The role of perceived value in vertical brand extensions of luxury and premium brands

Abstract

This study examines the role of perceived value in the relationship between brand attitude, perceived fit, extension attitude and consumers' purchase intention of downscale vertical extensions of luxury and premium brands in two product categories: cars and shoes. Results from 236 individuals with different income levels show that extension attitude is positively related to purchase intention both directly and indirectly, via the perceived value of the extension; the latter is more strongly correlated than extension attitude to consumers' purchase intention. Brand attitude is also positively associated with perceived value. Overall, perceived value partially mediates the relationships of brand attitude and of extension attitude with purchase intention.The product category affects the strength of some of the relationships in the model, including the role of fit. Summary statement of contributionThe study establishes the role of perceived extension value as a mediator of the relationships of brand attitude and of extension attitude with the purchase intention of vertical extensions of premium and luxury brands in two product categories. The product category affects some of the relationships in the model: the association between fit and perceived value is statistically significant only for the more conspicuous category of cars. No earlier study had undertaken such a comprehensive empirical analysis.

The spillover effect of downward line extensions on U.S. consumers’ evaluation of a French luxury parent brand: The role of branding strategies, authenticity, and fit

“…The use of vertical line extensions has been a prevalent growth strategy for fast moving consumer goods (Ambler & Styles, ) but also for luxury brands (Dall'Olmo‐Riley, Pina, & Bravo, ; Reddy, Terblanche, Pitt, & Parent, ). The main objective of a line extension is to leverage the equity of the core brand by launching new products sharing the same brand name.…”

Product-to-Service Extension: The Impact of Brand Equity on Upscaled Service

“…Thus, many researchers and practitioners have focused attention on the process of the luxury brand extension to find ways of achieving competitive advantage in the global market. There are two types of brand extension (e.g., vertical and horizontal), but recent research in the luxury brand extension literature has mostly focused on investigating the vertical brand extension (Chung & Kim, ; Dall'Olmo Riley, Pina, & Bravo, ; Hennigs, Wiedmann, Behrens, Klarmann, & Carduck, ). Although these studies provide the evidence of the importance of luxury brand extension, not only vertical brand extension but also horizontal brand extension strategies are needed to be identified in various luxury industries to clearly understand what contributes to the success of the extended brand.…”

Going to great lengths in the pursuit of luxury: How longer brand names can enhance the luxury perception of a brand

“…With this new conception of luxury emerging, we see a broader application of this study not only in the luxury segment but also for utilitarian products where managers are looking to name new brands or products. This is because in today's market, be it in the context of FMCG, luxury or utilitarian brands, vertical brand extension is a common strategy (for e.g., brand extensions of Toyota and Marriott; Albrecht, Backhaus, Gurzki, & Woisetschläger, ; Dall’Olmo Riley, Pina, & Bravo, ). For such extensions, scholars often recommend applying distancing techniques (for e.g., a lower price, different brand name, smaller logo size, Aaker, ; Aaker & Equity, ) for the new extension to minimize any negative effects (if any) on the original brand in cases of negative reception by the consumer (Kim, Lavack, & Smith, ).…”