How do brand extensions influence the brand personality of the brand, and what is the moderating effect of the type of market? by Lisette Drent

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brand, and what is the moderating effect of the type of market?

by

Lisette Drent

University of Groningen

Faculty of Economics and Business

MSc Business Administration

Marketing Management

Supervisor: Jia Liu

2

nd

supervisor: Katrin Reber

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Abstract

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1. Introduction

1.1 Background problem

In 2003, the global consumer magazine market was worth about $71 billion. In 2008, this grew to being worth $80 billion. Researchers anticipate that this trend will continue and suggest that the consumer magazine market will reach about $95 billion by 2012 (Middelbeek and Van der Donk, 2008).

But there is the rise of digital media. Social network websites and user-generated content have become a mass phenomenon and can’t be missed out in today’s electronic world. This development threatens established business models. Printed newspapers and magazines are facing a major crisis (Edgecliffe-Johnson, 2008), as consumers move from print media to digital media. However, Losowsky (2011) states that printed items will continue to exist. Today, newspapers and magazines are still important media but their place in the advertising landscape has been altered due to economic, social and technological changes (Nyilasy, King and Reid, 2011).

Due to the increasing offer of media and advertising it becomes more difficult and more expensive for a brand to reach the right consumer. Expanding competition results in special forms of advertising, since brands want to distinguish themselves from the others within the market. It is hard to successfully develop and launch a new brand. The costs are much higher because of a dramatic increase in media costs, the more extensive and aggressive use of promotions by established firms, and the difficulty of obtaining distribution (Aaker and Keller, 1990). As a result, more and more brands choose to extend their current brand name with the help of brand extensions.

When a brand enters a new product category with preservation of the current brand name, one speaks of brand extension. A brand extension can benefit from the existing brand name’s attribute and imagery awareness and associations to gain consumer trial, retailer distribution, and so forth, in the new category(Batra, Lenk and Wedel, 2010).

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Brand extensions exist on both mass markets and niche markets. A niche market is considered to be a small market, consisting of an individual customer or a small group of customers with similar characteristics or needs (Dalgic and Leeuw, 1994). Whereas mass markets perceive the market as one aggregated market, focusing on the common needs of customers and reaching buyers with one product with one marketing mix, niche markets focus on the different needs of customers with differentiated products (Porter, 1980). Niche markets often enjoy a stronger brand personality (Dalgic and Leeuw, 1994), but also face the problem of product positioning and a higher risk in introducing brand extensions (Sudharsan et al, 1995).

1.2 Problem statement

Existing literature has researched the question how the launch of a brand extension influences the main brand, considering brand recognition and brand choice. But there is no existing literature researching this question when considering brand personality. I want to bridge this gap by examining if use of brand extensions positively influences the evaluation of the brand. As few studies have examined the concept of brand extensions for specialized niche players, I want to investigate the moderating effect of the type of market considering brand extensions and brand personality. Therefore, the problem statement can be formulated in the following way:

“How do brand extensions influence the brand personality of the brand, and what is the moderating effect of the type of market?”

1.3 Research questions

The problem statement can be further translated into the following more specific research questions:

1. How does use of brand extensions influences the brand personality of a brand?

2. How does the type of market moderate the effect of brand extensions on the brand personality of a brand?

1.4 Theoretical and managerial relevance

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mainly focusing on brand recognition and brand choice. But no existing literature examined the concept of brand extensions in relation to brand personality.

As there are multiple types of brand extensions, the focus of this research is on the type of brand extensions of image and status, whereby the identity of the brand will be assigned. This extension has the highest risk of all types of brand extensions and can only succeed when the image of the parent brand recalls positive associations with the consumer. Most brand extensions of magazine brands try to represent the identity of the parent brand. As this identity is often a certain ‘lifestyle’, the brand extensions can represent many products.

Brand extensions can decrease the costs of gaining distribution and/or increase the efficiency of promotional expenditures. For printed media it can increase circulation profitability and customer lifetime value. So, more and more magazine publishers choose to extend their current brand name with the help of brand extensions. Reasons for expanding the portfolio of the brand with brand extensions vary from strengthening the brand, keeping the brand ‘up to date’, and lowering the marketing/advertising costs. These are reasons that are highly essential for brand managers.

Few studies have examined the concept of brand extensions for specialized niche players. Existing literature in fact deals more with brand extension in general and its impact on customers’ perception, its specific features, advantages and disadvantages. That motivates this research in examining the difference of influence on the brand personality between brand extensions in niche markets and mass markets. The results will contribute to an underpinned conclusion in which it will be clear how brand extensions influence brand personality and if there is a difference between niche markets and mass markets. Recommendations will be given, which can lead to optimization.

1.5 Structure of the thesis

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2. Literature review

2.1 Brand extension 2.1.1 Definition

It is hard to successfully develop and launch a new brand. The costs are much higher because of a dramatic increase in media costs, the more extensive and aggressive use of promotions by established firms, and the difficulty of obtaining distribution (Aaker and Keller, 1990). As a result, more and more brands choose to extend their current brand name. When a brand enters a new product category with preservation of the current brand name, one speaks of brand extension. A brand extension can benefit from the existing brand name’s attribute and imagery awareness and associations to gain consumer trial, retailer distribution, and so forth, in the new category(Batra, Lenk and Wedel, 2010).

The strategy of brand extension took off in the 1980s. Tauber (1988) called it ‘the guiding strategy of product planners’ and described a procedure to systematically research and select brand extensions. Ries and Trout (1981) defined brand extension to be the single most important trend with a perfect fit to corporate needs. Gibson (1985) said that Tauber popularized the notion of taking a disciplined approach to developing new products by leveraging an established brand name into categories new to that brand. Tauber (1981) emphasized brand extension to be one method for a company to enter a new business through the leverage of its most valuable asset: the consumer awareness, good will, and impressions conveyed by its brand name. The so called corporate or umbrella effect can create efficiencies and may reduce risk of failure of the new item when the brand name already strongly conveys benefits desired in the new category.

2.1.2 Different types of brand extension

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Same products in a different form

One of the simplest ways to leverage a product into a different category is to change its form. This kind of brand extension is called a ‘line extension’. It is a strategy with a low risk factor, since it encounters a known product with almost identical product characteristics. For example, a margarine brand can offer a fluid margarine next to normal margarine.

Distinctive taste/ingredient/component in the new item

An alternative form of offering a new form of an existing product is to take an ingredient or component of the product and make it part of an item in a different category. Owning a taste or ingredient allows ownership of a distinctive new product in a different category. For example, an ice-cream brand can develop a cream liqueur or cookies.

Companion products

Some products are used with other products. These natural companions lend themselves to leverage in the other category. Some companions are close to the parent. Other companions can leverage the association in more of a forward or backward form of integration. An example of a companion is a coffee brand that also offers coffee mugs.

Same customer franchise

Many brand extensions represent a marketer’s effort to ‘sell something else’ to its customer base. In effect, this is a strategy to leverage the consumer franchise. Obviously, these extensions must be something the current customers want and believe this brand of it would be good. For example, a financial bank brand that also offers insurances to its customer base. Expertise

One of the most effective types of leverage is expertise, which represents offering extensions in a category where consumers believe you have special knowledge or experience. An example is a photography brand that leverages its expertise into copying machines and printers.

Benefit/attribute/feature owned

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brand extension leverages some perceived consumer benefit or association with the parent product to provide an edge with the new product. However, some brands clearly stand out as owning a property and this becomes the dominant leverage point in those cases. For example, a jam brand can offer fruit-sodas and become a fruit specialist (Mesker and Smorenburg, 1999).

Designer image/status

Brands can offer status and hence create an image for the new item and its user. Designer brands for example can therefore use their brand name, style and expertise to successfully enter new product categories and sell clothes, purses, perfumes, make-up, sunglasses, etc. This last named type of brand extensions, whereby the identity of the brand will be assigned, is the focus of this research. This extension has the highest risk of all types of brand extensions and can only succeed when the image of the parent brand recalls positive associations with the consumer. Most brand extensions of magazine brands try to represent the identity of the parent brand. As this identity is often a certain ‘lifestyle’, the brand extensions can represent many products.

2.1.3 Advantages of brand extension

Organizations have different reasons for expanding their portfolio with brand extensions: to strengthen the brand, to keep the brand ‘up to date’, and to lower marketing/advertising costs. All these reasons can be of advantage for the organization.

Strengthen the brand

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There are two basic approaches to measuring customer-based brand equity. The ‘indirect’ approach attempts to assess potential sources of customer-based brand equity by measuring brand knowledge (i.e., brand awareness and brand image). The ‘direct’ approach attempts to measure customer-based brand equity more directly by assessing the impact of brand knowledge on consumer response to different elements of the firm's marketing program (Aaker, 1991; Keller, 1993).

Keep the brand ‘up to date’

A consumer expects a brand to conceive and to offer new products that adapt to the current life style. Today’s consumer wants to shop online, travels more often, and more and more chooses to buy environmental conscious products. A strong brand has to adapt to these trends. A brand extension therefore offers many possibilities.

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Lower marketing/advertising costs

Investment outlays typically necessary to establish a new brand, which is a significant expense, are minimized. An important related payoff is that introduction of a brand extension can increase sales for the parent brand. The advertising and heightened awareness of the new entry can have a synergistic effect on the original product. The term ‘synergy’ is used to describe the mutually beneficial effect of brand extensions on their evaluations. Synergy occurs when the value of a set of elements in combination exceeds the sum of the values that the elements would have if they occurred in isolation (Shine, Park and Wyer Jr, 2007). This corporate or umbrella effect can create important advertising efficiencies (Tauber, 1981). Advertising will be a lot more efficient, since there is only one brand to promote. All products of the parent brand can be endowed with the same logo and design. There is only one organization needed for marketing, sales, finance, legal business and human resources.

2.1.4 Success factors for brand extension

Academic researchers and marketing experts are very concordant when it comes to the three factors that influence a successful brand extension; image, fit and leverage.

Image

Brand image refers to the set of associations linked to the brand that consumers hold in memory (Keller, 1993). A positive and strong image of the brand is important; only a brand with positive associations and loyalty can count on a positive attitude from the consumer towards the new introduced product. Brand associations are conceptualized in terms of their characteristics by type (level of abstraction and qualitative nature), favorability, and strength, and in terms of their relationship with other associations by congruence, competitive overlap (identification and uniqueness), and leverage (Keller, 1993). A brand extension goes along with the brand image and therefore cannot be an intensifier for the brand image at first. A brand extension can however make the brand more noticeable and profitable (Taylor, 2004). Fit

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Previous research on brand extensions has identified the ‘fit’ between the brand and the extension as an important determinant of a positive consumer response to the new extensions (Meyvis, Goldsmith, and Dhar, 2007). Fit is defined as a noticeable resemblance with a direct connection or a good addition to the parent brand (Taylor, 2004). Regardless of how it has been conceptualized, there should be a positive belief and a favorable attitude towards the original brand, compatible skills (Aaker and Keller, 1990), or overlapping category and benefit associations (Broniarczyk and Alba, 1994). The more salient, shared associations there are between the brand name and the new extension category, the greater is the perception of fit. The greater the perceived fit, the greater is the degree to which consumers will view the perceptions and preference of the extending brand to ‘carry over’ to its new product category. Fit at the level of imagery is often a greater determinant of brand extension success than the degree of favorable overall attitudes toward the extending brand or the degree of physical similarity between the parent and the entered-into product categories (Broniarczyk and Alba, 1994). Prior literature suggests that brand extensions are likely to be more successful if a brand extends into another category into which its existing brand associations and imagery fit better and if the extending brand is ‘atypical’, which means that it possesses associations and imagery that are broad and abstract rather than tied too closely to the brand’s original product category (Batra, Lenk and Wedel, 2010).

Researchers have argued that a good fit between the brand and the extension category is a necessary condition for favorable consumer reactions (Meyvis, Goldsmith, and Dhar, 2007).

Experience with the parent-brand increases consumers’ expectation that the extension quality is high. Therefore, consumers with more parent-brand experience will be more likely to try the extension. However, they will be less likely to repurchase the extension because of the selection bias (Kim and Sullivan, 1998).

Leverage

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should be a benefit of the parent brand that is the same benefit offered and desired in the new extension (Tauber, 1988).

2.1.5 The effect of the parent brand name on brand extensions

The choice of a name affects brand recall and recognition processes (Alba and Hutchinson, 1987). Research has shown that consumers use perceptions of a family brand name to evaluate new products introduced under its umbrella (Aaker and Keller, 1990). Desai and Keller (2002) showed that the type of ingredient brand name significantly influences the acceptance of extensions. Therefore, brand name dilution or enhancement, either to prevent negative perceptions or to enhance existing equity, is for critical interest to managers.

Brand researchers assume that brand extensions offer a way to stretch the brand with existing or target market consumers. However, brand extensions are also an alternative to attract consumers who do not use the original brand product, but who may try the extension product (Olavarrieta et al, 2009).

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because they seem to be isolated from extension failures, but at the same time they allow extensions to benefit from parent brand associations, and to transfer successes back to parent brands.

2.1.6 The effect of brand extensions on the parent brand

The leverage of a strong brand name can substantially reduce the risk of introducing a product in a new market by providing consumers the familiarity of, and knowledge about, an established brand (Aaker and Keller, 1990). Moreover, brand extensions can decrease the costs of gaining distribution and/or increase the efficiency of promotional expenditures (Morein 1975).

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2.2 Brand personality 2.2.1 Definition

Brand personality refers to the set of human characteristics associated with a brand (Aaker, 1997). In contrast to product-related attributes, which tend to serve a utilitarian function for consumers, brand personality tends to serve a symbolic or self-expressive function (Keller, 1993). Human beings have a uniform need for identity, and often search for this through the symbolisms and meanings carried by products and brands. The symbolism and meanings constituting brand personality are not necessarily inherent in brands, but are usually intentionally and sometimes unintentionally added through corporate communications and customer reactions (Wee, 2004). Consumers find it natural to imbue brands with personality characteristics, such as 'honest', 'cheerful', 'charming' or 'tough' (Plummer, 1985). The personality factor provides a critical and enduring differentiation dimension that helps to simplify the consumers’ decision-making process (Aaker, 1997; Wee, 2004). The personality of a brand enables a consumer to express his or her own self (Belk, 1988) and ideal self (Malhotra, 1988) through the use of a brand.

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2.2.2 Dimensions of brand personality

Aaker (1997) developed a framework of brand personality dimensions. Results from her conducted research suggest that consumers perceive that brands have five distinct personality dimensions: sincerity, excitement, competence, sophistication, and ruggedness. Each dimension has again different facets.

Brand Personality

Sincerity Excitement Competence Sophistication Ruggedness

- Down-to-earth - Honest - Wholesome - Cheerfull - Daring - Spirited - Imaginative - Up-to-date - Reliable - Intelligent - Successful - Upper class - Charming - Outdoorsy - Tough

Fig 1: Five dimensions of Brand Personality (Aaker, 1997)

These distinct and robust personality dimensions for brands as a part of the five-factor model were developed by means of exploratory factor analysis, and supported in a follow-up study involving other brands and subjects (Aaker, 1997). The five-factor model is also supported by other researchers (e.g. Caprara et al, 2001).

Maehle and Supphellen (2011) conducted a research in addition to Aaker (1997) in order to reveal which sources are most relevant for forming these five brand personality dimensions. It appears that the dimensions ‘sincerity’ and ‘competence’ are created mainly by company-level and consumer-based sources and for mainly utilitarian reasons considering importance for customers. The dimensions ‘sophistication’ and ‘ruggedness’ are built by symbolic sources and the reasons for importance are social identity-related. The dimension ‘excitement’ is formed by a blend of company-level, consumer-based, and symbolic sources. The reasons for importance are equally divided between utilitarian and social identity-related categories.

2.2.3 The relationship between human personality and brand personality

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are captured in the ‘Big-Five’ model and consist of openness, consciousness, extraversion, agreeableness, and neuroticism (Norman 1963; Tupes and Christal 1958). Aaker (1997) argues that three of her developed brand personality dimensions relate to three of the ‘Big Five’ human personality dimensions: ‘agreeableness’ and ‘sincerity’ both capture the idea of warmth and acceptance; ‘extroversion’ and ‘excitement’ both connote the notions of sociability, energy, and activity; ‘consciousness’ and ‘competence’ both encapsulate responsibility, dependability, and security. Fennis et al (2005) examined the specific items of the brand personality scale and those of human personality inventories and also fount a relationship between ‘competence’ and ‘consciousness’, because both encompass markers such as ‘intelligent’. They also observed a relationship between a brand's ‘ruggedness’ and ‘extroversion’. This relationship is plausible because ruggedness contains items such as outdoorsy and tough, which correspond to extroversion indicators like adventurous and bold.

However, the dimensions ‘sophistication’ and ‘ruggedness’ differ from any of the ‘Big Five’ of human personality (Briggs, 1992). This pattern suggests that brand personality dimensions might operate in different ways or influence consumer preference for different reasons. Phau and Lau (2001) suggest that when a brand commands a high preference, the preferred personality of the consumer actually has an influence over its perceived brand personality. This provides that the consumer has built a positive relationship with the brand and then reinforces his or her personality on to the brand.

2.2.4 The effects of brand personality on perceived product quality

Quality can be defined as actual superiority or excellence (Zeithalm, 1988), whereas perceived quality refers to consumers’ intangible perceptions or judgments of the overall quality or superiority of a product or service. It refers to the overall feeling about the brand (Aaker, 1997; Zeithalm, 1988; Keller, 1993). Specific product characteristics such as price, appearance, components and features, advertisements, and brand name will influence consumers’ perception of quality (Dodds et al, 1991; Rao and Monroe, 1989).

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Regarding the moderating effect of brand concept on the linkage between brand personality and perceived quality, excitement is positively related to perceived quality for brands associated with the symbolic brand concepts, whereas sophistication is positively related to perceived quality for brands associated with the experiential brand concepts. With brands having the functional brand concept, there was, however, no consistently stable relationship between dimensions of brand personality and perceived quality.

The positive relationship between the dimension of brand personality and perceived quality varies depending on which brand concept is used in the brand positioning. Any of the five brand personality dimensions, however, could lead to perceived quality if the positioning is effective. Thus, the brand personality must be consistent and congruent with the brand’s positioning, brand image, and brand concept. Any brand can be positioned with a functional, symbolic or experiential image; the brand image is a perception created by the marketer (Park et al, 1986). In addition, the findings of Rameseshan and Tsao (2007) suggest that there is no such thing as a ‘right’ personality for a brand, although some approaches are safer than others are when it comes to choosing a brand personality.

2.2.5 The effects of brand personality on purchase intention

Purchase intention is the probability for consumers’ intention to adopt certain purchase behavior (Sweeney and Soutar, 2001). A well-established brand personality can result in increased preference and usage, higher emotional ties to brand, trust and loyalty (Siguaw et al, 1999). Govers and Schoormans (2005) indicate that people prefer products with a product personality that matches their self-image. Moreover, this positive effect of product-personality congruence is found to be independent of the user-image congruence effect.

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2.3 Niche markets 2.3.1 Definition

A niche market is considered to be a small market, or pocket (Hooley and Saunders, 1993), consisting of an individual customer or a small group of customers with similar characteristics or needs (Dalgic and Leeuw, 1994). As a niche is not served by competing products (Keegan, Moriarty and Duncan, 1992), occupying a niche implies offering a unique selling proposition with a product or a set of products. A niche creates value by maintaining a significant competitive advantage (Echols and Tsai, 2005). According to Kotler and Keller (2006), an attractive niche is not likely to attract other competitors and has size, profit and growth potential. It gains certain economies through specialization. It is however defensible with limited resources because of the unique needs, tastes, and product usage patters of the consumers who compromise it (Hofer and Schendel, 1978).

Existing literature strongly debates the resemblance of a niche and a segment as both subdivide the market into narrower pieces. Chalasani and Shani (1992) claim that there is in fact a difference as segmentation is a ‘top-down approach’ with a process of breaking down a large market into smaller pieces, whereas a niche is a ‘bottom-up approach’ where the marketer starts from the needs of a few customers and gradually builds up a larger customer base. Niche marketing can therefore be seen as reversed segmentation.

2.3.2 Niche markets versus mass markets

Mass markets, or undifferentiated markets, used to be the most advanced and efficient. Today, the desirability of mass markets is debated, focusing on standardization, or niche markets. Niche markets have become a trend as a result of severe competition in mature markets. Standardized mass production and trying to sell the same product to masses of consumers seems to become less profitable in these mature markets. Although there are still benefits to mass markets, it may be argued that niche markets are more equipped to deal with the existing and rapid changing mini markets (Dalgic and Leeuw, 1994).

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with one marketing mix, niche markets focus on the different needs of customers with differentiated products (Porter, 1980). Kahn et al (1988) mention an overall comparison and state that mass markets have a production based view, with a high amount of production, a standardized product, high competition and target the whole market. Niche markets have a modern marketing view, with a high profit margin, a specialized product, less or no competition and target a small, unsatisfied group. Peters (1990) also mentions a similarity between a large niche market and a mass market as they both control a large market. The niche marketer however controls aggregated/linked niche markets in contrast to just one large market. A combination of mass marketing and niche marketing is defined by mass customization.

A niche achieves high margin, whereas the mass achieves high volume. An interesting phenomenon is derived by Peters (1990), as he mentions that niche marketers often evolve to mass marketers and mass marketers return to be niche marketers. It seems that most companies start out as niche marketers and evolve into mass marketers, as their product life cycles tend to develop into maturity. Once maturity is reached and saturation starts, innovation occurs and former mass markets tend to return to niche markets.

2.3.3 The concept of brand extension for niche markets

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Niche markets need to defend their product with limited resources. Their defensibility is provided by the close positioning of the product to the needs of the target segment. When customers are served well by a niche, they are no longer attracted from the offerings of other competitors (Sudharsan et al, 1995). With a target segment large enough to support their own product, a position such that it will exclusively serve those customers within the segment, and a well-designed product, brand extensions are also possible for highly specialized companies.

2.3.4 The concept of brand personality in relation to a niche market

Human beings have a uniform need for identity, and often search for this through the symbolisms and meanings carried by products and brands (Wee, 2004). Govers and Schoormans (2005) indicate that people prefer products with a product personality that matches their self-image. Phau and Lau (2001) suggest that when a brand commands a high preference, the preferred personality of the consumer actually has an influence over its perceived brand personality. This provides that the consumer has built a positive relationship with the brand and then reinforces his or her personality on to the brand.

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3. Hypotheses and conceptual model

The most important findings from theory and the derived hypotheses from theory will be presented within this chapter, together with a conceptual model with the relationships of the variables being investigated.

3.1 Brand extension and brand personality

It is to be researched how brand extensions influence the brand personality of a brand. Within the experiment, the focus is on the type of brand extensions, whereby the identity of the brand will be assigned. Tauber (1988) indicated this type as designer image/status. He states that brands can offer status and hence create an image for the new item and its user. With this research to be focused on the magazine industry, magazine brands can use their brand name, style and expertise to successfully enter new product categories and sell specials, books, workshops, accessories, and organize events. The extension based on identity has the highest risk of all types of brand extensions and can only succeed when the image of the parent brand recalls positive associations with the consumer. Most brand extensions of magazine brands try to represent the identity of the parent brand. As this identity is often a certain ‘lifestyle’, the brand extensions can represent many products. Therefore, most important is fit. Previous research on brand extensions has identified the ‘fit’ between the brand and the extension as an important determinant of a positive consumer response to the new extensions (Meyvis, Goldsmith, and Dhar, 2007). The greater the perceived fit, the greater is the degree to which consumers will view the perceptions and preference of the extending brand to ‘carry over’ to its new product category. Within this experiment, the perceived fit is based on similarity judgments’ with help from seven characteristics: Component parts, product features, product functions, needs they satisfy, usage situations, manufacturing processes, and servicing (Smith and Andrews (1995) and Smith and Park (1992)).

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well-established brand personality can result in increased preference and usage, higher emotional ties to brand, trust and loyalty (Siguaw et al, 1999).

As a brand extension goes along with the brand image, there cannot be an intensifier for the brand image at first. A brand extension can however make the brand more noticeable and profitable (Taylor, 2004). The brand equity can be enlarged, since an additional product of the same brand offers more platforms to present the brand values and let the consumer experience the brand. Customer-based brand equity occurs when the consumer is familiar with the brand and holds some favorable strong and unique brand associations in memory (Keller, 1993). A brand extension with a high-perceived fit contributes to the brand equity, which strengthens the brand. Therefore, it is to be expected that these brand extensions positively influence the brand personality of a brand.

H1: Use of brand extensions, in the type of designer image/status with

high-perceived fit, positively influences the brand personality of a brand

3.2 Type of market

It is of interest whether the type of market moderates the effect of brand extensions on the brand personality of a brand. Within this research the focus is on mass markets and niche markets. The difference between mass markets and niche markets can be characterized by differences in organizations and approach. Whereas mass markets perceive the market as one aggregated market, focusing on the common needs of customers and reaching buyers with one product with one marketing mix, niche markets focus on the different needs of customers with differentiated products (Porter, 1980). Kahn et al (1988) mention an overall comparison and states that mass markets have a production based view, with a high amount of production, a standardized product, high competition and target the whole market. Niche markets have a modern marketing view, with a high profit margin, a specialized product, less or no competition and target a small, unsatisfied group.

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for a company to exercise its superior competence. These characteristics define niche characteristics by Dalgic and Leeuw (1994). Niche markets may therefore help companies to remain among the healthy survivors.

Niche markets focus on the different needs of customers with differentiated products (Porter, 1980). Niche markets know the target customer so well that they meet their needs better than other firms that are casually selling to this niche (Kotler, 1991). Niches therefore have added value and achieve high margins, whereas the mass achieves high volume. Niche specialized markets, often being first-movers, offer unique products with a specific value proposition. As a result, niche markets moderate a stronger brand personality and brand image in their market of competence. Therefore it is to be expected that the influence of brand extensions on the brand personality of a brand is stronger on niche markets than on mass markets.

H2: The influence of brand extensions, in the type of designer image/status with

high-perceived fit, on the brand personality of a brand is stronger on niche markets than on mass markets

3.3 Conceptual model

The hypotheses are translated in the following conceptual model.

IV: Brand extension DV: Brand personality

Type of market

- Mass: + - Niche: ++

+

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4. Methodology

4.1 Research design

4.1.1 Conclusive casual research

Research designs can be broadly classified as being exploratory or conclusive. Exploratory research is conducted to develop initial insights and to provide direction and input for any further research needed, and is essential when a problem needs to be more defined precisely, whereas conclusive research is conducted to draw conclusions about a problem and is more structured and quantitative. It is designed to assist the decision makers in determining, evaluating, and selecting the best course of action in a given situation. The output of exploratory research may serve as input for conclusive research, whereas the output of conclusive research may serve as input for managerial decision-making (Malhotra, 2009). The objective of this research is to test certain hypotheses and examine presumed relations between different variables. Therefore, conclusive research is being practiced here.

Exploratory research, descriptive research, and causal research are the three basic research designs available within the field of research. The objective of this research is to determine cause and effect relationships; one dependent variable (brand personality) is being manipulated, while the control over the moderating variable (type of market) is guaranteed. All of this is congruent with, and leads to, the conclusion that this research design concerns causal research. In order to guarantee a thorough application of a conclusive causal research, the sample used has to be large enough and representative.

4.1.2 Experiment

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4.1.3 Questionnaire and procedure

The online experiment exists of two questionnaires, each addressed to the right type of market (mass versus niche). Participants in this research will receive a hyperlink through a newsletter. They have subscribed to this newsletter and therefore fit within the target audience of the chosen brands (mass versus niche). As the newsletters are send to a large sample, a minimum of 500 participants per experimental group is needed in order to meet the academic standards on experimental research and obtain data that can be considered as being reliable. The questionnaires start with a neutral introduction on the experiment and explanation of the procedure, without explaining the true purpose of the research. Within the core of the questionnaires, several statements will be propounded in relation to the different hypotheses and based on the reviewed literature. Per hypothesis, multiple questions and statements will be asked and propounded, in order to test the hypotheses best. Both questionnaires contain the same questions and statements and fit within a post-test only research design.

The participants are asked to indicate their commitment towards the brand, the brand personality of the magazine, the similarity between a certain brand extension of the brand and the magazine, and the brand personality of the brand as a whole. A manipulation check is included of how both samples perceive their magazine considering the type of market. The questionnaires end with a few demographic questions, after which the results will be send back to the researcher. The questionnaires can be found in Appendix A and B of this paper.

4.2 Participants and sample

Subjects will be drawn from a convenience sample among two groups of magazine readers and users of brand extensions of magazines. The first group consists of readers of the mass-market title ‘Libelle’. Libelle is the largest women magazine of The Netherlands and provides information and inspiration about subjects that is of interest to the average Dutch female. Libelle has a strong relation with its readers and is a multimedia brand with a lot of line and brand extensions such as bookazines, an annual event and a learning academy. The second group consists of readers of the niche market title ‘delicious.’. delicious. is the food magazine of The Netherlands and provides simple and fast recipes. The reader is font of everything that has to do with food and frequently uses media, both print as online.

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4.3 Variables

4.3.1 Description and manipulation of the variables

Within this experiment, the following variables will be considered: - Independent variable: Brand extension

- Dependent variable: Brand personality - Moderating variable: Type of market

The variables will be described with regard to the how and why behind manipulating these variables in this research in order to test the different hypotheses. More detailed information about the measurement items, their source, and their possible influence can be found in Appendix C of this paper.

4.3.1.1 Independent variable: Brand extension

The independent variable used in this experiment is brand extension. The focus of this research is on the type of brand extensions of image and status, whereby the identity of the brand will be assigned. This extension has the highest risk of all types of brand extensions and can only succeed when the image of the parent brand recalls positive associations with the consumer. Most brand extensions of magazine brands try to represent the identity of the parent brand. As this identity is often a certain ‘lifestyle’, the brand extensions can represent many products.

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4.3.1.2 Dependent variable: Brand personality

The dependent variable used in this experiment is brand personality. More and more magazine publishers choose to extend their current brand name with the help of brand extensions. This study contributes to the brand extension literature by examining how brand extensions influence the brand personality of the brand, and consequently the evaluation of the parent brand.

The respondents of both sample groups are asked to perceive the brand personality of their magazine and of the magazine brand as a whole (including brand extensions). In order to perceive brand personality, the framework of brand personality dimensions by Aaker (1997) is used. This framework consists of five distinct personality dimensions and their different facets. A seven-point (‘I don’t agree at all’ / ‘I totally agree’) Likert scale was used in order to measure brand personality.

4.3.1.3 Moderating variable: Type of market

The moderating variable used in this experiment is the type of market. Within the experiment, a difference has been made between mass markets and niche markets. Therefore, the first sample group consists of readers of a mass-market magazine title (Libelle) and the second sample group consists of readers of a niche-market magazine title (delicious.). The sample groups only have to answer questions about their type of market-magazine and are asked to use their frame of reference.

4.3.1.4 Controlling and manipulation check

The respondents of both sample groups are asked to indicate their commitment to the magazine brand. Brand commitment is based on brand loyalty (Beatty and Kahle, 1988), brand satisfaction (Arora, 1985), involvement (Zaichkowsky, 1985), and brand performance (Keller, 1933). A seven-point (‘I don’t agree at all’ / ‘I totally agree’) Likert scale was used in order to measure brand commitment.

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4.3.2 Experimental design

The experiment concerns a 2 x 2 between participants design, as the design involves use of brand extension: ‘yes’ versus ‘no’ x type of market: ‘mass’ versus ‘niche’. This results in four experimental conditions, which are being depicted below in figure 3.

Use of brand extension

Yes No

Brand extension

Type of market: Mass Condition 1 Condition 3

Type of market: Niche Condition 2 Condition 4 Fig 3: Experimental design

4.4 Plan of analysis

In order to test the relationship between the dimensions of brand personality and brand extension, a one-way ANOVA is used with brand extension as the independent variable and the different brand personality dimensions as the dependent variables.

In order to test the moderating effect of the type of market on the relationship between the dimensions of brand personality and brand extension, a one-way ANOVA is used for grouping the participants of the mass-market magazine and the niche market magazine. Brand extension is the independent variable, and the dimensions of brand personality are the dependent variables.

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A Cronbach’s Alpha test is performed in order to see if all questions underlying a certain test variable are internally significant. When there are, for example, three questions measuring a dimension of brand personality, a high Cronbach’s Alpha would imply that a participant, who values the first question with a high score, would also do so with the other questions.

4.5 Validity

4.5.1 Internal validity

Internal validity refers to whether reasoning within the experiment is performed correctly (Malhotra, 2009). Within this research, internal validity will be guaranteed by controlling the extraneous variables of the research as much as possible. The participants are given precise and tight instructions on how to fill in the questionnaire correctly. Furthermore, the researcher is controlling the independent variable brand extension, and potential differences in reactions of participants will be measured correctly. The actual causal relation between the independent variable and its effect on the dependent variable will be approximately guaranteed, leading to high internal validity.

4.5.2 External validity

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5. Analysis and results

The results and tables derived from the statistic tests can be found in Appendix D of this paper.

5.1 Demographic results 5.1.1 Libelle

Subjects were drawn from a convenience sample of 542 people. 448 are retained for analysis, providing a usable response of 82.6 percent. Of these respondents, 100 percent is female. The sample was between the ages of 35 and 65 years, with an average of 52 years. All respondents read the magazine Libelle. 72 percent has a subscription. 62.3 percent of the respondents believe Libelle is appropriate for a mass market.

5.1.2 delicious.

Subjects were drawn from a convenience sample of 577 people. 453 are retained for analysis, providing a usable response of 78.5 percent. Of these respondents, 86 percent is female and 14 percent is male. The sample was between the ages of 16 and 73 years, with an average of 46 years. All respondents read the magazine delicious. 59 percent has a subscription. 59.4 percent of the respondents believe delicious. is appropriate for a niche market.

5.1.3 Comparability

It is necessary for both sample groups to be comparable so that alternative explanations for differences between the Libelle respondents and the delicious. respondents on outcome measures can be eliminated. Where the groups were not comparable on a characteristic and the characteristic was related to an outcome, the effect of this characteristic is controlled in multivariate analyses.

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magazine is appropriate for the type of market, the sample groups are comparable for research.

5.2 Commitment

The respondents of both sample groups are asked to indicate their commitment to the magazine brand. A Cronbach’s Alpha test is used to measure the internal consistency between the five dimensions of commitment, as mentioned in paragraph 4.3.1.4. Based on the variables and the scale, the Cronbach’s Alpha of commitment is 0,818, which indicates a good internal consistency.

5.2.1 Libelle

Respondents of Libelle indicate to be positively committed to their magazine brand, with an average of 4.65 on a seven-point Likert scale. Brand satisfaction (5.23) is measured to be the strongest dimension of commitment, whereas brand loyalty (3.42) is measured to be the least strongest, but still positive, dimension of commitment.

Dimension Mean (1-7) Brand loyalty 3.42 Brand satisfaction 5.23 Involvement 5.12 Brand performance 4.83 Average 4.65

Fig 4: Commitment Libelle

Respondents value the magazine Libelle with an average of 4.58 on a seven-point Likert scale.

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Dimension Mean (1-7) Brand loyalty 3.83 Brand satisfaction 5.19 Involvement 3.96 Brand performance 4.44 Average 4.36

Fig 5: Commitment delicious.

Respondents value the magazine delicious. with an average of 5.65 on a seven-point Likert scale.

5.2.3 Conclusion

Respondents of both Libelle and delicious. indicate to be positively committed to their magazine brand. Brand satisfaction is measured to be the strongest dimension of commitment, whereas brand loyalty is measured to be the least strong, but still positive, dimension of commitment. Although respondents of Libelle indicate to be slightly more committed to their magazine brand than respondents of delicious. do, delicious. respondents value their magazine more positive than respondents of Libelle do.

5.3 Brand extension

The independent variable used in this experiment is brand extension. The respondents of both sample groups were presented a brand extension of their magazine. Both brand extensions are in line with each other and therefore comparable, as explained in paragraph 5.1.3.

Based on research from Smith and Andrews (1995) and Smith and Park (1992), respondents evaluated the fit between the brand extension and the magazine with help from seven characteristics. A seven-point (‘not very similar’ / ‘very similar’) Likert scale was used in order to record similarity judgments. A Cronbach’s Alpha test is used to measure the internal consistency. Based on the variables and the scale, the Cronbach’s Alpha of similarity is 0,989, which indicates an excellent internal consistency.

5.3.1 Libelle

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The Libelle respondents were presented with the extension Libelle Bookazine. 31.6 percent of the respondents make use of this extension. The extension is valued with an average of 4.84 on a seven-point Likert scale.

Respondents were asked to indicate to what extend they believe the presented brand extension is similar to the magazine. Respondents of Libelle indicate the similarity between Libelle and extension Libelle Bookazine as positive with an average of 4.23 on a seven-point Likert scale. Product features (4.72) and manufacturing processes (4.71) are measured to be the strongest dimensions of similarity, whereas component parts (3.45) and needs they satisfy (3.86) are measured to be the least strongest, but still positive, dimensions of similarity.

Dimension Mean (1-7)

Component parts 3.45

Product features 4.72

Product functions 4.56

Needs they satisfy 3.86

Usage situations 4.33

Manufacturing processes 4.71

Servicing 3.98

Average 4.23

Fig 6: Similarity Libelle and Libelle Bookazine

75 percent of the respondents make use of the brand extensions of delicious.

The delicious. respondents were presented with the extension delicious. Cooking Book. 17 percent of the respondents make use of this extension. The extension is valued with an average of 4.51 on a seven-point Likert scale.

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strongest dimensions of similarity, whereas component parts (4.33) and servicing (4.42) are measured to be the least strong, but still positive, dimensions of similarity.

Dimension Mean (1-7)

Component parts 4.33

Product features 4.62

Product functions 4.61

Needs they satisfy 4.56

Usage situations 4.56

Manufacturing processes 4.45

Servicing 4.42

Average 4.51

Fig 7: Similarity delicious. and delicious. Cooking Book

Respondents of both Libelle and delicious. indicate the similarity between the magazine and the presented brand extension as positive. Product features is measured to be one of the strongest dimensions of similarity, whereas component parts is measured to be the least strongest, but still positive, dimension of similarity. Although the brand extensions are in line with each other, and therefore comparable, respondents of delicious. indicate a stronger similarity between the magazine and the presented brand extensions, than respondents of Libelle do.

5.4 Brand personality

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variable can be used to predict the outcome of the other variables. All values are above 0.00, which indicates a positive correlation, at a significance level of 0.01. Sincerity appears to have a very strong correlation with competence (0.666). Excitement is strongly correlated with competence (0.549) and sophistication (0.603). The weakest correlation, but still a positive correlation, is between competence and ruggedness (0.380), and sincerity and ruggedness (0.409).

A two-way ANOVA test (multivariate general linear model) is used to compare the mean differences between the Libelle respondents and the delicious. respondents. The groups have been split on ‘Use of brand extensions’ and ‘Type of market’, which are both independent variables. The dimensions of brand personality are the dependent variables.

A Levene’s Test of Equality of Error Variances is used to test whether the variances of the different groups are similar. When the significance value is less than 0.05, the hypothesis that states that the variances are alike, will be rejected. The Levene’s Test of Equality of Error Variances shows that the dimensions excitement (0.312), competence (0.146) and sophistication (0.106) have homogeneity of variances of the dependent variables across groups, as the significance value is greater than 0.05. This means that the differences between condition means are likely due to chance and not likely due to the manipulation of the independent variable. The dimensions sincerity (0.010) and ruggedness (0.012) have a significance value less than 0.05, which indicates that the variance across groups was significant different (unequal). This means that the differences between condition means are not likely due to chance and are probably due to the manipulation of the independent variable.

Condition Variable Mean

Condition 1:

Type Mass x Use Yes

Sincerity Excitement Competence Sophistication Ruggedness 4,6644 4,8339 4,2768 4,3322 3,8658 Condition 2:

Type Niche x Us Yes

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Fig 8: Compared means between conditions

It is interested to know whether there are significant mean differences between the groups for the two independent variables ‘Use of brand extensions’ and ‘Type of market’, and for their interaction. Figure 9 below shows the significance values of the tests of between subject differences. The significance value of the interaction is above 0.05, which indicates that there is no statistically significant interaction. The values show that there is a significant difference in brand personality between ‘Use of brand extensions’, but there are no significant differences between the ‘Type of market’. Simple main effects analysis (figure 8) shows that when respondents make use of brand extensions, they significantly perceive the brand personality as stronger.

Source Dependent variable Sig.

Use Sincerity Excitement Competence Sophistication Ruggedness 0,000 0,000 0,000 0,000 0,020

Type of market Sincerity

Excitement Competence Sophistication Ruggedness 0,006 0,000 0,000 0,064 0,000 Condition 3:

Type Mass x Use No

Sincerity Excitement Competence Sophistication Ruggedness 4,4023 4,5075 3,8851 4,0230 3,4828 Condition 4:

Type Niche x Use No

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Use * Type of market Sincerity Excitement Competence Sophistication Ruggedness 0,642 0,387 0,965 0,714 0,425 Fig 9: Tests of Between Subject Effects

A one-way ANOVA test is used to test the relationship between the dimensions of brand personality and brand extension. This ANOVA variant is chosen since it can analyze the variance between different groups, based on multiple factors. A seven-point (‘I don’t agree at all’ / ‘I totally agree’) Likert scale was used by the respondents in order to measure brand personality. The results are discussed for both the Libelle respondents as for the delicious. respondents.

5.4.1 Libelle

The Libelle respondents can be divided into two different groups: the first group does not make use of the brand extensions of Libelle (22 percent). The second group does make use of the brand extensions of Libelle (78 percent).

A one-way ANOVA test is performed in order to measure the difference in the perceived brand personality between these two groups. Respondents of the second group indicate to perceive the brand personality of Libelle significantly higher on all five dimensions of brand personality, and with an average of 14.4 percent. So, respondents who do make use of the brand extensions of Libelle perceive the brand personality as more positive than respondents that do not make use of the brand extensions of Libelle.

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6,3 5,1 6,4 4,3 3,1 Sincerity Excitement Competence Sophistication Ruggedness 5,2 3,1 5,1 2,4 2,6

Brand personality - magazine Brand personality - brand

Fig 10: Brand personality Libelle

The delicious. respondents can be divided into two different groups: the first group does not make use of the brand extensions of delicious. (25 percent). The second group does make use of the brand extensions of delicious. (75 percent).

A one-way ANOVA test is performed in order to measure the difference in the perceived brand personality between these two groups. Respondents of the second group indicate to perceive the brand personality of delicious. significantly higher on all five dimensions of brand personality, and with an average of 9,54 percent. So, respondents who do make use of the brand extensions of delicious. perceive the brand personality as more positive than respondents that do not make use of the brand extensions of delicious.

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indicates that the average perceived brand personality of delicious. is not stronger nor weaker when respondents think of the magazine brand as a whole, so including brand extensions.

5,0 4,6 4,7 4,6 3,6 Sincerity Excitement Competence Sophistication Ruggedness 5,2 4,5 5,0 4,4 3,6

Brand personality - magazine Brand personality - brand

Fig 11: Brand personality delicious.

Results indicate that when a brand develops brand extensions, and the consumer actually uses these extensions, the perceived brand personality as seen by the consumer will change. Within this experiment, respondents who make use of the brand extensions of the brand indicate to perceive the brand personality as stronger and more positive, while the brand extensions have the same values as, and a high-perceived fit with, the magazine brand. This change is a consequence of using the magazine brand in a different and more frequent way, through which the perceived brand personality transforms.

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It is remarkable that the groups that do make use of the brand extensions of the brands score significantly higher on all five dimensions of brand personality. This indicates that consumers who make use of both the magazine and the brand extensions of the brand (the brand as a whole) ascribe positive brand personality dimensions to the brand faster and with more persuasion, than consumers who only make use of the magazine.

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6. Discussion and conclusion

6.1 Hypotheses supported/not supported

In order to answer the problem statement of this research, two hypotheses were derived from theory.

Results from the experiment show that respondents who make use of the brand extensions of the brand indicate to perceive the brand personality as stronger and more positive than respondents who do not make use of the brand extensions of the brand, while the brand extensions have the same values as, and a high-perceived fit with, the magazine brand. The average perceived brand personality is stronger when respondents think of the magazine brand as a whole, so including brand extensions. Therefore hypothesis 1 is supported.

Respondents of both samples indicate the brand personality of the brands as positive. However, the average perceived brand personality of the mass brand is stronger and more positive when respondents think of the magazine brand as a whole, whereas the average perceived brand personality of the niche brand is not stronger nor weaker, and therefore similar, when responders think of the magazine brand as a whole. Therefore hypothesis 2 is not supported.

Fig 12: Hypotheses supported/not supported

The minimum sample for ANOVA testing demands 20 participants. As the participants of both sample groups represent a group of people larger than the actual sample size, the results of the experiment apply for a larger group than only the test groups.

Hypothesis Supported / Not

supported

H1: Use of brand extensions, in the type of designer image/status with

high-perceived fit, positively influences the brand personality of a brand

Supported H2: The influence of brand extensions, in the type of designer image/status

with high-perceived fit, on the brand personality of a brand is stronger on niche markets than on mass markets

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6.2 Experiment results compared to theory

As a brand extension goes along with the brand image, there cannot be an intensifier for the brand image at first. A brand extension can however make the brand more noticeable and profitable (Taylor, 2004). The brand equity can be enlarged, since an additional product of the same brand offers more platforms to present the brand values and let the consumer experience the brand. Most brand extensions of magazine brands try to represent the identity of the parent brand. As this identity is often a certain ‘lifestyle’, the brand extensions can represent many products. Therefore, most important is fit. The greater the perceived fit, the greater is the degree to which consumers will view the perceptions and preference of the extending brand to ‘carry over’ to its new product category. A brand extension with a high-perceived fit contributes to the brand equity, which strengthens the brand. Therefore, it is to be expected from theory that these brand extensions positively influence the brand personality of a brand. Results from the experiment correspond to this theory. This can be elucidated as the presented brand extensions were in the type of designer image/status with a high-perceived fit. The respondents indicate to be committed to the brand and value the magazine brands on average as positive.

Prior literature suggests that brand extensions are likely to be more successful if a brand extends into another category into which its existing brand associations and imagery fit better and if the extending brand is ‘atypical’, which means that it possesses associations and imagery that are broad and abstract rather than tied too closely to the brand’s original product category (Batra, Lenk and Wedel, 2010). Niche markets enjoy a stronger brand personality and brand image in their market of competence. Therefore it is to be expected that the influence of brand extensions on the brand personality of a brand is stronger on niche markets than on mass markets.

Results from the experiment do not respond to this theory. It appears that the influence of brand extensions on the brand personality of a brand is stronger on a mass market than on a niche market. This may be elucidated by the fact that mass markets focus on the common needs of customers with a standardized product and achieve high volume.

6.3 Contribution to existing literature