Does umbrella branding really work? Investigating cross-category brand loyalty

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Keller, 1990, Broniarczyk and Alba, 1994, Hem et al., 2003, Völckner and Sattler, 2006 found evidence that parent-brand characteristics and the fit between parent brand and transfer product are the main and most influential factors driving brand extension success. However, the ability of a brand to transfer its brand loyal customers from the parent to the extension category has been widely neglected. Brand loyalty can be regarded as a consequence of the underlying assumption of customers transferring their quality perceptions, their brand knowledge, and their experience with the brand from one category to the other [Erdem and Swait, 1998]. We find empirical evidence that consumers who are loyal to the brand in the leading (parent) product category show a higher probability to be loyal to that same brand in another (extension) category compared to those consumers who are not loyal in the leading category. Moreover, as the overall success of the extension includes positive retroactive effects of the extension product on the parent product or brand [Erdem, 1998], the arising question is whether there are differences between extension product categories regarding their attachment to the parent category and their ability to stimulate brand loyal purchases in the parent category, i.e., speaking of 'leader' and 'follower' categories in terms of brand loyal purchase behavior. This might even hold true for the relationship of any two categories the brand competes. Terms of use: Documents in JEL classification: M31, C43

Cross‐category revenue spillover in brand extensions: The role of within‐category experience

“…First, our empirical setting is limited to a single multi‐product firm. It thus does not include actions of competitors, which have been considered to be associated with customers' cross‐category brand loyalty and purchase behavior (e.g., the share of category requirements; Grasby et al, 2022; Silberhorn et al, 2017). Second, to enhance the efficacy of our findings, future research needs to incorporate data from diverse industry settings other than just retail (e.g., Evanschitzky et al, 2017; Shah et al, 2012) and additional demographic or geographic characteristics associated with customers.…”

“…As such, brand‐related factors such as advertising (Balachander & Ghose, 2003), brand logos (Han et al, 2010), and brand heritage (Pecot et al, 2018) act as signals for enhanced quality associated with the parent brand, resulting in customers' commitment to a brand and repeat purchase behavior. Further, the brand signals that both existing and future products under the same brand will also meet customer expectations, that is, brand‐quality expectations (Aaker & Keller, 1990; Silberhorn et al, 2017). Therefore, when making decisions about a new product, customers use their prior experience with the brand to reduce their perceived risk, especially when quality information is missing or not fully employed (Erdem & Chang, 2012; Sebri & Zaccour, 2017).…”

“…As such, brand-related factors such as advertising (Balachander & Ghose, 2003), brand logos (Han et al, 2010), and brand heritage (Pecot et al, 2018) act as signals for enhanced quality associated with the parent brand, resulting in customers' commitment to a brand and repeat purchase behavior. Further, the brand signals that both existing and future products under the same brand will also meet customer expectations, that is, brandquality expectations (Aaker & Keller, 1990;Silberhorn et al, 2017).…”

“…In the context of brand extensions, such correlated perceptions across product categories under the same brand are driven by beliefs about the brand, such that the firm's skill level or other key inputs determine the quality of all products it manufactures, and the firm has incentives to use the same brand for products that are similar in quality (i.e., brand trust; Krystallis, 2015;Mikl os-Thal, 2012). As such, loyal customers from one category tend to be loyal to the brand in another category due to the overall attitude toward the brand (Silberhorn et al, 2017).…”

How loyalty extends across product categories

“…Bennett et al (2000) found buyers of both leaded and unleaded petrol were more likely to purchase the same brand across both categories. Finally, Silberhorn et al (2017) found consumers who are loyal to a brand in one category have a higher probability of being loyal to the brand extension for nine non-food categories.…”