Brand alliance versus brand extension : which benefits outweigh what costs?

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Brand alliance versus brand extension.

Which benefits outweigh what costs?

Master thesis

UVA Msc. Business Studies: Marketing track Thesis supervisor: R.E.W. Pruppers

Deadline: February 12th_{, 2014} Ellen Becht: 5982170

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Table of tables

Table 5.1: Research design ... 38

Table 6.1: Consumer attitude means ... 53

Table 6.2: Value distribution means ... 54

Table 6.3: Image based brand fit means ... 56

Table 6.4: Mixed measures within-between subjects anova results ... 57

Table 6.5: Mixed measures within-between subjects anova; extension versus alliances ... 59

Table 6.6: Mixed measures within-between subjects anova; extension versus ingredient brand alliance60 Table 6.7: Mixed measures within-between subjects anova; iba alliances host versus ingredient ... 61

Table 6.8: Mixed measures within-between subjects anova; cccb alliance high versus low ibbf ... 62

Table 6.9: Brand extension versus complementary competence co-brand alliance: high vs low ibbf ... 63

Table 6.10: Brand extension versus complementary competence co-brand alliance ... 64

Table of figures

Figure 4.1: Association transfer ... 22

Figure 5.1: Pretest interaction plot Tony’s chocolonely ... 49

Figure 6.1: Image based brand fit manipulation ... 56

Figure 6.2: Brand equity leveraging strategies on consumer attitude ... 58

Figure 6.3: Brand extension versus brand alliance (dichtome)... 58

Figure 6.4: Brand extension versus ingredient brand alliance ... 59

Figure 6.5: Brand extension versus ingredient brand alliance - host and ingredient brand ... 59

Figure 6.6: Complementary competence co-brand alliance - high versus low image based brand fit ... 62

Figure 6.7: Brand extension versus complementary competence co-brand alliance - high and low ibbf . 62 Figure 6.8: Brand extension versus complementary competence co-brand alliance ... 63

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Abstract

Brands continually introduce new products, and often use brand equity leveraging strategies to minimize risks of launching the new product onto the market. The knowledge consumers have about the original brand is then used to (positively) influence the consumer evaluation of newly introduced products. In this research brand extension and brand alliance brand equity leveraging strategies are compared. Brand extensions are new products introduced by a single brand,

whereas two (or more) brands collaborate to market a new product in the brand alliance strategy. Thus, a brand can either market a new product by itself using a brand extension strategy, or collaborate with another brand in a brand alliance. Both brand equity leveraging strategies are widely used and can be successful. However, it remains unclear when consumers prefer new products from what brand equity leveraging strategy. Therefore in this paper is researched when

consumers prefer a brand alliance over a brand extension and vice versa. An experiment is

conducted incorporating a brand extension, ingredient brand alliance and complementary competence co-brand alliance brand equity leveraging strategy. The brand equity leveraging strategy conditions are manipulated based on product feature similarity to explore if one brand equity leveraging strategy is preferred over another when the newly introduced product is either similar to or quite different from the original brand’s products. Furthermore is researched when and whether a brand should position itself as an equal, dominant (host), or ingredient brand in a brand alliance, and also the influence of image based brand fit is assessed. The research results show no significant effect of brand equity leveraging strategy on consumer evaluation, nor a significant effect of image based brand fit. As supported by many previous articles product feature similarity seems to play the most important role in consumer evaluation of brand extensions and brand alliances. This indicates that collaborating in an alliance does not always add value in the eyes of the consumer.

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1. Introduction

If a consumer could choose, would he pick a (regular) can of Pepsi Light, or a Coca Cola light in a can designed by Marc Jacobs? And why is it that there is (only) a mass of people waiting outside for the store to open when H&M launches special clothing lines by famous designers as

Viktor & Rolf, Karl Lagerfeld, and Isabel Marant? What makes these brand collaborations more

valuable than the brands by itself? And when is such a collaboration not more valuable?

1.1 Branding

Brands are decisive marketing assets, as brands influence consumers’ purchase behavior. Brand associations help consumers in their purchase decision making process. A consumer probably answers the question ‘Which shampoo do you use?’ not with the color or function, but with the

shampoo’s brand name. Branding is crucial to differentiate a product from its competitors. If you always use Guhl shampoo you are more likely to try a newly introduced Guhl shampoo, than a new Andrelon shampoo. But what if Guhl would introduce a hair spray? Would it matter whether they market it themselves or if they collaborate with an established hair spray brand such as

L’Oreal? Thus, how do brand associations influence a consumer’s evaluation of the new

product? To evaluate is to attribute value. A brand’s value for consumers can be quantified in customer based brand equity. Customer based brand equity is at hand when consumers become aware of a brand and develop strong, favorable, and unique associations towards this brand (Dickinson & Barker, 2007). Organizations use branding strategies to enhance consumer evaluations of a new product by leveraging brand equity.

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1.2 Brand equity leveraging strategies

Organizations use brand equity leveraging strategies to strengthen the brand and extend customer value perceptions to their products (Helmig, Huber & Leeflang, 2008). Two popular brand equity leveraging strategies are brand extensions and brand alliances. Brand extension is a brand equity leveraging strategy that can be defined as the use of a current, established brand name to enter a new product category or market segment (Aaker & Keller, 1990). An example is the Smint brand that introduces Smint chewing gum as an addition to their original breath mints. A brand alliance can be defined as a collaboration, in which two (or more) brands are combined in some way, as a part of a product or as another aspect of the marketing program (Rao, 1997). An example is the

Active Crystals collection of fashionable technology as a result of the collaboration between Philips and Swarovski. The most important distinction between the two brand equity leveraging

strategies is the number of brands. Brand extension is a ‘do it yourself’-business within an

organization. Brand alliances are collaborations of multiple brands. In both strategies brand equity is leveraged from an already existing brand (original brand) to a new product (a brand extension or brand alliance). The purpose of both brand extensions and brand alliances is to get consumers to positively evaluate a new product, due to their (positive) associations with the original brand.

1.3 Research gap

In this thesis the relation between the branding strategies brand alliance and brand extension, that leverage brand equity from existing brands to a new brand, and therefore influence consumer evaluations is researched. Although a lot of research has been conducted on both brand extensions and brand alliances, the branding strategies are never compared. Existing research focuses only on comparing factors within one brand equity leveraging strategy. Thus,

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establishing results on the optimization of one branding strategy, by determining if one brand alliance is more successful than another brand alliance, based on varying variables. Never before is explored under what conditions a brand alliance is more or less successful than a brand

extension. If you regard brand alliances as special cases of brand extensions, the question that rises is: When does a brand have enough skill, competence quality associations, and

complementary assets associations in a new category to extend without a partner (Uggla, 2004)? And when is collaborating with another brand to extend more beneficial for a brand than

extending alone? Would the ‘Baco’ have become equally popular when Bacardi had not

collaborated with Coca Cola, and marketed ‘just’ a new mix drink with Bacardi in it? Would less people have bought a Senseo coffee machine if Philips had not formed an alliance with Douwe

Egberts?

1.4 Problem statement

To discover when a brand alliance and when a brand extension is the better option, in this paper the relation between the chosen brand equity leveraging strategy (brand extension or brand alliance), and the customer evaluation of a newly marketed product will be researched. Perceived fit, will be manipulated to explore when a brand alliance is preferred over a brand extension and vice versa. Not – as is customary in the current body of literature – to establish that high fit is perceived more positive than low fit, but to explore when a specific brand equity leveraging strategy is preferred over another. Thus, the research will compare various high and low fit brand alliances and brand extensions to come to an understanding as to when what brand alliance is beneficial over a brand extension and the reverse. The research is guided by the following explorative research question: When do consumers prefer a brand alliance over a brand

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4 1.4.1 Perceived fit

An extensive body of research is conducted on what variables influence the customer based brand equity of brand extensions and alliances. Many factors play a role in the success of a branding strategy, and research indicates that perceived fit is likely to be most crucial in the comparison of branding strategies’ evaluations from a consumer perspective. Fit can be

described as the perceived congruence, similarity or compatibility of two product categories and brand concepts of partner brands (Helmig, Huber & Leeflang, 2008; Uggla, 2004). Fit is argued to be among the most important variables, in respect of the number of brands as crucial

difference between a brand extension and brand alliance.

Perceived fit encapsulates the ease with which the extension or alliance is accepted (Dickinson & Barker, 2007). A collaboration between tough, manly brand Harley Davidson and a feminine, dowdy cupcake decoration company would be less likely to succeed than an alliance between the cupcake decoration company and Disney princesses, because there is less perceived congruence, similarity, and compatibility of the two product categories and brand concepts. Therefore, fit is important to determine which potential partners a brand could form a profitable alliance with, as it reflects when consumers perceive that a collaboration adds value to a brand (compared to an extension in which a brand acts solely).

Nonetheless, not only the fit of brand image is important. Another highly influential dimension of fit emphasizes the fit of product categories between the original (parent) brand and the new product category. This product feature similarity of original and new brand is not only crucial to brand alliances, but also to brand extensions. When Smint introduced Smint chewing gum, the product category (chewing gum) was congruent with their original breath mints. However, this would not be the case if Smint would introduce energy drinks. Would Smint be sensible to collaborate with an energy drink brand like Redbull for such a product introduction?

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Various questions rise on the influence of perceived fit on consumers’ evaluation of

brand extensions and brand alliances. Extensive research indicates that high fit brand alliances and brand extensions are evaluated more positive than low fit brand extensions and alliances. Nevertheless, the question remains if fit interacts with the evaluation of the different brand equity leveraging strategies. Therefore, to explore the subject, different high and low fit brand alliances and brand extensions will be compared, to answer the following sub question: Is there

an interaction effect of perceived fit on consumer evaluation of brand alliances and brand extensions? Thus, an interaction between perceived fit and brand equity leveraging strategy.

1.4.2 Delimitations

This research will be limited to brand extensions and brand alliances that market non-existing new products for well-known brands. The relation between original brand and extension, and original brand and partner brands is explicitly clarified. This because the study emphasizes a comparison of consumer evaluations based on perceived fit, and therefore it is important to make sure the consumer is aware of the (different) relations between original and new brand(s).

Moreover a sharp distinction is made between branding strategies based on the number of brands that are incorporated: brand extensions entail new products from one single brand, whereas in brand alliances more than one brand is active. Because of this demarcation the focus lies on the actual consumer based evaluation of (single) brand extensions and (multiple) brand alliances.

1.5 Relevance

Although the fields of brand alliances and brand extensions are extensively researched already, to date there’s no study that compares the value of brand alliances and brand extensions from a

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many articles. Nevertheless, research on the consequences of these strategic decisions on consumer evaluations, thus a comparison of brand extensions and brand alliances, is lacking. In this thesis different types of brand alliances are compared to brand extensions. The distinction within the brand alliance brand equity leveraging strategy is made based on the power

distribution within the collaboration. Brands can be either equal partners, or a brand can be dominant or submissive to the partner brand in an alliance. By comparing various brand equity leveraging strategies, is explored when one strategy is more beneficial than the other.

For marketers this means that not only strategic considerations should be taken into account, but also the consequences of the strategic options on consumer perception can be

considered in the future. In this research practical implications will be provided to help marketers to choose the most profitable branding strategy. This can be of great relevance, as approximately 90 percent of the attempts to establish new products or new brands on the market fails

(Leuthesser et al., 2002).

1.6 Outline

To answer the research question first the literature on brand extensions (chapter 2) and brand alliances (chapter 3) will be reviewed. Thereafter, in a theoretical framework (chapter 4) hypotheses are formulated to guide the research. Next the research methods (chapter 5) are described, followed by a clear overview of the results (chapter 6). Finally, a conclusion (chapter 7) will be drawn, and (chapter 7) the results will be interpreted and linked back to existing literature in the discussion (chapter 8). This thesis will provide the reader with extensive knowledge on the (dis)advantages of both brand alliances and brand extensions, and enable marketers to link their strategic objectives to their consequential consumer evaluations.

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2. Brand extensions

Regardless of ulterior motives, by extending a brand marketers take advantage of consumer’s

brand name recognition and image, to reduce the risk of new product failure (Aaker & Keller, 1990). Associations with the original (parent) brand can be transferred to the extended brand or product (Nan, 2006). By a brand extension the parent brand image is enhanced and can be clarified. Brand extensions have the potential to furnish new product acceptance by an improved brand image. By using an established brand to introduce a new product the risk that consumers perceive is decreased (Keller, Aperia & Georgson, 2012).

2.1 Customer based brand equity

As brand extensions use associations with the original brand to foster product acceptance, consumer evaluations are thus influenced by the knowledge about a brand that consumers already possess. “The differential effect that brand knowledge has on consumer response to the marketing of that brand” is called customer based brand equity (Keller, Alpera & Georgson,

2012). This definition explicates that customer based brand equity makes consumers react to brands in various ways because they are influenced by what they know about the brand already. The customer based brand equity definition consists of three key elements that are all interrelated: differential effect, brand knowledge, and consumer response to marketing. Brand knowledge consists of brand awareness and brand image, which refer to the condition and situations a brand is recognized and recalled in, and the consumer perception of a brand

expressed in the associative network around a brand. The differential effect relates to the brand knowledge a consumer possesses, as knowledge is stored and organized in associative network memory models, that encapsulates all associations a consumer has with a brand. A consumer may favor the decaf extension of Douwe Egberts coffee over the decaf extension of Starbucks

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coffee, because of the knowledge the consumer already has about these brands. However,

another consumer might prefer the decaf extension of Starbucks over Douwe Egberts, because of the associations he or she has about one or both of the brands. Important is that brand knowledge is interpreted subjectively and encapsulated in a personal network of brand associations (Lassar, Mittal & Sharma, 1995). Therefore the brand knowledge consumers possess can both positively and negatively affect their evaluation of a brand extension. Although an associative network memory model includes all associations with a brand, the strength, favorability, and uniqueness of associations differ. The variation in strength, favorability and uniqueness of associations is crucial to the differential responses that consumers show (Keller, Aperia & Georgson, 2012). Association strength is determined by the amount, quality, and nature of information processing. Also brand awareness is related to association strength, as it is reflected in the

breadth (number of situations) and depth (likelihood of recognition and recall) of associations. In addition, the uniqueness of associations determines whether a brand is distinguished from other brands in the product category. Moreover the favorability of associations are key determinant of the differential effect. Consumers relate knowledge to a brand as associations. When the

associations with a brand are (mostly) positive, a consumer will react more positively to the brand. In contrast a consumer that entails a majority of negative associations with a brand, shall react considerably negatively on the brand associations. Thus, consumers think of a brand more often when the brand has an extensive network with many strong associations, evaluate a brand more positively when these associations are favorable, and can make a distinction between brands in the same product category, based on the associations that are unique to a brand (Keller, Aperia & Georgson, 2012). Customer based brand equity makes consumers be more confident in

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a brand than in other brands in the product category (Lassar, Mittal & Sharma, 1995). And that is the purpose of a brand extension.

2.2 Brand extension types

Customer based brand equity is leveraged for different purposes into different types of brand extensions. In the current literature two distinct types of brand extensions are distinguished, based on their objectives: line extensions and category extensions. Line extensions are brand extensions that introduce a new product in an existing product category, whereas category extensions launch a new product in a new product category.

2.2.1 Line extension

Line extensions are meant to attract consumers in a new target group, that is a new market segment in the existing product class (Aaker & Keller, 1990), or to maintain consumers that would otherwise purchase similar products from competitors. In any supermarket many examples are present. Coca Cola extended by adding Coca Cola Light, Coca Cola Zero, and

Cherry Coke (among other flavors) to their original regular Coca Cola. Lays added flavors as

Cheese Onion and Bolognese to their original salted flavor, Absolut Vodka introduced flavored versions such as Absolut Vodka Raspberry and Absolut Vodka Lemon, and also nearly every shampoo brand encapsulates shampoos with various functions and fragrances.

2.2.2 Category extension

However, brands do not only leverage their existing brand equity to introduce new products in the same category. A brand extension can also be used to introduce a new product in a new product category. Such a brand extension, in which a brand’s existing brand equity is used to

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introduce a new product in a new product category is referred to as a category extension (Aaker & Keller, 1990). The most obvious example is Robert Branson’s Virgin. The Virgin brand entails an airline, as well as a green fund, among many other brand extensions, and offers products that range from holidays to wines and books. More often brands extend into product categories that have something in common with their original product. So did Nike introduce a sport clothing line in addition to sport shoes, and marketed the mobile game application Angry Birds their game characters as stuffed animals. Also brands such as Philips and Samsung cover various electronic devices under their brand, ranging from televisions to shavers (Philips) or to mobile phones (Samsung).

The success of a brand extension depends on its ability to strengthen or contribute to favorable, and unique associations with the original brand, and therefore the brand equity that it can create in the new category or market segment. Thus, consumers should retain salient, favorable, and unique associations to perceive a brand extension as relevant, and differentiate it from competition (Keller et al, 2012).

2.3 Brand extension evaluation: consumer processing

But how do consumers process the leveraged brand equity into associations that differentiate a brand’s extension from another product in that product category? Brand equity leveraging

strategies are used to make brands and products easier to process for consumers, by

strengthening the brand and extending customer value perceptions to their products (Helmig, Huber & Leeflang, 2008). According to Lassar, Mittal, and Sharma (1995) customer based brand equity refers to subjective consumer perceptions (and not objective indicators) which are relative to competitors, and a global value associated with a brand that stems from both the physical aspects of a brand and the brand name (Lassar, Mittal & Sharma, 1995).

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The finding that consumers use their knowledge and corresponding associations with a brand to subjectively compare brands, is carried through in the categorization theory. By means of the categorization theory can be argued that consumers evaluate brand extensions with a category approach, via piecemeal processing, or a combination of those (Aaker & Keller, 1990; Nan, 2006). Moreover the categorization theory can be used to clarify the importance of

perceived fit for consumer evaluation of brand extensions.

Consumers compare the original and new product’s attributes to assess in which category a product can be classified. In the categorization theory is described how knowledge is stored in a consumer’s memory, and how new information is processed in a cognitively efficient way

(Bouten et al., 2011). Information is grouped into categories that are distinguished based on perceived similarities and resemblances. Categories can be interrelated in the individual

consumer’s mind, and specific knowledge ranging from category members to expectations and

features is attributed to each category. This categorization of knowledge makes it easier for consumers to retrieve information from the memory, because the knowledge is stored in a structured and simplified way (Sheng & Pan, 2009). Thus brand extensions can be considered a means to make brands and products easier to process for consumers, by strengthening the brand and extending customer value perceptions to their products (Helmig, Huber & Leeflang, 2008).

In the categorization theory two ways of information processing are distinguished: categorization-based processing, and piecemeal-based processing. Consumers can evaluate a product either based on general associations that are attributed to the category the product is classified in, or based on its product specific attributes. When consumers evaluate a product by integrating information on various attributes, piecemeal-based processing is at hand. In contrast, categorization-based processing occurs when consumers group a product or stimulus with a

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category, and then associate the affects that particularly category is characterized by with the product. Thus, for piecemeal processing consumers evaluate a product by its attributes, whereas categorization-based processing relies on the category a product is grouped in (Sheng & Pan, 2009). This is especially relevant for category extensions, in which brands launch a product in a new product category. The processing of a category extension is crucial to extension success, as a brand can only successfully compete with other brands in the same product category, when it is associated not only with category characteristics, but also differentiated from its competitors by being associated with unique attributes. Categorization can be based on both a product’s concrete attributes and/or on the more abstract aspects of a product (Sheng & Pan, 2009). So do Converse sneakers look quite similar to their H&M look-a-likes based on concrete attributes. Nonetheless consumers distinguish the sneakers based on abstract attributes such as brand image.

Consumer evaluations of brands are subjective assessments of both concrete and abstract (interpretations of) attributes that are interlinked in consumers’ individual associative network models. As a product’s features determine the way a product is processed and evaluated, it can be argued that the success of a branding strategy relies on the sense that a combination of brands makes to consumers (Park et al., 1996), which can be referred to as the logic of a combination (Simonin & Ruth, 1998). One of the most eminent concepts used to operationalize this logic of combination is ‘fit’. Perceived fit encapsulates the ease with which the extension or alliance is

accepted (Dickinson & Barker, 2007)..

2.4 Perceived fit: product feature similarity

One of the most influential articles on brand extensions is a research on the way consumers form attitudes toward brand extensions by Aaker and Keller (1990), in which the importance of (product class) fit on various dimensions is emphasized. The three dimensions that are

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distinguished within perceived fit are complementarity, substitutability, and transferability. Complementarity and substitutability both comprise the extension’s product class.

Transferability refers to the extent to which consumers think a brand has the necessary skills and assets to extend the brand in the concerned product category or market segment. Transferability and complementarity are the prime dimensions, and fit on just one of them is sufficient to affect a consumer’s evaluation positively. In addition to fit, the perceived quality of the original brand,

the interaction between quality and fit, and the perceived difficulty for forming an alliance play a role in consumers’ evaluation of a brand extension (Aaker & Keller, 1990). Moreover, a smaller

importance of the fit dimension substitutability is explained by the little number of brand extensions that represent true substitutes (Bottomley & Holden, 2001).

By means of the categorization theory can be argued that consumers evaluate brand extensions with a category approach, via piecemeal processing, or a combination of those. Categorizing, consumers classify a brand extension with a product category, and as a consequence the associations corresponding to that category are transferred to the brand extension. Therefore the evaluation of a brand extension should be primarily determined by a consumer’s attitude towards the product category. However, when a brand extension cannot be

categorized, its evaluation will be based on the associations of the extended brand or product itself (piecemeal approach). Important implication for brand extensions is that the categorization effects increase as the fit does (associations transfer from the original brand to the extension), but as fit decreases consumers evaluate increasingly based on attributes, benefits, and attitudes of the extension itself (Nan, 2006). Thus, more associations are transferred to the new brand when consumers perceive a high fit between two brands. This is how the influence of perceived fit on

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consumers’ evaluation of brand extension is explained by category based processing (Aaker & Keller, 1990).

2.5 Brand extension pros and cons

Brand extensions have the potential to furnish new product acceptance by an improved brand image. By using an established brand to introduce a new product the risk that consumers perceive is decreased (Keller, Aperia & Georgson, 2012). In addition the promotion and distribution costs can be decreased by extending an existing brand (Aaker & Keller, 1990), as using an established brand allows for efficiencies in promotional expenses, and marketing

campaigns (Keller et al., 2012). Moreover, a brand extension that seems to be less profitable than a brand alliance, can turn out to be more profitable to an organization, when the consumer

perception is similar. This because the profit does not have to be shared with an alliance partner. However, caution is recommended, as the brand image and meaning can also be diluted, or consumers can become confused or frustrated, which can cause decreased consumer

identification with the brand. Furthermore the new product can cannibalize sales of existing products, and retailers can refuse to sell the new product (Keller et al., 2012). Despite of these disadvantages many brand extensions are created, and they appear in various forms.

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3. Brand alliances

A brand allianceis a collaboration of two (or more) brands that are combined in some way, as a part of a product or as another aspect of the marketing program (Rao, 1997). Just like brand extensions brand alliances are entered into to leverage brand equity. However, brand alliances influence consumers by transferring associations of two (or more) partner brands (Dickinson & Barker, 2007). Brand alliances are argued to have the potential to increase sales revenues, relatively cheaply explore new markets, share financial and strategic risks, and improve product image and credibility by leveraging new associations that are established with the original brands (Chang, 2008). In brand alliances brand associations are leveraged from secondary sources, that is partner brands (Uggla, 2004).

Distinct types of branding alliances are discerned based on the brand alliance’s purpose. A broad definition of brand alliances includes any paring of multiple brands in a marketing context (advertisements, products, product placements, distribution outlets, etc.) (Leuthesser et al., 2003). Brands can collaborate to launch an entirely new product, introduce a combined product, or ‘just’ to promote a product together. Based on these three objectives, three types of

brand alliances are distinguished. However, in the current literature the terminology concerning different types of brand alliances is mixed up greatly, and although in a broad sense any

collaboration between two brands can be regarded a brand alliance, in this paper a collaboration of brands is only regarded a brand alliance when both brands contribute to the new product. This to make sure attribute associations are transferred from both original brands to the new brand. Based on this term, and the power distribution between brands in the alliance, two types of brand alliances are distinguished: Ingredient brand alliances and complementary competence co-brand alliances. A complementary competence co-brand alliance is a collaboration in which two (or more) brands combine their skills and competences to produce one product that is new to

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both brands. Philips and Alessi combined Philip’s core technological competences, with Allessi’s core design competences, to launch a (very successful) line of fashionable kitchen appliances. In ingredient brand alliances one (ingredient) brand provides an ingredient that is used in another (host) brand’s existing product. An example is the alliance that Lu Scholiertjes is in with the

Côte d'Orchocolate brand, to signal to consumers that their cookies are coated with premium chocolate. Thus ingredient brand alliances result in a combined product.

3.1 Combined product: Ingredient brand alliance.

An ingredient brand alliance is an asymmetrical combination of two established brands, in which one brand is positioned as a (dominant) host brand, and one brand as ingredient brand (Park, Jun & Shocker, 1996). A key attribute from the ingredient brand is incorporated into the new product or brand, thereby reinforcing that attribute (Uggla, 2004). An example is McDonalds’ McFlurry (host brand) with ingredient brands such as Kitkat, Mars, and M&Ms. Because of the changing ingredient brand, McFlurry targets a broad range of consumers with different tastes. Power asymmetries occur frequently within ingredient brand alliances, because a primary brand ‘contains’ a secondary brand (Leuthesser et al. 2003). However, some brands position

themselves as an ingredient brand. A prime example of an ingredient brand is Intel. By manufacturing microprocessors for electronic devices, but not the devices themselves Intel is always an ingredient brand to consumers. Intel even projects its composite brand character by its slogan: “Intel inside”. Key characteristic of ingredient brand alliances is that, as opposed to both

line and category extensions, ingredient branding does not entail the introduction of a new product, but simply adds a branded product (attribute) as an ingredient to an existing (original) product. The product thereafter is also just sold under the original brand (Vaidyanathan & Aggerwal, 2000).

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Key note to ingredient brand alliances is that the relation between host and ingredient brand is asymmetrical. The host brand is the dominant brand, which is associated with a secondary (submissive) ingredient brand. Ingredient brands only add their associations to the host brand’s (alliance) product. Therefore the host brand is regarded the product category driver,

that owns a customer base, and has control over the marketing and distribution systems of the new brand (Uggla, 2004).

3.2 New product: Complementary competence co-brand alliance

A complementary competence co-brand alliance can be defined as “a form of co-operation between two or more brands with significant customer recognition, in which all the participants’

brand names are retained, and a single, unique product is created. Co-branding is considered a suitable strategy for combining the competences and reputation of two brands to innovate and create new products.” (Bouten, Snelders & Hultink, 2011; p. 455). Thus, more concrete a complementary competence co-brand alliance is the combination and retention of two or more brands to create a single unique product. Ideally a complementary competence co-brand alliance leads to a ‘best of all worlds’ synergy that is based on the unique strengths of each of the partner

brands (Leuthesser et al., 2003). Complementary competence co-brand alliances enclose complex strategic collaborations wherein partner brands frequently enter into a joint venture and/or profit sharing agreements. An example of such a complex arrangement is the Senseo brand that is a result of a collaboration between Philips and Douwe Egberts. Philips marketed the Senseo coffee maker machine relatively cheap, but profitable, because of royalties that it

received on the accompanying coffee pads that were produced and sold by Douwe Egberts. Complementary competence co-brand alliances are usually long-term commitments (Leuthesser et al., 2003).

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3.2.1 Consumer processing of complementary competence co-brand alliances

Brand alliances contribute to the development of favorable attitudes toward brand combinations (Simonin & Ruth, 1995), as brand alliances allow consumers to assume that high-quality product brands only collaborate with other high-quality product brands (Rao & Ruekert, 1994). Therefore Brand alliances may improve the image of one of the partner brands by signaling enhanced product quality (Park, Jun & Shocker, 1996). This because brand alliances might positively affect consumers’ quality perceptions of unobservable product attributes of a partner brand (Rao

et al., 1999). Overall key to positive brand alliance evaluation is, however, that partner brands are complementary and their associations favorable (Park et al., 2006). These conditions can be translated in the necessity for both perceived fit between brands or products and a high equity of the original brand. Ideally brands in an alliance are core complementary, this means that partner brands both contribute to the set of attributes that consumers get their satisfaction from, because they perceive them highly important and meaningfully different (Leuthesser, 2003). Thus, according to signaling theory perceived fit seems to influence consumer evaluations of brand alliances positively.

3.3 Perceived fit: Product feature similarity and image based brand fit

In brand alliances consumers evaluate the fit they perceive between brands and products not only based on objective brand and product category similarities, but also on the presence of other subjective relationships between existing product and potential extensions. Concept relationships can make consumers form their own understanding regarding shared brand concepts,

notwithstanding the object-to-object similarity relationships of category fit. Brand concepts are abstract brand-unique meanings that are caused by a brand’s unique configuration of product

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features (Park, Milberg & Lawson, 1991). Brand concept consistency is embedded in the image based brand fit between partner brands.

Brand concept consistency therefore extends the view on perceived fit. Fit is not limited to product category similarity, but also encapsulates brand concept consistency, also known as image based brand fit. As a brand concept is a unique abstract meaning that is used to position a product or brand image in the mind of a consumer, brand concept consistency refers to

differentiation of brand images. This means that consumers do not only take into account the similarity of the existing and new product categories, but also the conformity of the original brands. Image based brand fit influences consumers’ attitudes based on the congruity between the original (parent) brands and the brand extension. As the congruity (fit) decreases, so does the influence (Nan, 2006)

A brand concept is based on varying concrete and abstract attributes (product features), which differentiates a product in consumers’ minds and positions it in regard to the other

products in the same product category (Park, Milberg & Lawson, 1991). This means that brands such as Chanel and H&M are both associated with shoes and clothing, but only Chanel is also associated with luxury, and high status. As a consequence a Chanel shoe could be sold in expensive, high status shoe store Shoebaloo, whereas this would be unimaginable for H&M shoes. Furthermore this means that research on consumer evaluations should encapsulate not only product category fit, but also brand concept consistency (Park, Milberg & Lawson, 1991). Product features encapsulate both abstract and concrete attributes, but only a combination of the fit in product category and brand image, comprises a complete overview of the fit that consumers perceive between product and brand attributes. Thus, an analysis of product feature similarities is necessary when determining the perceived fit. Perceived fit positively influences the consumer

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evaluation of new brands. But for complementary competence co-brand alliances perceived fit encapsulates not only product feature similarity, but also image based brand fit. Product feature similarity and image based brand fit encapsulate two very different aspects of perceived fit. Therefore in this research a conceptual distinction is made between these two components of perceived fit.

3.4 Brand alliance pros and cons

Brand alliances are entered into to build brand equity, by transferring associations between partner brands (Dickinson & Barker, 2007). Brand alliances are argued to have the potential to increase sales revenues, relatively cheaply explore new markets, share financial and strategic risks, and improve product image and credibility by leveraging new associations that are

established with the original brands (Chang, 2008). By providing the partner brands with access to new consumer bases, avoiding the fixed costs of creating a new brand, and extending the value hypothesis, collaborating brands not only decrease costs, but also accelerate cash flows (Uggla, 2004). Nevertheless, caution is necessary as organizations can have different visions and cultures and can be incompatible for co-branding. Once consumers have accepted a brand alliance, it becomes hard to dismantle an alliance, and even harder to re-establish the brand or product with a single brand (Chang, 2008). Because of the brand alliance control over associations is partly lost, as can identity and core values get diluted. Consumers can get confused, and overexposed, which affects the potential for future leverage (Uggla, 2004). Also, partners within an alliance might incorporate different branding strategies. Although a brand alliance is a collaboration, reasons to enter into such an alliance are partner specific (Leuthesser et al., 2003). Therefore the objectives of alliance partners may grow apart, which can result in conflicting interests.

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4. Theoretical framework

Consumers evaluate brands in terms of the strength, favorability, and uniqueness of associations that determine the consumer’s overall perception of associations in a brand image, and the consumer’s ability to recognize or recall the brand in various situations (Keller, Aperia &

Georson, 2012). In various articles the relationship between a brand equity leveraging strategy and customer based brand equity is researched. Perceived fit is often argued to be one of the most crucial influences to consumers’ brand evaluations (o.a. Aaker & Keller, 1990; Van Riel et

al., 2001; Volckner & Sattler, 2006). Perceived fit acts as a moderator to the relation between branding strategy and customer based brand equity, increasing or decreasing the transfer of strong, favorable, and unique associations from the original brand(s) to the new brand (o.a. Pina, Martinez, Chernatony & Drury, 2006; Salinas & Perez, 2009). This because fit between parent brand and extension product increases consumers’ understanding of the extended brand by

inferring its features and benefits (Volckner & Sattler, 2006). Therefore fit increases the

likelihood that an extension will be favorably evaluated and the image will be reinforced (Pina et al., 2006). The relation between brand equity leveraging strategy, perceived fit, and customer based brand equity is further explored in this research.

4.1 Consumer processing

The categorization theory clarifies the processing of brand alliances, as well as brand extensions. Whereas brand extensions originate from a single original parent brand, brand alliances are collaborations between two original partner brands that facilitate the transfer of associations to a new brand. In complementary competence co-brand alliances two partner brands are to be taken into account with an equal power distribution within the collaboration. Therefore not only the

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relation between the original brand(s) and new brand are to be considered, but also the interaction between the original partner brands.

4.2 Conceptual model

As implicated above in both brand extensions and brand alliances, associations are transferred from (an) original brand(s) A and/or B to a new brand C (figure 1). Brand equity leveraging strategies are used to manage such association transfers, as the brand associations that are transferred to the new brand greatly influence the evaluation of the new product. As indicated in figure 4.1 the transfer processes that occur in brand extensions are very much like the processes in brand alliances. The crucial difference is the number of brands involved, and thus the variation in association transfers that are allotted on the new brand, and between (original) parent brands.

In this research the product feature similarity between the original and new brand(s) is taken into account for three different brand extension and brand alliance brand equity leveraging strategies. A comparison between the different brand equity leveraging strategies is made based on the extension into a product category that is similar to or different from the original brand measured by product feature similarity. However, for brand alliances also the relations between original brands have to be taken into account. For ingredient brand alliances, the asymmetrical

New brand C Original brand B Original brand A

Figure 4.1: Association transfer

Product feature

similarity Product feature _similarity

Image based brand fit

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relationship between host and ingredient brands, might cause a difference in the influence of product feature similarity on consumer evaluation. Therefore the influence of product feature similarity is researched from the perspective of both host brand and ingredient brand. Moreover, based on theory is ascertained that in complementary competence co-brand alliances image based brand fit influences the consumer’s evaluation of the new brand in addition to product feature similarity. This results in the inclusion of two complementarity competence co-brand alliance conditions; high and low image based brand fit.

Thus, a comparison is made between ingredient brand alliances both from ingredient brand and host brand perspective, and complementary competence co-brand alliances consisting of partner brands with both high and low image based brand fit, and brand extensions. For each condition product feature similarity is manipulated. Hereby the benefits of an alliance over an extension and vice versa are explored for brands that (want to) introduce a new product into a similar or new product category. Because the product feature similarity of line extensions is per definition high and cannot be manipulated, the brand alliance conditions are compared to category extensions only. All brand equity leveraging strategy types are compared to each other in both high and low product feature similarity condition.

4.3 When to choose what brand equity leveraging strategy?

Because both brand extensions and brand alliances are subject to similar ways of processing and similar interaction variables of product feature similarity, brand alliances can be interpreted as special cases of brand extensions that contain two brands to extend to a new product. Therefore the same issues arise from the two branding strategies: How does the new product (or brand) impact brand equity? (Leuthesser et al., 2003).

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Consumers compare features of the original brand to the extension assessing the extent to which the new product contributes to a meaningful general brand concept. Lack of product feature similarity may lead consumers to perceive the new brand as meaningless. Consumers use

contextual cues to categorize and evaluate the new brand on the various dimensions of perceived fit (Bouten et al., 2011). Thus, perceived fit between parent brand and extension product is crucial to extension success (Volckner & Sattler, 2000), and high product feature similarity influences consumer evaluations of branding strategies positively. This leads to a first

assumption, clarifying the influence of perceived fit on the relationship between brand equity leveraging strategy and consumer evaluation: product feature similarity positively influences the consumer evaluation of brand equity leveraging strategies. When this assumption is applied to the comparison between brand alliances and brand extensions, it leads to the following

hypothesis:

H1: Brand equity leveraging strategies with high product feature similarity are evaluated more positively than the same brand leveraging strategies with low product feature similarity.

Thus, in all research conditions high perceived fit will lead to more positive evaluations than low perceived fit.

4.3.2 Assumptions concerning consumer evaluation

Various authors state that when brands are paired together the customer based brand equity is evaluated more positively than a single brand’s, as the equity of a partner brand has a positive

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effect on the alliance brand or product’s customer based brand equity (Washburn, Till & Priluck, 2000; 2004). Brand alliances contribute to the development of favorable attitudes toward brand combinations (Simonin & Ruth, 1995). However, when the influence of perceived fit is taken into account, it seems unlikely that a collaboration between teenage girl magazine Glamour, and boy toy manufacturer Lego to introduce respectively a clothing line, and a video game would be evaluated more positive than an extension of each of these brands on their own. It seems very unlikely that a brand alliance is always, under every condition, evaluated more positive than a brand extension. Thus, the assumption that brand alliances always have greater customer based brand equity than brand extensions (Park, Jun & Shocker, 1996; Rao et al., 1999) seems at least partially inaccurate. Therefore, in this research is proposed that the consumer evaluation of both brand extensions and brand alliances is dependent on various conditions. And hence it is not sensible to formulate one hypothesis to compare the brand equity leveraging strategies of extensions and alliances. Therefore various hypotheses that are suited to various conditions are formulated.

4.3.3 Product feature similarity and brand equity leveraging strategy evaluation

This research is assesses whether there is a difference in the effect of product feature similarity for brand alliances and brand extensions. Based on the categorization theory is argued that a new product is categorized based on a consumer’s associations with the original brand. This indicates

that both brand extensions and brand alliances with high product feature similarity are expected to be evaluated more positive than the same brand equity leveraging strategy with low product feature similarity. However, associations to launch a product in a new product category with low product feature similarity are absent in brand extensions, whereas such associations can be contributed by a partner brand in brand alliances. Therefore, as a result of the equity that cannot

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be leveraged in extensions but can be leveraged from alliances the difference in evaluations of brand extensions with high and low product feature similarity is expected to be greater than de difference in evaluations of brand alliances with high and low product feature similarity. It is expected that brand extensions with low product feature similarity are evaluated more negatively than brand alliances with low product feature similarity. This leads to the following hypothesis:

H2: The effect of product feature similarity on consumer evaluation is more pronounced for the brand extension than for the brand alliance brand equity leveraging strategies.

However, how perceived fit interacts with the consumer evaluation of each condition when comparing the conditions to each other, remains unclear. Therefore specific hypotheses are formulated per condition.

4.3.4 Brand extension versus ingredient brand alliance

The overall question posed here is when is an ingredient brand alliance more beneficial than a brand extension and vice versa? The crucial characteristic of ingredient brand alliances is that, as opposed to category extensions, ingredient brand alliances do not entail the introduction of a new product, but simply add a branded product (attribute) as an ingredient to an existing (original) product branded by a host brand. The product thereafter is also just sold under the original brand (Vaidyanathan & Aggerwal, 2000). This prompts an additional question of whether it is more beneficial to introduce a new product occupying a position as host brand or as ingredient brand in the alliance.

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4.3.4.1 Product feature similarity

Product feature similarity plays a remarkable role in consumer evaluation of ingredient brand alliances. Research implies that the lower the product feature similarity between an original and new product, the larger the role of an ingredient brand is in the consumer evaluation. Ingredient brands are used to add a new product function or modify a current function of the host brand. When an ingredient brand is a better representative of or more strongly linked to the alliance product’s product category than the host brand, the importance of the ingredient brand increases.

An ingredient brand helps broaden the host brand’s equity. Especially for host brands extending into a product category with low product feature similarity, an ingredient brand is beneficial for adding new attribute associations. Therefore ingredient brand alliances are presumably evaluated more positively than brand extensions when low product feature similarity is at hand (Desai & Keller, 2002). Thus, in accordance with this article’s first hypothesis (the effect of product feature similarity on consumer evaluation is more pronounced for the brand extension than for the brand alliance brand equity leveraging strategy) is expected that the difference in consumer evaluation of brand extensions with high and low product feature similarity, is greater than the difference in evaluation of ingredient brand alliances with high and low product feature

similarity.

H3a: The effect of product feature similarity on consumer evaluation is more pronounced for the brand extension than for the ingredient brand alliance brand equity leveraging strategy.

More specifically it is expected that ingredient brand alliances are evaluated more positively than brand extension in the low product feature similarity conditions.

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4.3.4.2 Product feature similarity and brand role in ingredient brand alliances

Although the effect of product feature similarity is expected to be more pronounced for brand extensions than for brand alliances, it remains unclear when it is more beneficial for a brand to serve as a host brand and when it is more beneficial to serve as an ingredient brand within a the brand equity leveraging strategy. The relation between host and ingredient brand is

asymmetrical. The host brand is the dominant brand, which is associated with a secondary ingredient brand. Therefore the host brand is regarded the product category driver (Uggla, 2004). Consumer evaluations of brands are subjective assessments of interlinked concrete and abstract attribute associations in consumers’ individual associative network models. Therefore the success of a branding strategy relies on the sense that a combination of brands makes to consumers (Park et al., 1996), and the extent to which consumers perceive a combination of brands logical (Simonin & Ruth, 1998). This implies that it is more beneficial for a brand to function as host brand when the product feature similarity between original and new brand is high, as consumers can then easily categorize the ingredient brand alliance under the host brand as product category driver. It is also proposed that it is more beneficial to serve as an ingredient brand when product feature similarity is low, and consumers could more easily categorize the brand under the product category of another brand that is already established in the product category that the original brand wants to extend into. Ingredient brand alliances are unlikely to be rated more positively when the brand-to-extension relationship is inconsistent (low product feature similarity) with the dominant host brand associations (Bridges et al., 2000). Thus, as the host brand is regarded the product category driver, product feature similarity has a greater effect on consumer evaluation from a host brand, than from ingredient brand perspective.

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H3b: The effect of product feature similarity on consumer evaluation is more pronounced for the host brand than for the ingredient brand in an ingredient brand alliance.

This hypothesis indicates that the effect of host and ingredient brand on consumer evaluation is moderated by product feature similarity. Practically, this implies that when the original brand cannot be explicitly related to the new product category, the brand should not be fulfilling a role as product category driver (thus host brand). This because consumer evaluations are more positive, and thus more beneficial for the original brand, when the original brand functions as an ingredient brand in a collaboration with a brand that is – to consumers – a sensible product category driver. Ingredients brands are to be used to leverage their key associations to a host brand (Uggla, 2004).

4.3.4.2.1 Function as host or as ingredient brand?

Low product feature similarity makes a switch of product categories hard for host brands, as such a jump in categories lacks sense and credibility. Dutch smoked sausage brand Unox would have a hard time hosting a gala dress fashion line, even in an alliance with famous designers such as

Viktor & Rolf, because a lack of product feature similarity. An alliance with a sandwich filling

brand to extend into sliced smoked sausage sandwich fillings would make more sense to consumers, as the Unox brand already established a name as a quality smoked sausage brand. Thus, for a host brand it is expected that consumer evaluations are more positive when extending into a category with high product feature similarity. This implies that when the product feature similarity between original and new product is high, so is the benefit of introducing a new product as a host brand. And vice versa, as the product feature similarity between original and new product is low, so is the benefit to serve as host brand in an ingredient brand alliance.

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Thus, when a brand wants to extend into a product category with low product feature similarity taking position as an ingredient brand might be more beneficial, as the original brand can then use another brand’s associations and credibility in the new product category as driver.

Fashion magazine Glamour could collaborate with Samsung to brand a fashion phone. Being an ingredient can ease the large discrepancy between Glamour’s original product category, which is magazines, and the new smartphones product category, because consumers categorize the new product under the host brand’s (Samsung) product category. Collaborating with Samsung as a

host brand and being an ingredient brand themselves provides Glamour already established associations to the new smartphone product category. This leads to the following hypothesis:

H3c: When extending into a product category with low (high) product feature similarity, consumer evaluations of ingredient brand alliances in which the original brand occupies a position as ingredient (host) brand are more positively, than ingredient brand alliances in which the original brand occupies a position as host (ingredient) brand.

Thus, in the low product feature similarity conditions, the logic of the combination is perceived low(er), because a consumer cannot categorize the new product easily. Therefore the consumer evaluation of the alliance product becomes less positive. By occupying the ingredient brand role, the new product can be categorized under a suitable host brand, which makes more sense, and therefore the consumer evaluation of the new product becomes more positive.

The consumer evaluation process of ingredient brand alliances and brand extensions is similar. Associations that the new product evaluation is based on are driven by one host brand (although supplemented by associations from an ingredient brand). Hence is proposed that the

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consumer evaluation of brand extensions and ingredient brand alliances in which a brand is positioned as host brand are developed similarly. However, the ingredient brand alliances in which a brand fulfills the role of ingredient brand are evaluated differently, as the dominant associations are coming from a partner brand. Therefore the following is hypothesis is formulated:

H3d: In low product feature similarity conditions ingredient brand alliances in which the original brand assumes the ingredient brand role are evaluated more positive than both brand extensions and ingredient brand alliances in which the brand fulfills the host position.

4.3.5 Brand extension versus complementary competence co-brand alliance

Overall key to positive complementary competence co-brand alliance evaluation is that partner brands are both complementary and their associations favorable (Park et al., 2006). Ideally brands in an alliance are core complementary. This means that partner brands both contribute to the set of attributes that consumers get their satisfaction from, because they perceive them highly important and meaningfully different (Leuthesser, 2003). Thus, the evaluation of brand alliances depend on both fit between the original brands and new product, and fit between the partner brands themselves. Therefore not only product feature similarity, but also image based brand fit affects consumer evaluations of complementary competence co-brand alliances (Park et al., 1991). Image based brand fit concerns more abstract associations, and product feature similarity entails mostly concrete attributes. It is argued that product feature similarity determines the importance of image based brand fit in consumer evaluations of complementary competence co-brand alliances. But also that image based co-brand fit, might even be of greater importance to

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consumer evaluations than product feature similarity, as it determines the logic and sense of the combination of partner brands (Baumgarth, 2004; Simonin & Ruth, 2004).

Alliances with low image based brand fit are often linked to associations of product feature similarity attributes related to the original product class, whereas alliances with strong image based brand fit are also linked to favorable associations related to the image based brand fit between the alliance partners (James, 2005). When a combination of brands is perceived logical, consumers combine associations from both brands, and interlink them in their personal associative network model (Park et al., 1996). Hence, it is expected that image based brand fit functions as a prerequisite that enhances the product feature similarity effect. Thus, alliances wherein image based brand fit is high, are expected to be evaluated more positive than alliances with low image based brand fit between partner brands despite of the product feature similarity. This leads to the following hypothesis:

H4a: The effect of product feature similarity on consumer evaluation is more pronounced for complementary competence co-brand alliances with high image based brand fit, than for complementary competence co-brand alliances with low image based brand fit.

The expectation is that complementary competence co-brand alliances with high image based brand fit are evaluated more positive than alliances with low image based brand fit, and the difference between the consumer evaluations is greater between the high image based brand fit conditions than between the low image based brand fit conditions.

Based on deductive argumentation two more hypotheses are formulated regarding the comparison between brand extensions and complementary competence co-brand alliances.

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Category extensions are evaluated by consumers primarily due to association transfers from the original brand to the extension. Categorization effects increase when the product feature

similarity increases, and decrease when product feature similarity decreases (Nan, 2006).

Therefore (in the simplified model in this research), the consumer evaluation of brand extensions depends on product feature similarity only, whereas complementary competence co-brand

alliances are evaluated based on both product feature similarity and image based brand fit. As proposed earlier, an in complementary competence co-brand alliances image based brand fit might function as a prerequisite for and enhancer to the product feature similarity effect. As a consequence low image based brand fit might decrease or partly inhibit the product feature similarity effect. This leads to a new hypothesis.

H4b: The effect of product feature similarity on consumer evaluation is more pronounced for brand extensions, than for complementary competence co-brand alliances with low image based brand fit.

It is reckoned that in the high product feature similarity condition brand extensions are evaluated more positive than complementary competence co-brand alliances with low image based brand fit. Complementary competence co-brand alliances with high image based brand fit, however, are expected to be evaluated more positive than brand extensions. Therefore is proposed that image based brand fit functions as a prerequisite for the product feature similarity effect, and high product feature similarity will thus not influence complementary competence co-brand alliances as much as either complementary competence co-brand alliances with high image based brand fit, or brand extensions. This leads to the following hypothesis.

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H4c: In low product feature similarity condition brand extensions are evaluated less positive than complementary competence co-brand alliances, but in high product feature similarity condition brand extensions are evaluated more positive than complementary competence co-brand alliances with low image based brand fit.

4.4 Overview of expectations

Based on theory and deductive argumentation eight hypotheses are formulated. First of all is expected that product feature similarity positively influences the consumer evaluation of brand equity leveraging strategies. This implies that brand equity leveraging strategies with high product feature similarity are evaluated more positive than the same brand equity leveraging strategies with low product feature similarity. Moreover the effect of product feature similarity on consumer evaluation is expected to be more pronounced for the brand extension than for the brand alliance brand equity leveraging strategy. Which indicates that the difference in consumer evaluations of brand extensions in high and low product feature similarity is greater than the difference in consumer evaluations of brand alliances in high and low product feature similarity conditions.

Regarding ingredient brand alliances is proposed that the effect of product feature similarity on consumer evaluation is more pronounced for the host brand than for the ingredient brand in an ingredient brand alliance. Results are expected to show that brands are evaluated more positively when assuming the host brand function in high product feature similarity conditions. But in low product feature similarity conditions it is more beneficial to occupy a position as ingredient brand in an ingredient brand alliance. Furthermore is predicted that in low product feature similarity conditions ingredient brand alliances in which the original brand

Brand alliance versus brand extension : which benefits outweigh what costs?