Brand Extensions: Prestige Brand Effects

Abstract

Competition and consumer brand attitudes make introducing a new brand risky and very expensive, increasing the attractiveness of brand extensions. Brand extension research has established that original brand quality perceptions, product category fit, consumer perceptions of the product category complementarity and substitutability, plus the transferability of design and manufacturing capability significantly influence extension attitude formation. However, these studies fail to differentiate between brand types and have aggregated out category effects. Using a national survey we show that brand type (prestige, functional) and extension category are important variables in consumer brand extension attitude formation. Perceived quality influences functional brands more than prestige brands as prestige brand attitudes assume quality. Functional brands experience less dilution than prestige brands, implying less risk and greater expandability than argued by previous authors.

The role of functional and symbolic brand associations on brand loyalty

“…Brand prestige can influence consumers' brand purchase intention through enhancing their confidence during brand selection, and their social status and selfdom after brand purchase (Baek et al,2010). Brand prestige is a more salient concept than functional concepts (Lye et al,2001). It may be noteworthy for consumers because of its relation to their self-concepts (Keller,1998), wealth, power and social image (Alden et al,1999).…”

Drivers of Brand Extension Success: What Really Matters for Luxury Brands

“…Only little research (e.g., Hagtvedt & Patrick, 2009;Monga & John, 2010) has been done on brand extensions for luxury brands so far. This is surprising because quite a few authors (e.g., Lye, Venkateswarlu, & Barrett, 2001;Monga & John, 2010;Völckner & Sattler, 2007) explicitly state that the insights gained from brand extension research in the nonluxury context cannot easily be transferred to the luxury context due to the different nature of luxury brands. For example, luxury brands (as opposed to nonluxury brands) are stronger on symbolic and experiential benefits (Vickers & Renand, 2003).…”

“…Park, Milberg, and Lawson (1991) have shown that prestige brands are more extendible if the brand concept is consistently transferred, even if product-feature similarity is low. To conceptualize prestige-oriented brand concepts, the authors mainly resort to dimensions related to the self-concept of the consumer (Lye, Venkateswarlu, & Barrett, 2001). Roux (1995) has identified conceptual fit and brand quality as the main determinants of perceived extension quality for luxury brands.…”

“…Whereas high brand equity might allow luxury brands to extend further, brand extensions might harm the image of the parent brand leading to a loss of exclusivity of the brand (Pitta & Katsanis, 1995). The risk of image dilution by unsuccessful extensions is particularly high for brands with a high consumer-based brand equity and prestige brands (Lye, Venkateswarlu, & Barrett, 2001). Besides, there can be negative reciprocity effects even for high-fitting extensions (Park, McCarthy, & Milberg, 1993).…”

“…By considering a holistic set of value drivers in a research design that covers comparably strong brands stemming from luxury and nonluxury contexts, the current study reveals extension-related differences between luxury and nonluxury brands. This is especially relevant as previous research has shown that luxury brands are fundamentally different from nonluxury brands, which in the past have mainly been used in brand extension research (Lye, Venkateswarlu, & Barrett, 2001). Prior research on luxury or prestige brands has either replicated studies from different contexts without taking into account the characteristics of the luxury brands (e.g., Lye, Venkateswarlu, & Barrett, 2001;Roux, 1995;Roux & Boush, 1996) or has focused on one particular dimension of value (e.g., Hagtvedt & Patrick, 2009).…”