi- ated relationships by applying the Preacher and Hayes’ (2004, 2008) bootstrap test (based on 1,000 re-samples). Zhao et al. (2010) propose that, based on this test, an indirect effect is significant and mediation is established if the 95% bootstrap confidence interval of the indirect effect does not include zero. Table 2A displays the direct, indirect and total effects on the perceived quality of the extension (QUALExt) and purchase intention (PINTExt). The 95% bootstrap intervals do not contain zero, indicating that all hypothesized mediation effects are significant. Our model explains approximately 42.0% in QUALExt and 55.5% of the variance in PINTExt and thus provides evidence that the analyzed success drivers are of high relevance.
Consistent with previous studies on brand extension suc- cess (e.g., Bhat and Reddy 2001; Martin and Stewart 2001), QUALExt positively impacts PINTExt (β=.695, p<.001). In addition, the results indicate a positive and significant impact of the quality of the parent brand (QUALBrand) (β=.378, p<.001) and the parent brand–extension fit (FITBrand) (β=.340, p<.001) on QUALExt with total effects of β=.263 (p<.05) and β=.236 (p<.05) on PINTExt respectively.
4 The bootstrap tests indicate that the mediation of these two variables on PINTExt through QUALExt is significant.
QUALBrand is positively influenced by both perceived brand globalness (PBG) (β=.147, p<.05) and brand origin image (IMAGEOrigin) (β=.359, p<.001). The in- direct effects of PBG are β=.056 (p<.05) on QUALExt
and β=.039 (p<.05) on PINTExt. On the other hand, the indirect effect of IMAGEOrigin on QUALExt is β=.136 (p<.05) and β=.095 (p<.05) on PINTExt. The bootstrap test indicates that all four indirect effects are statistically significant (see Table 2A).
We further tested for the type of mediation of these variables on brand extension success by adding direct paths to QUALExt and PINTExt. Comparing the chi- squares of the models with and without these direct links shows a non-significant change in model fit when direct links from IMAGEOrigin to QUALExt and to PINTExt are added. Thus, we have an indirect-only mediation for IMAGEOrigin on both brand extension success variables. In contrast, when a direct link between PBG and PINTExt
is added to the model, model fit improves significantly (Δχ2=5.49, Δd.f. = 1). Moreover, while the sign of the indirect effect of PBG on PINTExt is (as expected)
positive, the direct effect is negative and significant β= −.121 (p<.01); thus, the results of PBG point to a competitive mediation situation whereby the direct effect and the indirect effect point in opposite directions (Zhao et al. 2010).
Based on these findings, we find support for H2, indicating that IMAGEOrigin influences brand extension success through its positive effect on QUALBrand (which in turn influences QUALExt and, ultimately, PINTExt). We also find support for H1 in that PBG is indeed linked to brand extension success via QUALBrand. However, we also find a competitive direct effect of PBG on PINTExt
resulting in a total negative effect of β=−.082 (p<.05). With regard to the effects of the brand origin–extension
fit (FITOrigin), we find support for H3, postulating a direct positive impact on QUALExt (β=.256, p<.001). Results also indicate a strong positive impact of FITOrigin on FITBrand (β=.417, p<.001). Moreover, the bootstrap test gives evidence that the mediation effect through FITBrand
on QUALExt is statistically significant, confirming H4. The positive and significant direct and indirect effects of FITOrigin on QUALExt support complementary mediation through FITBrand. Overall, we find a strong total effect of FITOrigin on brand extension success with estimates of β =.398 (p<.05) on QUALExt and β=.277 (p<.05) on PINTExt. The effect of FITOrigin on PINTExt is an indirect- only mediation effect as indicated by a non-significant chi- square difference test (Δχ2=2.78; Δd.f. = 1) comparing models with and without a direct link from FITOrigin on PINTExt.
Comparing the total effects of the drivers of brand exten- sion success considered in our model (Table 2A), we find that FITOrigin has the strongest overall impact on both QUALExt and on PINTExt. With respect to the control var- iable, brand familiarity is positively related to QUALBrand
(β=.431, p<.001).5
To further examine the underlying effect of FITOrigin
on extension success, we conducted an additional analy- sis whereby we estimated our model under high versus low FITOrigin conditions (using a median split). We thus follow a similar idea as Martin and Stewart (2001) who examine the impact of brand extension–fit under high and low goal congruency situations. Our findings provide evidence that FITBrand has a much greater impact on QUALExt when FITOrigin is high (β=.473, p<.001) than when it is low (β=.219, p<.01). Thus, a brand extension should be most successful when a consumer readily links a brand origin to the extension. The more congruent the
4 We also tested for an interaction effect of QUALBrand and FITBrand by applying the single-indicator technique proposed by Ping (1995). However, model fit did not significantly improve and the interaction coefficient was not statistically significant. Therefore, we do not report the results of the moderator analysis in Figure 2 and Table 2A.
5 We also estimated a model that controlled for possible confounds with sociodemographics (age and sex). No significant effects were found and, therefore, these variables were not further considered in the analysis.
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brand origin and the extension, the stronger the transfer of cognition and affect from the parent brand to the extension.
Study 2
Empirical setting and stimuli
Prior research suggests that consumers from mature and from emerging markets may differ in their perceptions of global and local brands as well as in their evaluations of different brand origins (Batra et al. 2000; Jaffe and Nebenzahl 2006; Özsomer 2012; Schuiling and Kapferer 2004; Steenkamp and de Jong 2010). More specifically, the influence of perceived brand globalness and brand origin image on consumers’ attitudes and purchase inten- tions is likely to be stronger in an emerging market than in a mature market setting like Austria (Ger and Belk 1996; Heslop and Papadopoulos 1993; Zhou and Hui 2003). Batra et al. (2000), for example, argue that con- sumers in developing countries prefer non-local brands for symbolic reasons such as communicating social sta- tus. In addition, non-local brands offer a means for dis- playing competence with regard to foreign cultures and fulfil the desire to participate in the global consumer community.
In light of these considerations, we sought to replicate and test the stability of our conceptual model in an emerging market context.6 We chose Bulgaria as a research
setting because it is a less developed country than Austria; however, it still has a high level of foreign trade (WTO 2011) with consumers being exposed to different local and global brands in many product categories (Bulgaria ranks #38 out of 208 countries on the KOF index of globalization; ETH 2012). Importantly, the global brands used in Study 1 are also avail- able for sale in Bulgaria, and in four out of the five focal product categories there are equivalent strong local brands (see Table 1).7 To confirm the brands’ relevance and familiar- ity to consumers, we discussed the selection of parent brands and extensions with two marketing experts that are highly familiar with consumer behavior in Bulgaria; we also con- ducted a pretest with 23 Bulgarian consumers.
Data collection and construct measurement
We collected data through a web-based survey in coopera- tion with a professional consumer panel provider. A total of 302 adult consumers (50.0% females, 18–65 years old, mean 39.4 years, SD=13.0 years) took part in the survey. We excluded 12 respondents who did not indicate a brand origin, resulting in a final sample of 290 consumers. The age and gender distribution in our sample is broadly representa- tive of the Bulgarian population (51.3% of the population are women and mean age is 41.3). In the sample, 65.2% were currently employed, 12.8% unemployed, 7.9% stu- dents, and 5.2% retired. Also, 1.7% had an elementary
7 We did not find an equivalent local brand in the category “online auctions” and instead used the product category “banking services” with “internet providers” as high fit and “travel agency” as low fit extensions respectively (selection is based on the study by Völckner et al. 2010).
*** p<.001, * p< .05, xp< .10
Fig. 3 Study 2: structural equation model results for Bulgaria (standardized estimates)
6 We would like to thank two anonymous reviewers for encouraging us to replicate our model in an emerging market context.
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education, 15.5% apprenticeship/technical school, 20.0% high school and 58.5% university education.
We employed the same procedures and measures as in Study 1. A confirmatory factor analysis confirmed the unidi- mensionality, reliability and validity of our measurement scales (χ2=753.83, d.f.=349; RMSEA=.063; SRMR=.061; CFI=.949). Factor loadings, t-values, Cronbach’s alpha, com- posite reliability (CR), and average variance extracted (AVE) all point to a high level of reliability and convergent/discri- minant validity of the scales (see Appendix 1 and 2).
We also applied the same procedures as in Study 1 to assess CMV, multicollinearity, and OVB. The results (available from the authors on request) gave no reasons for concern.
Results
In a first step, we tested whether our mediation model also holds in this sample. We did so by adding direct paths from PBG to the two brand extension success variables (i.e., QUALExt and PINTExt). In contrast to Study 1, we find a non-significant change in model fit when these direct paths are added. Similarly, model fit does not change significantly when direct effects from IMAGEOrigin and FITOrigin to PINTExt are added. However, the model fit changes signif- icantly (Δχ2=49.67, Δd.f.=1) when a direct path from IMAGEOrigin to QUALExt is added. The direction of this effect is positive and highly significant (β=.359, p<.001). The estimation of the final structural equation model includ- ing this additional path (see Fig. 3) resulted in overall good fit (χ2=782.62, d.f.=359, RMSEA=.064, SRMR=.075, CFI=.947).
We calculated bootstrap confidence intervals (Preacher and Hayes 2004, 2008) to test for the hypothesized mediated relationships. Unlike in Study 1, the indirect effects from PBG and IMAGEOrigin (through QUALBrand) on QUALExt and PINTExt are not significant. The reason for this is the weak direct effect of QUALBrand on QUALExt (β=.095, p<.10).
Overall, our model explains approximately 70.8% in QUALExt and 52.9% of the variance in PINTExt. As expected, we find a positive and significant link between QUALExt and PINTExt (β=.679, p<.001) with the former being significantly influenced by FITBrand (β=.221, p<.001). The control variable brand familiarity has a positive impact on QUALBrand (β=.279, p<.001) and PINTExt (β=.139, p<.001).
8
Consistent with prior findings (e.g., Özsomer 2012; Pappu et al. 2007; Steenkamp et al. 2003), PBG (β=.176, p<.05) and IMAGEOrigin (β=.312, p<.001) have a positive effect on QUALBrand. However, as indicated above, these
effects do not transfer to the brand extension success varia- bles, i.e., no mediation is present. Therefore, H1 and H2 are not supported in this sample.
With regard to the effects of FITOrigin, results indicate a positive impact on QUALExt (β=.368, p<.001), confirming H3. In support of H4, FITOrigin has a strong positive effect on FITBrand (β=.752, p<.001). The positive direct and indirect effects of FITOrigin on QUALExt indicate comple- mentary mediation through FITBrand. Total effects of FITOrigin are highly significant with estimates of β=.534 (p<.001) on QUALExt and β=.363 (p<.001) on PINTExt. The impact of FITOrigin on PINTExt is an indirect-only mediation effect because, as noted, no direct effect could be identified. A comparison of the total effects (see Table 2B) indicates that, similar to Study 1, FITOrigin is the most important driver of both QUALExt and PINTExt.
Again, based on a median split, we estimated separate models for low and high FITOrigin. As in Study 1, the link between FITBrand and QUALExt is stronger in the high (β=.397, p<.001) than in the low FITOrigin condi- tion (β=.365, p<.001). This finding confirms that the more congruent consumers perceive the brand origin and the extension, the stronger the transfer of associa- tions from the parent brand to the extension.
Discussion and conclusion
Theoretical implications
Brand extensions are a widely used strategy by internation- ally active firms not least because “rising media costs, coupled with the importance of building high visibility and the need to obtain cost economies, create pressures to extend strong brands across product lines and country borders” (Douglas and Craig 2003, p. 272). Drawing on signaling and categorization theory, the present research investigates three antecedent constructs entrenched in the international marketing literature as (additional) drivers of brand exten- sion success: perceived brand globalness, brand origin im- age, and brand origin–extension fit.
To the best of our knowledge, there is only a single study by Iversen and Hem (2011) that considers perceived brand globalness and brand origin image as drivers of brand ex- tension success. We extend their study in several ways. First, whereas Iversen and Hem (2011) analyze two brands that both rate high on perceived brand globalness in a single product category (sports equipment), we include a larger repertoire of sixteen brands from six different product cate- gories. In each product category, we use a global and a local brand, thus allowing for substantial variance in perceived brand globalness and brand origin of the brands in focus (Dimofte et al. 2008). Second, whereas Iversen and Hem
8 Controlling for demographics, we also found a negative and signif- icant effect of sex on QUALExt (β=−.077, p<.05; women coded as 1). As the significance of the other path coefficients did not change and their estimated values changed only minimally, we decided—in the interest of parsimony—not to include this path in the final model.
J. of the Acad. Mark. Sci. (2013) 41:567–585 577
(2011) use a single attitude scale to capture extension suc- cess, we follow Aaker and Keller (1990) and model brand extension success along two distinct dimensions. Specifically, in line with the majority of past research (e.g., Broniarczyk and Alba 1994; Mariadoss et al. 2010), we assess the per- ceived quality of the extension as an evaluative outcome variable. In addition, we assess purchase intention as a vari- able reflecting the behavioral intentions of consumers (e.g., Bhat and Reddy 2001; Martin and Stewart 2001). Third, while Iversen and Hem (2011) investigate the impact of perceived brand globalness and brand origin image in a Western country setting (Norway), we test our model in both a mature and an emerging market context and identify key differences in the model relationships and associated effect sizes. Fourth, and most importantly, we incorporate the new brand origin-extension fit construct as an additional potential driver of brand extension success; as already noted, this construct reflects the fit between the brand origin and the product category of the extension, not that of the parent brand.
Our model explains considerable amounts of variance in both brand extension success outcomes in both countries, thus providing evidence that the analyzed brand extension success drivers are indeed of high importance. Across sam- ples, out of all drivers examined, brand origin-extension fit has the strongest total effect on brand extension success. Our results indicate that brand origin-extension fit influen- ces impressions of similarity between the parent brand and the extension (i.e., parent brand-extension fit). Thus, our research responds to Völckner and Sattler’s (2006) call for further studies that analyze the question “what constitutes fit?” (p. 31). Obviously, brand origin-extension fit is another source of generating an overlap between the parent brand and the planned extension. This is an important finding because it implies that by leveraging the brand origin- extension fit, the stretchability of a brand can be expanded even to extensions that at first sight do not fit to the brand’s current image and/or its products.
Our results further indicate that brand origin-extension fit also directly impacts consumers’ quality evaluations of the extension and that the strength of its overall impact on brand extension success is stronger than the influence of the per- ceived quality of the parent brand and parent brand- extension fit (which, to date, have been considered as being the two most important drivers of extension success; see Völckner and Sattler 2006 for a review). This finding pro- vides an important insight for brand extension research because it gives evidence that other factors should be con- sidered as potential drivers of extension success, particularly when extension decisions are contemplated in an interna- tional context (Iversen and Hem 2011).
Beyond the strong effect of the brand origin-extension fit that is generalizable across samples, we find important
differences in the mature and the emerging market contexts with regard to the effects of brand origin image and per- ceived brand globalness. With regard to the brand origin image, in the mature market context, our study gives evi- dence that, as hypothesized, it indirectly influences brand extension success through its positive influence on the per- ceived quality of the parent brand. These results are in line with the findings of Iversen and Hem (2011) who found that the relationship between the evaluation of an extension and the brand origin image is fully mediated through the parent brand’s image. In addition, this result corroborates recent findings from country-of-origin research indicating that country image indirectly impacts behavioral intentions through brand image (Diamantopoulos et al. 2011). In the emerging market context, however, we could not establish this indirect-only mediation effect. Rather, we find a direct effect of the brand origin image on the perceived quality of the extension which suggests that consumers infer the qual- ity of the extension directly from their evaluations of the brand origin and do not take the “detour” through the perceived quality of the parent brand.
A possible explanation for the divergent results in the mature and emerging market settings could be the follow- ing: The link between the perceived quality of the parent brand and the quality of the extension is based on consum- ers’ expectations that “the new extension of a high quality brand is likely to be of high quality as well” (Erdem 1998, p. 340). In other words, the parent brand is supposed to act as the main point of reference for assessing the (expected) quality of the extension. There is, however, an alternative reference point that can be used to evaluate the quality of the extension and the parent brand: the brand origin. Consumers in the emergent market seem to rely (much) more on the brand origin rather than the parent brand as reference point and this also explains the aforementioned weak impact of the perceived quality of the parent brand on the perceived quality of the extension (which renders the effects of per- ceived brand globalness on extension success not signifi- cant). While the veracity of this explanation should be subject to further research, it seems to suggest that the country context (mature vs. emerging market) impacts the salience of the perceived quality of the parent brand as a mediator variable.9
Interestingly, in both our studies, the impact of perceived brand globalness on the perceived quality of the parent
9 While the differences in the results obtained in the mature and the emergent markets could, in principle, also be (partly) attributed to differences in the survey methods used, the psychometric properties of the measurement scales for all constructs (including the ones on which differences were observed) were highly satisfactory in both samples (see Appendix 1 and 2). Thus, there is little evidence to suggest that method-specific differences were responsible for the di- verging results in the two study settings.
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brand is less strong than the corresponding impact of the brand origin image. In other words, consumers’ quality perceptions of a brand seem to be influenced more by their perceptions of the country from which the focal brand originates than by their perceptions of the brand’s global availability and reach. This is an important finding that provides an empirical challenge to recent criticism that country-of-origin notions become increasingly irrelevant in an era of global brands (e.g., Usunier 2006). With specific reference to signaling theory, our results thus confirm that the brand origin image acts as a strong signal of brand quality and also identify its role as a key driver of brand extension success.
A rather surprising finding was that the expected positive indirect effect of perceived brand globalness on purchase intention in the mature market (Austria) is accompanied by a direct negative effect, indicating competitive mediation (Zhao et al. 2010).10 This suggests that while consumers acknowledge the superior quality of parent brands perceived to be global as well as the quality of extensions of such brands, they are nevertheless negatively disposed toward buying them. The latter finding is at odds with the results of Steenkamp et al. (2003), who report no direct relationship between perceived brand globalness and purchase inten- tion.11 One explanation for this negative direct effect may lie in the timeline of the survey (fall 2011); the latter was conducted while the economic crisis in some European countries was still a headline issue and consumers may have been more critical toward purchasing global brands and in favor of supporting local companies.12 Furthermore, an increasing numbers of consumers in developed countries are against globalization, which may also adversely impact purchase intentions of global brands (Dimofte et al. 2008; Holt et al. 2004).
Managerial implications
The findings of our study provide the basis for several recommendations for international marketing managers in terms of the selection of the extension category, brand positioning, and marketing communication strategies. Our results indicate that by extending into categories that are
perceived as matching the brand’s origin, a brand could successfully offer products that do not seem to fit to the brand at first sight. Managers can use this knowledge by selecting extensions scoring high on brand origin–extension fit as this will not only enhance consumers’ perceptions of parent brand–extension fit but will also directly positively influence their quality evaluations of the extension (and, through it, purchase intentions as well). The introduction of such extensions can be further supported by communica- tion campaigns that emphasize the brand’s origin and the fit of the extension to that origin. Thus an advertising strategy that aims at anchoring the brand, the brand origin, and the extension as all belonging to the same category in the minds of consumers would enhance overall perceived fit and thus positively impact extension success. For example, the brand Bertolli with its core product olive oil emphasizes its origin (Italy) in its advertisements and successfully extended into a range of products such as pasta sauce and pesto which con- sumers also associate with Italy.
Our results on the influence of perceived brand global- ness and brand origin image on brand extension success, indicate that positioning a brand as global may bring fewer benefits to companies than will highlighting the origin of the brand. Assuming that the brand origin image is positive and associated with salient, strong, relevant, and unique charac- teristics (Keller 2003), the brand origin could be profitably highlighted in brand positioning and advertising strategies (Papadopoulos et al. 2011). For example, the brand Freixenet uses its Spanish origin in its brand positioning and advertising strategies and has successfully extended from sparkling wine to red and white wines. Such a strategy seems to be particularly appropriate in emerging markets where the brand origin also has a direct and quite strong influence on the perceived quality of the extension; indeed, in such markets, highlighting the origin of the extension seems to be even more effective than highlighting its link to the parent brand. In mature markets, on the other hand, emphasizing the globalness of a (parent) brand during the introduction of an extension (e.g., through the use of global consumer culture positioning strategies; see Alden et al. 1999) is not without risk as it may negatively impact the purchase likelihood of the extension (and this despite posi- tive quality evaluations of the latter).
Limitations and avenues for further research
While we provide important insights into the drivers of brand extension success in both a mature and an emerging market, replications in other countries would help establish the generalizability of our findings. In particular, the poten- tial impact of perceived brand globalness on brand exten- sion success should be subjected to further scrutiny, not least because consumers in the mature market studied (Austria)
10 No such effect was observed in the emerging market (Bulgaria). 11 Note, however, that our dependent variable is not identical to that used by Steenkamp et al. (2003). Whereas Steenkamp et al. (2003) focus on brand purchase intention, our focus is on the purchase intentions of the extension. The negative direct effect of perceived brand globalness seems to suggest that consumers do not want to support a global brand in even getting bigger through successful brand extensions. 12 Indeed, running the model separately for foreign and domestic (Austrian) brands revealed that the negative direct effect of perceived brand globalness on purchase intention is driven by foreign brands while being insignificant for domestic brands.
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are quite critical in terms of globalization attitudes (Spears et al. 2004). Moreover, given that attitudes toward global (and local) brands may vary across countries (Steenkamp and de Jong 2010), the nature and magnitude of the impact of the perceived brand globalness construct on outcome variables may also vary; for example, conducting the study in China or Brasil may well have resulted in a different assessment of the relative roles of perceived brand globalness and brand origin. In this context, the extent to which brands that score high on brand globalness have an advantage may also depend on whether they are competing only against local brands or (also) against other global brands.13
Unfortunately, we could not formally test for potential moderating effects of the competitive environment on extension success because (a) the sample sizes in the brand extension categories were rather small (about 30 per extension), and (b) in most selected extension cate- gories, both global and local brands compete against each other. Thus, a promising future research avenue would be to examine the moderating role of the com- petitive environment on the relationship between per- ceived brand globalness and brand extension success.
In line with recent literature calls to use a larger repertoire of brands including less prominent brands so as to control for confounding effects with brand strength (Dimofte et al. 2008), we used 16 brands as stimuli that displayed greater variation in terms of perceived globalness than was the case in prior studies.14 Be that as it may, the extent to which our findings generalize to other product categories and brands (particularly non-European ones) remains an issue for fur- ther research.
Our results should also be interpreted in light of the specific construct definitions and measurements used here- in. In particular, the brand origin image was conceptualized as the image of products from a country (also known as “micro” image; see Pappu et al. 2007) because our focus was on the transfer of this image on an extension from a brand that originates from this country. Future research could conceptualize the brand origin image at a more “mac- ro” level, namely as “the total of all descriptive, inferential and informational beliefs one has about a particular country“ (Martin and Eroglu 1993, p. 193). Alternatively, one could focus on specific country imagery dimensions, such as util- itarianism and hedonism (Leclerc et al. 1994) or competence and warmth (Chattalas et al. 2008).15
While brand origin recognition accuracy (Samiee et al. 2005) was not a problem in the Austrian sample (about 90% correct identification), almost a third of Bulgarian respondents did not identify the origin of their assigned brand correctly. While this is not surprising,16 it never- theless raises important questions since recent research indicates that brand origin misclassification can adversely impact both quality perceptions and behavioral intentions (Balabanis and Diamantopoulos 2011). In an extension context, if a parent brand is not associated with its correct origin and, in turn, consumers perceive a lower fit of the extension with that (wrong) origin, brand ex- tension success may well suffer.17 Thus, yet another issue for further research is a systematic examination of how brand origin recognition accuracy influences brand exten- sion success.
In light of the importance of brand origin–extension fit as a brand extension success driver, further attention also should be paid to the underlying process/mechanism that leads consumers to perceive high/low fit between an extension and the parent brand’s origin.18 Previous re- search suggests that “the presence of shared goals creates a network of associations that facilitate the transfer of knowledge and affect” (Martin and Stewart 2001, p. 483) and that there is “a greater likelihood of consumers transferring such knowledge and affect from a parent brand to an extension in the presence of goal congruen- cy” (Martin et al. 2005, p. 289). Therefore, an important future research challenge is the identification of the con- ditions that facilitate the transfer of associations from the brand origin to the extension.
Last but not least, consumer characteristics that might be expected to impact perceptions of brand globalness and the importance attached to brand origin cues should be investi- gated in future studies. Global consumption orientation (Alden et al. 2006), consumers’ global–local identity (Tu et al. 2012), and consumer cosmopolitanism (Riefler et al. 2012) are some key constructs that could be used to aug- ment and refine models seeking to explain factors driving brand extension success in an international context.
Acknowledgments The authors would like to thank the JAMS editor and four anonymous reviewers for their helpful comments and sugges- tions on a previous draft of this article.
13 We would like to thank an anonymous reviewer for highlighting this issue. 14 For example, on a seven-point scale, Iversen and Hem (2011) report a mean value of 6.18 and a standard deviation of 1.38 for perceived brand globalness. In contrast, the corresponding values for our study are 4.49 and 1.82 respectively. 15 We would like to thank an anonymous reviewer for this suggestion.
16 Consumers in an emerging market have been exposed to foreign brands for a shorter period of time. This is particularly so in the case of Bulgaria which, as a member of the (then) Eastern Bloc, was “isolated” from Western product influences for many years. 17 Indeed, in our particular sample, consumers that associated the brand with the wrong origin evaluated brand origin–extension fit as significantly lower (M=3.63; SD=1.73) than consumers that identified the correct brand origin (M=4.07; SD=1.75). 18 We would like to thank an anonymous reviewer for highlighting this issue.
580 J. of the Acad. Mark. Sci. (2013) 41:567–585
Appendix 1 Construct measurement
Table 3
Study 1 (Austria) Study 2 (Bulgaria)
Perceived quality of the extension (Broniarczyk and Alba 1994; Keller and Aaker 1992)
α=.90; C.R.=.90; AVE=.74 α=.93; C.R.=.93; AVE=.82
The extension will be of superior quality. .899 *** .925 ***
The quality of the extension will be better than most brands. .827 *** .892 ***
The quality of the extension will be good. .864 *** .892 ***
Purchase intention (Aaker and Keller 1990; Taylor and Bearden 2002; self-developed scale)
α=.83; C.R.=.91; AVE=.77 α=.91; C.R.=.91; AVE=.78
I will likely try [extension]. .849 *** .785 ***
The likelihood that I buy this brand next time I need [extension category] is very low/high.
.935 *** .938 ***
Probability that you purchase [extension] if [brand] offers it on the market. (0% –100%)
.847 *** .923 ***
Perceived parent brand quality (Völckner and Sattler 2006) α=.86; C.R.=.86; AVE=.67 α=.87; C.R.=.88; AVE=.71
How do you evaluate the quality of the products offered by [brand]? .743 *** .624 ***
[Brand] offers high quality products. .858 *** .928 ***
The quality of [brand] products is far above average. .840 *** .932 ***
Parent brand–extension fit (Taylor and Bearden 2002) α=.93; C.R.=.93; AVE=.77 α=.92; C.R.=.92; AVE=.74
[Extension] fits with the image of [brand]. .867 *** .885 ***
[Extension] is similar to other products offered by [brand]. .883 *** .915 ***
Launching [extension] is logical for [brand]. .844 *** .917 ***
Launching [extension] is appropriate for [brand]. .917 *** .704 ***
Perceived brand globalness (Steenkamp et al. 2003) α=.86; C.R.=.87; AVE=.69 α=.92; C.R.=.92; AVE=.80
To me, this is a local/global brand. .802 *** .842 ***
I don’t think/think consumers abroad buy this brand. .852 *** .921 ***
This brand is sold only in [country]/all over the world. .849 *** .916 ***
Brand origin image (Roth and Romeo 1992) α=.82; C.R.=.81; AVE=.52 α=.90; C.R.=.90; AVE=.70
Innovativeness .657 *** .794 ***
Design .782 *** .829 ***
Prestige .781 *** .873 ***
Workmanship .622 *** .855 ***
Brand origin–extension fit (Taylor and Bearden 2002) α=.91; C.R.=.91; AVE=.72 α=.94; C.R.=.93; AVE=.76
[Extension] fits with the image of [country]. .814 *** .858 ***
[Extension] is similar to other products offered by companies located in [brand origin].
.834 *** .907 ***
Launching [extension] is logical for companies located in [brand origin]. .835 *** .889 ***
Launching [extension] is appropriate for companies located in [brand origin]. .895 *** .939 ***
Brand familiarity (Mishra et al. 1993; Srinivasan and Ratchford 1991) α=.94; C.R.=.94; AVE=.77 α=.94; C.R.=.92; AVE=.70
Unfamiliar/familiar .819 *** .911 ***
Inexperienced/experienced .918 *** .866 ***
Not knowledgeable/knowledgeable .890 *** .926 ***
Uninformed/informed .897 *** .902 ***
A novice buyer/an expert buyer .823 *** .803 ***
*** p<.001; ** p<.01; * p<.05; column entries are standardized factor loadings
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Appendix 2 Discriminant validity assessment
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Table 4
Mean SD 1 2 3 4 5 6 7 8
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Study 1/ Study 2
1. Perceived quality of the extension
3.59/4.59 1.46/1.62 .74/.82
2. Purchase intention 2.31/3.13 1.44/1.53 .52/.52 .77/.78
3. Perceived parent brand quality 4.38/4.53 1.21/1.42 .17/.18 .13/.11 .67/.71
4. Parent brand extension–fit 3.55/3.46 1.61/1.72 .23/.44 .12/.22 .01/.04 .77/.74
5. Perceived brand globalness 4.49/4.91 1.82/1.80 .00/.15 .00/.07 .05/.14 .00/.04 .69/.80
6. Brand origin image 4.79/5.15 1.13/1.36 .07/.45 .05/.24 .23/.23 .01/.14 .04/.34 .52/.70
7. Brand origin–extension fit 4.42/3.92 1.51/1.75 .19/.55 .09/.28 .01/.06 .18/.58 .01/.07 .06/.23 .72/.76
8. Brand familiarity 3.76/4.02 1.80/1.76 .04/.07 .09/.10 .26/.13 .01/.03 .00/.00 .04/.05 .00/.03 .77/.70
Bold numbers on the diagonal show the AVE (Study 1/Study 2); numbers on the off-diagonal represent the squared correlation between the constructs
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- c.11747_2013_Article_328.pdf
- The impact of perceived brand globalness, brand origin image, and brand origin–extension fit on brand extension success
- Abstract
- Theoretical framework
- Overview
- Hypotheses based on signaling theory
- Hypotheses based on categorization theory
- Study 1
- Empirical setting and stimuli
- Data collection
- Construct measurement and measure validation
- Results
- Study 2
- Empirical setting and stimuli
- Data collection and construct measurement
- Results
- Discussion and conclusion
- Theoretical implications
- Managerial implications
- Limitations and avenues for further research
- Appendix 1 Construct measurement
- Appendix 2 Discriminant validity assessment
- References
