BRAND EXTENSIONS IN A COMPETITIVE CONTEXT: EFFECTS OF COMPETITIVE TARGETS AND PRODUCT ATTRIBUTE TYPICALITY ON PERCEIVED QUALITY

In today’s fiercely competitive marketplace, brand extensions have become a standard strategy for new product introductions. Brand extensions have proliferated over the past decade, escalating to an all-time high, with estimates ranging from 81% to 95%, by the beginning of this decade (The Wall Street Journal January 1992). The rationale behind endowing a new product with a well-known brand name is to provide consumers--and the trade--with a sense of familiarity and security by leveraging positive brand characteristics in a new product category. In this respect, brand-extension research has shown that the positive affect of a brand may be transferred to the extension (Boush et al. 1987). Moreover, affect transfer is most likely to occur when the brand’s old and the new categories are perceived to be similar (Aaker 1990; Aaker and Keller 1990; Park, Milberg, and Lawson 1991). Finally, brand-specific associations are another important factor to consider; they may dominate the effects of brand affect and category similarity, especially when consumers are knowledgeable about the brand (Broniarczyk and Alba 1994). When investigating primarily brand characteristics such as brand affect and associations, as well as the role of category similarity, previous research has not paid sufficient attention to the competitive context of brand extensions. Indeed, brand extensions have been treated as if they occurred in a competitive vacuum. Yet, competitive pressures are among the key challenges and opportunities facing brand management today (Shocker, Srivastava, and Ruekert 1994). Understanding the essential features of the competitive context is therefore critical for developing a complete theoretical account of brand extensions.