The effect of Brand Equity on the relationship between brand name strategy and new product success

The effect of Brand Equity on the

The effect of Brand Equity on the relationship between brand name

strategy and new product success.

Master thesis, MscBA, specialization Marketing

State University of Groningen, Faculty of Economics and Business

February 2011

By

Jelmer Martijn Dijkstra

Student number: 1677799

Management Summary

A study among Dutch grocery shoppers has been conducted whereby about 250 respondents evaluated two brand extensions of Arla Foods. The respondents evaluated the brand extensions, on the perceived quality, buying intention, willingness to pay a price premium and the overall likeability of the brand extension. The respondents reported in addition to this their perceived brand equity, innovativeness and product involvement. It appears that brand equity and consumer innovativeness are positively related to the consumer attitude towards the brand extension. The increasing share of private labels, promotion share in sales and stable brand strength of food brands on the Dutch market together with the finding of the present study confirms that practitioners should invest in the perceived brand equity of the parent brand. Especially if they want to expand their activities on the Dutch grocery market and want to increase the likelihood of a positive consumer attitude towards the brand extension.

The insight, that consumer innovativeness positively relates to the consumer attitude towards the brand extension reveals that potential consumers that are innovative have a better consumer attitude towards the brand extension. Which implies, that if the organisation has a clear profile of the innovative consumers, the organisation is able to direct marketing activities successfully to, for instance outlets where higher innovative consumers are most easily found.

In addition to this, in a low perceived brand equity situation significant differences in consumer attitudes towards the brand extension are found for the type of brand name strategy that is used for the brand extension. Based on these findings it suggested that in a low perceived brand equity practitioners should use a more separated brand name strategy (for instance a sub brand strategy) between the parent brand and the product brand. In a high brand equity situation no differences are found in the consumer attitude towards the brand extension for the different brand name strategies. Thus, the role of the parent brand in a high perceived brand equity situation does not have any influence on the consumer attitude towards the brand extension. The results may justify the cost and effort to investigate the perceived brand equity of the target segment by the increase in consumer attitude towards the brand extension when using the right brand name strategy.

Preface

This thesis forms the last part of the MScBA Marketing. I want to use this section of the thesis to thank everyone that made it possible for me to complete my MScBA Marketing. I, especially, would like to mention a few persons that supported me in my research. Special thanks to my supervisor Dr. Laurens Sloot for the interesting discussions, meetings, ‘valuable’ contacts and good feedback during my research. Furthermore I would like to thank my supervisor Dr. Hans Berger for his time and feedback during my research.

Moreover I want would like to thank René van Beek, Commercial director of Arla Foods, for his interest and time during my internship and research. Additionally, I would like to thank, my sister, my friends and especially Tjerk and Folkert for their social support and reviewing skills. My special and grateful thanks go out to my parents who made it possible for me to study.

Aline, Jacob and Marian, all of you deserve a individual word of thank for your love and unconditional support and confidence in me in completing my thesis.

Content

Management Summary ... III

Preface ... IV

Content ... V

1.

Introduction ... 1

1.1

Context ... 1

1.2

Research topic ... 1

1.3

Problem statement ... 3

1.3.1

Research question ... 3

1.3.2

Sub-research questions ... 3

1.4

Structure thesis ... 4

2. Theoretical Framework ... 5

2.1

Definition of the brand ... 5

2.2

Brand extensions ... 5

2.2.1

Advantages and disadvantages of brand extensions ... 6

2.2.2

Drivers of brand extension success ... 7

2.2.3

Consumer attitude of brand extensions ... 7

2.2.4

Conclusion ... 8

2.3

Brand equity ... 9

2.3.1

Conceptualization of CBBE ... 9

2.3.2

Measurement of CBBE... 12

2.3.3

Conclusion ... 14

2.4

Brand strategy ... 14

2.4.1

Brand name strategies ... 14

2.4.2

Brand name strategy framework ... 17

2.4.3

Advantages and disadvantage of brand name strategies ... 18

2.4.4

Conclusion ... 20

2.5.1

Consumer innovativeness in relation to consumer attitude towards brand extension 21

2.5.2

Dimensions of consumer innovativeness ... 21

2.5.3

Conclusion ... 22

2.6

Consumer involvement ... 22

2.6.1

Product and decisional consumer involvement ... 23

2.6.3

Consumer involvement in relation to consumer product attitude ... 23

2.6.4

Measurement of consumer involvement ... 24

2.6.5

Conclusion ... 24

3.

Conceptual Model ... 25

3.1

Hypotheses ... 25

3.2

Conceptual model ... 27

4.

Research Method ... 29

4.1

Research design ... 29

4.2

Research stimulus ... 29

4.2.1

Parent brand stimulus ... 30

4.2.2

Brand name strategy stimulus ... 30

4.2.3

Brand extension stimulus ... 31

4.3

Constructs, measurement and scale ... 31

4.4

Sample design ... 34

4.5

Pre-test ... 35

4.6

Method of analysis ... 35

5.

Results ... 37

5.1

Sample representativeness ... 37

5.2

Reliability ... 38

5.3

Descriptive results ... 38

5.4

Assumptions parametric tests ... 39

5.5

Results ANOVA ... 41

5.5.1

Relationship between brand equity and consumer attitude. ... 41

5.5.2

Relationship between consumer innovativeness and consumer attitude. ... 42

5.5.4

Relationship between brand name strategy and consumer attitude. ... 44

5.5.5

Relationship between brand name strategy and consumer attitude, the role of brand

equity. 46

5.6

Interrelationships among variables ... 49

5.6.1

Assumptions of multiple regression ... 50

5.6.2

Results multiple regression ... 50

5.6.3

Interaction brand equity and brand name strategy ... 52

6.

Discussion of Results ... 54

7.

Managerial implications, limitations and future research ... 58

7.1

Managerial implications ... 58

7.3

Limitations and future research ... 59

References ... 61

Appendixes ... 67

Appendix 1

Survey ... 67

Appendix 2

Q-Q plots ANOVA ... 74

Appendix 3

Output SPSS One-Way ANOVA BE, Consumer Attitude ... 76

Appendix 4

Consumer innovativeness in relation to consumer attitude ... 79

Appendix 5

Consumer involvement in relation to consumer attitude ... 82

Appendix 6

The relationship between BNS and consumer attitude ... 85

Appendix 7

The relationship between BNS and consumer attitude, the role of brand equity. ... 88

Appendix 8

Assumptions of multiple regression ... 94

1.

Introduction

This chapter provides an introduction into the context of the research. First there will be a short introduction about the context wherein this research takes place. This will be followed by the research topic after which the research questions and objectives will be outlined.

1.1

Context

Arla Foods is a Swedish-Danish cooperative based in Århus, Denmark, and is the largest producer of dairy products in Scandinavia. The organization holds, besides Scandinavia, a solid position in several other European countries ( e.g. like Germany and The United Kingdom). In 2009 Arla employed 16.231 people around the world. Furthermore, Arla had an annual turnover of 6.2 billion Euro in 2009. In 2015 the annual turnover target is set on 10 billion euro.

The cooperative believes that continued expansion is the solution to remain one of the leading dairy companies in the global market and to be able to pay the dairy farmers a competitive price over a long period of time. This expansion strategy is illustrated by the acquisition of a large Dutch dairy in 2009, making the Netherlands the fifth largest market for the cooperative. As a result the Netherlands has become a new growth and core market within Arla Foods. This growth has largely been driven by the acquisition itself, it is now time to focus on organic growth. To be able to do so, a key for Arla Foods is to upgrade its activities on the Dutch market. This expansion was introduced by a line of organic dairy products of 20 stock keeping units, including organic milk, yogurt and children desserts in April 2010. For the coming years there are more product releases planned on the Dutch market in order to improve Arla’s position into a leading dairy company on the Dutch market.

Arla sells a wide range of products around the world, the corresponding marketing activities are tailored to the countries in which the products are sold. The Arla brand is used both to market the company, and as a brand for all the products. Lurpak (premium butter and spreads products), Castello (premium cheese products), low price products and the supermarket chains’ own brands are not marketed under the Arla brand. Currently there are 75 brands belonging to Arla brand. In the near future Arla Foods aims to consolidate the numbers of brands marketed (Arla Foods annual report 2009). The present study will investigate the probable effects of this strategic move on consumer attitudes towards the Arla brand and more specific to brand extensions. Before discussing the actual problem statement and associated research question, the next paragraph will give a short introduction to the research topic.

1.2

Research topic

hearts of consumers. The aim of the brand strategy is to encourage a favourable image for its brands (Keller, 1993). Building strong, unique, favourable associations in consumer minds builds brand equity (Aaker, 1991, Keller, 2007). Brand Equity, defined by Aaker (1991) as ‘ a set of brand assets and liabilities linked to a brand, its name and symbol, that add to or subtract from the value provided by a product or service to a firm and/or to that firm’s consumers’, is an important construct for companies. That is, positive or high brand equity gives companies a competitive advantage, positively influences consumer demands, facilitates brand extension success and heightens the force of communication (Keller, 2008).

The simplest way of illustrating what is meant by brand equity, is to consider one of the typical blind taste tests. Two groups of consumers sample a product. One group knows the brand of the product. The other group does not know the brand. Invariably the two groups have different opinions despite consuming the same product. The difference in opinions is often related to the added value of the brand appearance. The brand gives consumers assets or reminds them of certain associations that are linked to the brand (Keller, 2003). These blind tests clearly show that building a strong brand is crucial and the importance of the brand equity for both consumers and companies is unarguable.

As said, with high brand equity it is easier to extend a brand (Keller, 2008). Brand extensions are a popular expansion strategy for companies to expand their activities (John, Loken & Joiner, 1998). The popularity of brand extension as an expansion strategy is due to the fact that a brand extension can reduce the introductory cost of the new product by trading on consumers’ awareness and perception of the parent brand. Once successfully launched, brand extensions help manufacturers’ brands among others to hold more shelf space and retain a higher profile in the consumer’s mind since product promotions are mutually supportive (Farquhar, Herr, & Ijiri, 1992).

Despite these inherent appeals, brand extensions have also certain disadvantages. In some situations greater product variety may induce consumers to buy less (Sloot and Verhoef, 2008). Moreover, an unpleasant scenario is that an extension fails and an even worse scenario is when a brand extension affects the image of the parent brand. Even if sales of a brand extension are high, the revenue may have resulted merely from consumers switching to the extension from existing product offerings of the parent brand (Keller, 2003). Thereby one risk of linking multiple products to a single brand is that the brand may not be strongly identified with any one product or lose the identification with its original categories (Morrin, 1999).

Despite the maturity of branding and branding research, there is a surprising diversity in the way that companies manage their brand portfolio’s and use brand name strategies. Even within the same market companies interpreted the best strategy for using brand names differently (LaForet & Saunders 2005). Furthermore, research examining the impact of the brand name strategy on consumer attitude towards a brand extension is sparse. In addition, to our knowledge little research has been performed on the effects of different brand equity levels on consumer attitude towards a brand extension. Therefore it is interesting to gain more insights in the effect of brand name strategy and the brand equity level on consumer attitude towards a brand extension.

It is unlikely that the effect of the level of brand equity and the influence of brand name strategies on consumer attitude will be the same for all consumers. Marketing- and brand managers would like to know about conditions, or consumer situations in which a brand name strategy results in a better overall consumer attitude towards a brand extension. Therefore this research investigates additionally two consumer constructs (consumer innovativeness and consumer product involvement) in relation to consumer attitude towards the brand extension in order to guide managers to some extent on this issue.

1.3

Problem statement

Arla Foods wants to expand their activities on the Dutch market by introducing new products. In the meanwhile the organization wants to consolidate their number of brands marketed. At this moment there is a lack of knowledge on the possible effects of the strategic move, of consolidating the number of brands, on consumer attitudes towards a brand extension. In order to make the right brand name strategy decision for the upcoming brand extensions a better understanding about these effects needed. The purpose of the present study is to identify the right combination of a brand name strategy, under different consumer conditions, for introducing new products on the Dutch market.

1.3.1 Research question

The following research question is derived from the problem statement:

What is the effect of brand name strategy type on consumer attitude towards a brand extension, and what is the role of brand equity, consumer innovativeness and consumer product involvement.

1.3.2 Sub-research questions

From the main research question, the following sub research questions are derived:

1. How can brands be defined and why are brands important?

2. How can brand extensions be defined and what are the success drivers of brand extensions?

3. What is brand equity, how can it be defined and measured?

5. How can consumer attitudes towards brand extensions be measured?

6. What is consumer product involvement and how can it be measured?

7. What is consumer innovativeness and how can it be measured?

1.4

Structure thesis

2. Theoretical Framework

To explore the concept of brand equity and associated brand name strategies and the relevance for consumers on the attitudes of a brand extension, it is necessary to examine the utilization of these concepts and linked concepts in the literature. This so called literature framework is divided into several paragraphs: first the definitions of a brand is considered, hereinafter an overview of the concept of brand extensions is explored, third the brand equity literature is discussed and at last the brand name strategies and the other constructs of interests, consumer product involvement and consumer innovativeness are defined. The investigated literature will lead to several hypotheses and an associated conceptual model.

2.1

Definition of the brand

A brand extension is an extension of the brand, but what is a brand and how is it defined. There are several definitions of the brand in the academic literature. The definition of the brand occurs from a number of elements according to Franzen (2002). These are: (1) a brand only exists in people's memories, (2) a brand is a recognition sign ( name, logo, color), (3) a brand evokes associations in people’s mind, (4) a brand is linked to commercially marketed goods and services. The brand is by Franzen (2002) subsequently defined as "a network of associations between the elements in the memory”.

According to Leeflang (1998), a product is often recognizable by a brand. A brand or trademark is a word, a name (brand name), a symbol, letter or character or a combination, used by an organization to distinguish the products and services of that organization from other products and services. The brand plays its own role and is more or less the identity visible to the consumer of the product characteristics. The brand name is one of the key brand elements (Keller, 1998).

A branded product is the product or service which consists of a brand or a brand that is linked to the product or service. A product or service is only a branded product when it has a certain class of consumers who made an emotional attachment to the product or service. The characteristics of a (strong) brand product are according to Leeflang (1998), (1) a high brand awareness, (2) a clear positioning (brand positioning), (3) a pronounced preference for one group of consumers (brand preference), (4) a high loyalty ( brand loyalty).

2.2

Brand extensions

This section covers the literature of brand extensions. First the definitions of brand extensions are discussed followed by the advantages and disadvantages of extensions. This section ends with the success factors of positive brand extension evaluation followed by consumer attitude measurement scales of brand extensions.

Farquhar (1992) an existing brand name to a product in an, for the company, existing category. A line-extension is introducing an existing brand name into a new product category. This research will focus on the extensions altogether and thus overlook the distinction of Farquhar (1992). The term brand extension is used in this research for both extensions strategies. At first the advantages and disadvantages of brand extensions will be discussed.

2.2.1 Advantages and disadvantages of brand extensions

There are several widely accepted advantages of launching new products together with the existing parent brand these are:

o Reduction of communication costs (Tauber,1981; Aaker, 1991; Aaker and Keller, 1990), due to the synergy between experienced communication of existing products of the firm and communication of the extension.

o Reduce costs of brand name introduction, due to the transfer of perceptions and attitudes from the parent brand to the brand of the extension, by this the probability of success is enhanced (Tauber, 1981; Aaker and Keller, 1990; Keller and Aaker, 1992; Rangaswamy et al. 1993).

o Brand extension can strengthen the parent brand, its meaning and thus facilitate in building brand equity (Keller and Sood, 2003).

o Brand extensions can support the purchasing of other products of the firm among non users (Keller and Aaker, 1992; Swaminathan et al. 2001).

o Reduction of risk for consumers when a new product is introduced with an existing brand name (Keller and Aaker, 1992).

Despite these benefits, using an existing brand name for introducing new products has also several disadvantages;

o By using an extension, the prior beliefs about the parent brand may diminish or change and thus dilute the accumulated brand value (Loken and John, 1993; John et al., 1998).

o An extension may reduce the purchases of other products or services which are sold with the same brand (Desai and Hoyer, 1993). This so called cannibalization occurs when sales of the new product take place at the expense of the original product (Lomax et al.,1997). Cannibalization only occurs if an extension is introduced in the same product category.

Considering the advantages and disadvantages of brand extension it can be concluded that brand extension success is not guaranteed. Volckner and Sattler (2006) refer to a study of Ernst & Young (1999) which shows that approximately 80% of all new introduced extensions in fast moving consumer goods (FMCG) fail. Despite the lack of recent figures on brand extensions failure, this figure gives a good indication of the failure rates. Moreover, it clarifies the focus and importance of academic research after Aaker and Keller’s study (1990) on the insights and determinants of brand extensions success (e.g. Bottomley and Doyle, 1996; Dacin and Smith, 1994; Swaminathan et al. 2001; Volckner and Sattler, 2006). This research can be used to facilitate managers with strategies to reduce the failure rate of brand extensions.

2.2.2 Drivers of brand extension success

As mentioned before, extensive research on extension success and the feedback of extensions on the parent brand has been explored (Buil et al., 2009). According to Volckner and Sattler (2006) most of the studies, that explored brand extensions success determinants, used hypothetical brand extensions. Aaker and Keller’s (1990) fundamental research on determinants of brand extension success is a typical example for a research on the determinants of extension success. In this study respondents were also asked to rate dependent (success items) and independent (success of the extension) items on a scale. Only a few researchers make use of real market data as dependent variable (Volckner and Sattler, 2006; Lane and Jacobsen, 1995; Reddy, Holak, and Bhat 1994).

Aaker and Keller (1990) conclude on basis of their study that consumer evaluation of extensions is more likely to be positive if the parent brand is associated with high quality (quality), when the new product is considered as a simple product consumers will evaluate the new product less positive (difficult), in addition perceived fit among the parent brand and the extension product is also associated with better consumer attitude towards the extension (fit). It is stated by Aaker and Keller (1990) that higher perceived fit facilitates the transfer of associations between the parent brand and the extension. Volckner and Sattler (2006) reviewed and tested several conceptual models regarding success factors of brand extension success. These researches helped managers and academics to categorize and divide the enormous number of possible relevant success factors into the essential factors for brand extension success namely; fit, marketing support, retailer acceptance, parent-brand conviction and parent brand experience. In addition, Volckner and Sattler (2006) indentified several less important factors for brand extension success such as history of previous brand extensions, consumer innovativeness, linkage of the parent brand utility to specific product attributes and moderating effects.

2.2.3 Consumer attitude of brand extensions

Aaker and Keller (1990,1992) developed a measurement scale for consumer evaluation. However, they changed the factors to measure consumer evaluation during their researches. In their research of 1990 they used a two dimensional scale of consumer evaluation namely; extension quality (inferior and superior) and likelihood of trying the extension. This scale changed in 1992 into a three dimensional scale namely quality (high, low), likelihood to try (not at all, very likely to try) and inferior or superior product. Klink and Smith (2001) developed further on the scale of Aaker (1992) and used two factors. How favorable subjects feel toward the extension and how likely consumers will purchase the extension. Kalamas et al. (2006) developed a measurement scale consisting of three items, of which two of them are based on Aaker and Keller’s (1990) scale of consumer evaluation. These are quality associated with the extension and purchase intention. Thereby, Kalamas et al. (2006) added the item; extension attribute attitude. Considering the mentioned scales it can be concluded that there is consensus about the items that should be incorporated into the measurement of consumer evaluation of a brand extension. Every scale has namely a purchase intention item, a perceived quality dimension and an attitude dimension. These three items are also found as important evaluation items in the research of Boush and Loken (1991).

2.2.4 Conclusion

Previous research gives a clear understanding of the advantages and disadvantages of brand extensions (e.g. Aaker and Keller, 1990; Keller and Sood, 2003; Swaminathan et al. 2001; Loken and John, 1993; John et al., 1998; Lomax et al., 1997). Thereby review studies (Volckner and Sattler, 2006,) provide an unambiguous overview of determinants that influence the extension success and the feedback effects of brand extensions on parent brand. There is also consensus in the measurement scale of consumer evaluation of brand extensions among researchers (Boush and Loken, 1991; Aaker, 1992; Kalamas et al., 2006). Every author has namely a purchase intention item, a perceived quality dimension and an attitude dimension.

2.3

Brand equity

A potentially important marketing concept occurred in the 1980s, brand equity. It has been one of the main priorities in marketing research since its appearance (Marketing Science Institute, 2002). The brand equity concept has ensured that branding is of high interest in marketing strategy and that researchers focused a tremendous amount of attention to this construct in academic research (Yoo and Donthu, 2001).

Aaker’s research in 1991 was the starting point of a big debate on brand equity and most of the academic research is based on this work. Besides Aaker’s (1991) research, the Keller (1993) conceptualization of brand equity is also seen as a main framework in the academic literature (Buil et al. 2008).

Brand equity is defined by Aaker (1991) as ‘a set of assets and liabilities linked to a brand, its name and symbol, that add to or subtract from the value provided by a product or service to a firm and/ or that firm’s consumers’. From this viewpoint, it is clearly presented, that brand equity recipients are consumers. However, consumers are not the only recipients of brand equity. Firms are also a recipient of brand equity. The brand equity construct can thus be viewed from different perspectives. There are researchers that mainly focused on the firm or more financial perspective of brand equity (Farquhar et al. 1991; Simon & Sullivan 1993; Haigh 1991) and researchers that focused more on the consumer based role of brand equity like Aaker (1991), Keller (1993), Yoo and Donthu (2001), Vazquez et al. (2002), de Chernatony et al. (2004), Pappu et al. (2005) and Christodoulides et al. (2006). The researchers that focus more on the firm based brand equity discuss the financial value that the brand creates for the business and is referred as firm-based brand equity (from now on FBBE) (Christodoulides and de Charnatony, 2009). Feldwick (1996) summarized the way brand equity is used in three different ways. First as the total value of a brand as an asset when it is sold, second as a measurement of consumer’s affection to the brand and third as a description of the consumer’s beliefs and attitudes towards the brand. The first term is associated with FBBE while the other two are associated with consumer based brand equity (from now on CBBE). Besides this categorization of existing literature on the recipients of brand equity Burmann et al. (2009) distinguish three different approaches of external brand strength. The first category has a focus on brand knowledge (Keller, 2003), this category perceives brand strength as a set of associations which derive from several consumer interactions (Srivastava and Shocker, 1991). The level of brand strength depends in this category on the quality and quantity of brand associations. The second category uses brand benefits as a starting point (Farquhar, 1991; Aaker, 1991; Simon and Sullivan, 1993; Rangaswamy et

al. 1993). The last approach according to Burmann et al. ( 2009) has its focus on the brand preferences on the

long term compared to the brand competitors. (Park and Srinivasan, 1994) This thesis will use the first categorization (brand knowledge) and will focus on CBBE. The conceptualization and measurement of CBBE will be discussed in the next paragraphs.

2.3.1 Conceptualization of CBBE

main research stream on CBBE finds its roots in the cognitive psychology with a center of attention on memory structure (Aaker, 1991; Keller, 1993). The primary conceptual models in CBBE will be discussed, these are the brand assets model of Aaker (1991) and the dimensions of brand knowledge Keller (1993).

Aaker (1991) defined CBBE as mentioned before from a consumer perspective as ‘’ a set of brand assets and liabilities linked to a brand, its name and symbol, that add to or subtract from the value provided by a product or service to a firm and/or to that firm’s consumers’’. The conceptual dimensions that Aaker indentified are brand awareness, perceived quality, brand associations, brand loyalty and other proprietary brand assets ( like trademarks, licenses, distribution channels and patents). These dimensions can be seen as influencers of the brand assets. The first four dimensions represent the consumer perception towards the brand and can be seen as sources for CBBE. The fifth dimension is not directly linked to CBBE (Christodoulides and de Charnatony, 2009). The dimension brand awareness is defined by Aaker (1991) as ‘’ the ability of a potential buyer to recognize or recall that a brand is a member of a certain product category’’. This construct can differ between brand unawareness to top of mind. In 1996 Aaker developed three additional brand awareness dimensions namely brand dominance (whether the brand is recalled on its own), brand knowledge ( the consumer is aware of the intended brand associations) and brand opinion (the consumer has a judgment about the brand). Loyalty, which is defined by Aaker (1991) as a measure of the attachment that a consumer has to a brand, reflects how likely a consumer will switch to another brand. The loyalty dimension of Aaker has five different layers. These layers are starting with the lowest layer of loyalty: Switchers/ No brand Loyalty, Habitual Buyer, Satisfied Buyer with switching costs, Like the brand – consider it a friend and Committed Buyer.

This classification of loyal consumer consist of five layers ranging from a consumer which is not loyal in the Switchers layer to consumers which are proud to be a consumer in the committed buyer layer. Perceived quality is the third dimension in Aaker his conceptualization of CBBE. Aaker (1991) defines perceived quality as ‘’the consumer perception of the overall quality or superiority of a product or service with respect to its intended purpose, relative to alternatives’’. The definition of perceived quality correspondents highly with the definition of perceived quality by Zeithaml (1988), ‘’the consumer judgement about a product’s overall excellence or superiority’’. The perceived quality is a subjective construct formed by consumers and thus differs from the objective quality. Brand associations is the fourth dimension of Aaker his CBBE model which is defined by Aaker (1991) as “anything linked in memory to a brand’’. This dimension can be divided in the associations towards the value of the brand, the brand as a person and brand as an organization (Aaker, 1996).

marketing mix of a product of which the consumer knows the brand name than to the marketing mix of an identical yet unbranded product. Brand knowledge is the key antecedent of CBBE and is conceptualized by Keller (1993) as ‘’ a brand node in memory to which a variety of associations are linked’’. The antecedent brand knowledge is as mentioned split in brand awareness and brand image. The brand awareness relates according to Keller (1993) to the brand recognition and recall performance by consumers. This definition has a lot of similarities with the definition of awareness by Aaker (1991) wherein brand awareness is defined as of a potential buyer to recognize or recall that a brand. Brand awareness is subdivided by Keller into two underlying dimensions namely brand recall and brand recognition. Brand recall is according to Keller (1993) the ability to retrieve the brand when given the product category or the needs fulfilled by the category. Whereas brand recognition stands for the ability of consumers to recognize or recall that a brand is a member of a certain product category (Keller, 1993). Brand awareness is important for the following reasons according to Keller (1993): make consumers think of product when they think of about a certain product, it create brand preference and it may influence the brand associations of the brand in a consumer mind. The second dimension of brand knowledge is brand image which is defined by Keller (1993) as ‘’perceptions about a brand as reflected by the brand associations held in consumer memory’’. Brand image consists of brand associations as can be concluded from the definition. There are three different types of brand associations namely attribute, benefit and attitudes of the associations. Attribute associations are product (necessary to use or consume the product) related associations and non product (price, packaging, user imagery and usage imagery) related associations. The next category is the benefit which can be separated in functional (intrinsic motivation), experimental (how a product feels) and symbolic (extrinsic benefit). The last type of association is the attitude or the overall evaluation. Besides these types of associations it is necessary, in order to build a brand with a high CBBE that these associations are unique, strong and favorable (Keller, 1993). The marketing

Study Dimensions CBBE

Aaker (1991, 1996) Brand awareness

Brand associations Perceived quality Brand loyalty

Blackston (1992) Brand relationship

(trust, consumer satisfaction with the brand)

Keller (1993) Brand knowledge

(brand awareness, brand associations)

Sharp (1995) Company/ brand awareness

Brand image

Relationship with consumer/ existing consumer franchise

Berry (2000) Brand awareness

Brand meaning

Burmann et al. (2009) Brand benefit clarity

Perceived brand quality Brand benefit uniqueness Brand sympathy

Brand trust

Table 2.1 Conceptual research on CBBE of different authors

2.3.2 Measurement of CBBE

Although Aaker (1991) and Keller (1993) conceptualized CBBE with their leading academic models they lacked in the development of a measurement tool. In 1996, Aaker did develop the brand equity ten, which are ten measurement constructs. However he never developed a scale for the measurement of these constructs.

Nowadays there are two basic complementary (Leone et al., 2006) methodologies of measuring brand equity, namely a direct and an indirect approach. The direct approach measures CBBE by exploring the impact of brand knowledge on the consumer’s response to several elements of the marketing campaign, in other words the consumer preferences (Leone et al., 2006, Christodoulides and de Charnatony, 2009, Park & Srinivasan, 1994) or utilities (Leuthesser et al., 1995). Christodoulides and de Charnatony, (2009) mention several disadvantages of the direct approach namely, brand separability, restricted managerial value due to the complex statistical method and absence of insights into the foundation of CBBE. Based on these disadvantages it is chosen to use the direct instead of the indirect approach of measuring CBBE in this study. In addition to the disadvantages, other researchers on branding (Pappu et al., 2005) also use the direct approach of measuring CBBE.

three dimensions remained, namely: brand loyalty, perceived quality and brand awareness which consist of ten items. Besides this measurement scale the same authors developed a unidimensional measurement of brand equity consisting of four items. This is a measure for the overall CBBE and had a strong and significant correlation with the multi-dimensional brand equity scale.

According to Christodoulides and de Charnatony, (2009) the Yoo and Donthu (2001) indirect measurement approach of CBBE has the most strengths and fewest weaknesses compared to other measurement scales of CBBE. They stated that the scale is culturally valid, the scale can be used in several product categories without the need to adapt to the specific category as is the case with the measurements proposed by Vazquez et al. (2002). Thereby, it is easy to use the scale and thus make it applicable for managers. The fourth reason of Christodoulides and de Charnatony, (2009) to support the Yoo and Donthu (2001) scale is that the CBBE is measured at an individual level. The last strength of this scale is that the Yoo and Donthu (2001) carried out a multi-step validation process. Also the measurement scale of Yoo and Donthu (2001) have certain limitations (Washburn and Plank, 2002). Limitations of the Yoo and Donthu (2001) scale is that the scale relies only on student samples and the scale is only tested in some product categories. Besides these limitations the main discussion in the academic literature is on the CBBE scale developed by Yoo and Donthu (2001).

Washburn and Plank (2002) made an independent comparison of the brand equity measurement from Yoo and Donthu (2001). They conclude in their research that the scale of Yoo and Donthu (2001) is an appropriate first step in the measurement of CBBE. However further scale development is needed. Striking in the research of Washburn and Plank (2002) is that their study also showed that the three dimensional scale is the most accurate model. Despite this finding they argue that a three dimensional brand equity scale neglects the theoretical difference between brand awareness and brand associations and the question arises whether or not to combine these two underlying constructs of brand equity into one construct. The constructs are correlated, however, Aaker (1991) as well as Keller (1993) make a distinction between the two constructs. Moreover Aaker (1991) stated in his conceptualization that brand awareness must go before brand associations. Thereby, the research of Yoo and Donthu (2001) shows that the two items are highly correlated but are not synonymous to each other because consumers may be familiar with a brand without having strong associations with the brand. Both Yoo and Donthu (2001) and Washburn and Plank (2002) have acknowledged the scope to improve the measurement of CBBE and that researchers should focus on the distinction between the dimensions of brand awareness and brand associations.

2.3.3 Conclusion

Two researches (Aaker, 1991, Keller, 1993) conceptualize brand equity into two main frameworks. Keller’s conceptualization has a center of attention on brand knowledge and involves two components namely brand awareness and brand image. Aaker (1991) provides the most generally accepted and comprehensive conceptualization and definition of CBBE namely: ‘’ a set of brand assets and liabilities linked to a brand, its name and symbol, that add to or subtract from the value provided by a product or service to a firm and/or to that firm’s consumers’’. Other conceptualization research shows that at a conceptual level some agreement exists as to what is meant by CBBE, in contrast to the measurement of CBBE.

One may say that there is a lack of agreement on what dimensions are the correct dimensions for measuring CBBE. Although a lot of research (e.g. Pappu et al., 2005, Yoo et al. 2000, Washburn and Plank, 2002) builds on the conceptualization of Aaker (1991,1996). Christodoulides and de Charnatony, (2009) argue that there is not a universal measurement and that the measurement depends of the life stage (Baker et al., 2005) and the market the brand is active in (Aaker, 1996). This research will follow the measurement of Aaker (1990) and use a four dimensional items scale (consisting of brand awareness, associations, loyalty and quality). The present study makes use of these dimensions because Donthu (2001) stated that brand associations and awareness are highly correlated but are not synonymous to each other. Consumers may be familiar with a brand without having strong associations with the brand.

2.4

Brand strategy

Most large firms operating in consumer markets own and market a set of different brands This paragraph discusses the manner in which product brands and corporate brands relate to each other. In other words the brand name strategy, brand portfolio strategy or brand hierarchy strategy of a company. The brand name strategy is traditionally made up of a corporate brand, for instance Volkswagen, a family brand like Skoda, an individual brand like Octavia and possibly a modifier like TDI (Keller, 1998). Keller (2003) stated that the brand name strategy for a firm tells markets which brand names, logos, symbols and more to apply to which new and existing products’. This research focuses on the brand name strategies that are applied to new and existing products.

The combinations that companies use for their brand name strategy can be classified along different ranges. At first the different classifications in the academic literature will be discussed. Hereinafter the different brand name strategies will be summarized in the main brand name strategies. After this the advantages and disadvantages of the main brand name strategies will be determined.

2.4.1 Brand name strategies

bridging strategies that combines elements across different brand hierarchies. These mentioned vertical and horizontal strategies have several variations which will be defined at first.

Sub branding introduces a new element into the brand hierarchy below the level of the master brand. Sub-branding modifies the meaning of the master brand. Farquhar et al. (1992) distinguish between two types of sub-brand strategies namely brand modifiers and dual trademarks. Brand modifiers are not actually trademarks because of their descriptive words or phrases. However, their role is similar to that of actual sub-brands (Farquhar et al., 1992). In the dual trademark variety the company owns both and moreover the sub brand derives its meaning from the master brand. Farquhar et al. (1992) stated that the master brand in the dual mark variety is the primary mark and the sub-brand can modify the master brand its meaning. Another vertical branding strategy is super branding strategy. This strategy adds new elements to an existing brand hierarchy above the level of the master brand (Farquhar et al., 1992). It is a way of upgrading or improve the master brand by adding a modifier or super brand (hidden or not) in order to reflect a certain product improvement.

Farquhar et al. (1992) separate horizontal branding strategies into brand bundling strategies and brand bridging strategies. Farquhar et al. (1992) states that brand bundling is a strategy for revitalizing existing master brands by the associations of other brands and states that this is a suitable strategy when a company does not have the finance or resources to build a product value. A well-known example of this is the Intel processor (ingredient) in many personal computer brands. The other horizontal strategy is brand bridging. Brand bridging strategies use the master brand to endorse a new brand when a company wants for instance to introduce a product in a different product category according to Farquhar et al. (1992). The master brand is not hidden from consumers view in a brand bridging strategy. In this case the master brand plays a sort of stepping stone strategy for the new brand.

Olins (1989) developed a branding structure framework and indentified three branding structures: monolithic, endorsed and branded. The monolithic structures use one name and identity worldwide (Shell). In the endorsed strategy the name is used in association with subsidiary or a product brand. The third strategy, branded, emphasizes on companies that use different names under different products an example of a company that uses this strategy is Procter & Gamble.

mono brands and furtive brands. It can be characterized as a mono brand when only one brand is used and furtive brands is a brand that used as a shadow endorser on the product packaging. Considering these definitions of LaForet & Saunders (1994) it can be stated that Procter & Gamble is an example of a company that uses mono branding.

A following investigation of brand name strategies by Douglas et al. (1999) for international markets exposed a simpler brand name structure (LaForet & Saunders, 1994). The structure of Douglas et al. (1999) consists of corporate dominant, product dominant and hybrid or mixed strategies. Thus findings of Douglas et al. (1999) are consistent with the findings of LaForet & Saunders (1994), moreover they also conclude, based on their field study of consumer goods companies in Europe, that there is a considerable variation within a given type of structure. Only a few companies have a corporate dominant branding structure based on the corporate name such as Apple, Shell, Nike and Philips. These companies focus more on a strong and unique global identity for the brand rather than responsiveness to local markets. Other companies like Procter & Gamble and Akzo Nobel use a product-dominant branding structure according to Douglas et al. (1999) and tailor the products to local preferences and thus harmonizing brands across borders. The third and last brand strategy is the hybrid brand structure. The hybrid brand structure combines corporate and product brands. Douglas et al. (1999) takes Coca-Cola as an example of a company with a hybrid strategy. Coca-Cola uses Coca-Cola on its cola and other beverage varieties worldwide. In addition, Coca-Cola has several regional soft drink brands in different countries. Coca-Cola thus combines corporate and product structures. Other companies that use a hybrid branding strategies are Mars and Unilever.

Bhat (1998) investigates the consumer reactions to the use of different brand names and the role of fit between the parent brand and the new product. Bhat (1998) distinguishes four brand naming strategies in naming new products. These are brand extension, new brand, sub-branding and nested branding. Brand extension is the use of the name of an existing brand. The second strategy is to use a new brand for the new product. The third strategy according Bhat (1998) is to use sub-branding for introducing a new product. Sub-branding is the use of a new brand next to an existing brand name. The sub-brand serves as a qualifier to the parent brand Bhat (1998). The last strategy; nested branding is a less popular strategy (Bhat,1998), where a new brand is simply introduced by a parent brand. Nested brands are Dockers by Levi’s and Courtyard by Marriot. This strategy clearly shows a separation between parent brand and the new brand in contrast to the case of sub-branding.

strategy and in the consumer mind. The separation is the highest in the house of brands option where the brands stand by themselves. In the endorsed brands and sub brand option the master brand/ sub brand relationship is present. Aaker & Joachimsthaler(2000) describe this as follows; the sub brand can refine and augment the master brand but cannot stray too far from the master brand’s identity. In the branded house option the master brand has the driver role and the sub brands are more descriptors with less responsibility.

Riezebos (2003) makes a distinction among three brand-name strategies; a monolithic brand name strategy, a dualithic brand name strategy and a multilithic brand name strategy. A monolithic brand name strategy uses one brand name and one visual style in different product groups or product classes. In a dualithic brand name strategy an organization uses two brand names for the same article. This is mainly the name of the company and an individual brand name for each product. A dualithic brand name strategy has two options. In the first option the individual brand name is a product line extension of the joint brand and in the second option the individual brand name is formed by a joint brand name. Riezebos (2003) calls the second option also an endorsement. The third name strategy of Riezebos (2003) is a multilithic brand name strategy or branded strategy. In this case a company uses different names for each brand. Within the multilithic brand name strategy Riezebos (2003) makes a distinction between similar and entirely different brand names. The series brands like MacShake, MacShake of McDonald’s can be classified as similar brands. Brands can also be classified as similar if the logos used are the same for the products. Unilever with different names but the same logo for their ice scream subsidiary is an example of this.

2.4.2 Brand name strategy framework

Table 2.2 Brand name strategies frameworks

Despite the varieties of brand name frameworks mentioned by researchers and used by organizations (LaForet & Saunders, 1994;2005) roughly five brand name strategies can be found. These strategies are: New brand strategy, Endorsed strategy, Linked strategy, Sub brand strategy and Parent brand strategy. This classification separates strategies on the role of the parent brand in the naming strategy. In the new brand strategy the role of the parent brand is very low, while in the parent brand strategy the parent brand is serving as the brand name and has thus the major role. In the endorsed strategy the new name plays a dominant role above the parent brand while in sub branding is the parent brand dominant above the product brand. The linked strategy is a name consisting of both brand names into a new name. Also in this strategy the parent brand has the dominant role above the product brand.

Some models do not have all the strategies in their framework. This is due to the fact that not every framework is designed from a corporate role versus product name relation. In this study the brand name strategy classification mentioned in table 2.2 will be used. Four of these strategies are of particular interests in this research namely the New brand strategy, Endorsed strategy, the Sub brand strategy and the Parent brand strategy.

2.4.3 Advantages and disadvantage of brand name strategies

Douglas et al. (1999) found in their study that a corporate name strategy is used only by a few companies. These companies have mainly a narrow and coherent product line. The prime objective of this strategy is to create a strong (global) identity rather than respond to consumer market conditions by a new brand name and associated positioning. Hereby the company can capitalize on the brand equity of the existing corporate name. Framework New Brand Endorsed Linked Sub Brand Parent Brand

Farquhar et al. (1992) Super Branding Brand Bridging Sub-branding

strategy Sub-brand strategy Olins (1989) Branded strategy Endorsing strategy or endorsing structure Endorsing strategy or endorsing structure Monolithic structure

LaForet & Saunders (1994,1999,2005) Branded strategy Endorsing strategy or endorsing structure Dual brand strategy Monolithic structure

Douglas et al. (1999) Product Dominant Product Dominant Corporate Dominant Corporate Dominant

Bhat (1998) New brand

strategy Nested branding Sub-branding strategy Brand extension

Aaker & Joachimsthaler (2000)

House of brands

Endorsed brands

Sub-brands Branded house

Riezebos (2003) Multilithic brand name strategy Endorsing strategy or endorsing structure

Series Brands Product line extension

Monolithic brand name strategy

Example Kaergärden Kaergärden by

Arla

ArlaKear Arla Kaergärden

The associations of the existing corporate brand are transferred to other products when the company decides to expand their product range with the same name. The existing corporate brand thus provides brand leverage in a certain way

(

Farquhar et al., 1992). It is hard for an organization to sustain a certain brand image among all different products with the same brand name; this can be considered as a disadvantage of this strategy according to Keller (2003). Thereby, as stated in the disadvantages paragraph of brand extension, the new product introduced under the same brand can influence the existing brand name negatively due to a lack of quality. Problems may also occur when the associations of the corporate brand are not transferred in a good way to the introduced product due to a lack of fit between the new product and existing associations of the corporate brand (Bhat et al., 1998).

The opposite strategy is a completely new brand name for a newly introduced product. This strategy is commonly used by U.S. firms that expand internationally (Douglas et al., 1999). By doing so consumer preferences can be met and companies can position brands among certain product benefits. These associations will not harm the parent brand since the brand names are not used together. This strategy will cost significant more time and effort since the brand equity of the new brand needs to be build up. When a shadow endorser is used in a new brand name strategy, for instance on the backside of the product, this will serve as credibility (Farquhar et al. 1992) for the new product, but it does not have a significant effect on the image of the new product.

The other two strategies that are of interest in this study fall between the two extreme strategies (parent brand and completely new name). The endorsed strategy has one main advantage, the image and associations of the corporate brand can be transferred. This has advantages for the consumer, since the consumer perceives the corporate name as a credible endorser in quality

(

Aaker & Joachimsthaler, 2000). The organization will gain advantages in a financial way since the brand building process will take less investments (Aaker & Joachimsthaler, 2000). On the other side the main disadvantage is that the endorsed product will fail and harm the corporate name (Keller,2003). This can be due to a lack of fit or in other words when the corporate name is stretched too much. The same advantages and disadvantages appear to the sub brand strategy. However the main difference between the strategies is that the corporate name is used in front of the product name in a sub brand strategy. In the endorsed strategy this is the other way around. In a sub brand strategy the product brand name has moreover fewer opportunities to build equity around its own associations (Keller, 2003 and Bhat, 1998) since the corporate name is used at first. By this, the sub brand strategy will also harm the corporate name more than in the case of an endorsed strategy when the new product fails (Aaker & Joachimsthaler, 2000).

choice for a certain strategy depends on the balance between the financial investment the company is willing to make for a brand strategy and the financial and strategic advantages a company aims to achieve on the basis of these investments. In practice (LaForet & Saunders, 1999 and 2005; Douglas et al., 1999) companies follow more than one brand name strategy and this is often due to the history of a company, especially in the case of corporate brand strategy (LaForet & Saunders, 1999; Douglas et al., 1999). The choice on what brand name to use is not within the scope of this research.

2.4.4 Conclusion

This paragraph discussed the manner in which product brands and corporate brands relate to each other, in other words the brand name strategy. The main academic frameworks are described and compared to each other. By doing this, it became clear that five main brand name strategies can be distinguished in the academic literature. These are New brand strategy, Endorsed strategy, Linked strategy, Sub brand strategy and Parent brand strategy. This classification separates strategies on the role of the parent brand in the naming strategy. In this study this name strategy classification will be used. Four of these strategies are of particular interests in this research namely the new brand strategy, endorsed strategy, the sub brand strategy and the parent brand strategy. Every brand name strategy has certain advantages and disadvantages. The main argument for indirect naming is that the extension will benefit from the familiarity with parent brand in a distant or veiled way and the introduction of a new name creates a distance from the parent brand. However the main disadvantage discussion in the academic literature concerns the negative spillover effects of a certain brand name strategy. According to Riezebos (2003), the choice for a certain strategy depends on the balance between the financial investment the company is willing to make for a brand strategy and the financial and strategic advantages a company aims to achieve based on these investments.

2.5

Consumer innovativeness

2.5.1 Consumer innovativeness in relation to consumer attitude towards brand

extension

The finding in academic research of consumer innovativeness in relation to the attitude towards the brand extension is that innovative consumers are more risk averse (Klink and Smith, 2001). Thereby, more innovative consumers show more positive attitude towards brand extensions (Hem et al., 2001). In addition, Klink and Smith (2001) find in their study that innovative consumers show a more positive attitude towards the brand extensions irrespectively their perceived fit with the parent brand. In the same line, evidence is found for the relationship between consumer innovativeness and perceived quality and moreover the buying intention of services (Hem et al., 2001) and tangible products (Volckner and Sattler, 2006). According to Rogers (1983) a prominent characteristic of innovative consumers is the comfort innovative consumers get when they obtain a risk. Xie (2008) find moreover that distant brand extensions appeals innovative consumers and thus do not care of trying extensions that are far away from the organizations main business. In addition to this, Martinez and Pina (2010) find in their study that consumer innovativeness has a unambiguous effect of the consumer attitude towards the brand extension.

2.5.2 Dimensions of consumer innovativeness

be derived. These are: hedonic, utilitarian, social and cognitive dimensions of consumer innovativeness. The present study acknowledge the existence of these dimensions, however the focus will be on the hedonic dimension of consumer innovativeness.

Vandecasteele and Geuens (2010) stated that the innovativeness literature is equivalent to theory concerning more general values, goals and motivation. These researches compared the human goals framework of Ford and Nichols (1987) to the hedonic dimension of the innovativeness scale. Vandecasteele and Geuens (2010) found that the hedonic dimension is almost the same compared to affective goals of the Ford and Nichols's framework. According to Vandecasteele and Geuens (2010) hedonic motivated consumes purchase new products for the reason that they want to be animated and want to have a feeling of happiness and pleasure. Thereby, the innovativeness dimension moreover fits with the value classification of Schwartz (1992) according to Vandecasteele and Geuens (2010). Since hedonic consumer innovativeness can be defined as a stimulation because it is among others an inspiration of the senses. In addition, the consumer hedonic innovativeness mesh with the hedonism value according to Vandecasteele and Geuens (2010).

2.5.3 Conclusion

Consumer innovativeness can be conceptualized as the tendency to buy new products sooner than the majority of the consumers in the market (Foxhall, Goldsmith & Brown, 1998). In academic research two streams exists on consumer innovativeness. Researches that consider the early adopter rationale and researchers that see consumer innovativeness as a personal trait. This research follows the personal trait streaming and moreover acknowledge that academic literature differentiate among four different consumer innovativeness dimensions. These are: a hedonic, a utilitarian, a social and a cognitive dimension. This study will only focus on the hedonic dimension of consumer innovativeness. The study will measure the hedonic consumer innovativeness by the five items of the 20-item four-dimensional Motivated Consumer Innovativeness (MCI) scale as proposed by Vandecasteele & Geuens (2009).

2.6

Consumer involvement

2.6.1 Product and decisional consumer involvement

Besides the numerous of meanings and definitions of consumer involvement, several conditions to classify consumer involvement exists in academic literature. A type of consumer involvement is the situational consumer involvement. Situational involvement can be defined as the short term interests with a high risk buying situation. Another type of consumer involvement is an ongoing consumer involvement in either high or low perceived risky buying situations. Mittal and Lee (1989) recognize another distinction in the type of involvement. They argue that consumers can be either product involved or has a brand decision involvement. Situational involvement can occur in both situations of the Mittal and Lee (1989) distinction of consumer involvement. To explain this, Mittal and Lee (1989) stated that consumers are not often involved in certain product categories, for instance washing machines. However, consumers tend to be involved when they make a decision in the brand of the washing machine. Mittal and Lee (1989) recognize thus two sorts of consumer involvement: product involvement and brand decision involvement. Product involvement is according to Mittal and Lee (1989) the consumer perception about the position a product engage in a consumer his life. The brand decision involvement reflects the consumer perception about making a carefully brand selection. Clarke (2006) add to the Mittal and Lee (1989) distinction that product involvement is the concern of a consumer in a certain product category and this is related to the main goals and values of the consumers. Thereby purchase involvement is the concern of making the right brand selection in a certain buying situation. The present study acknowledge the difference in involvements however it will focus on the product category involvement of consumers.

2.6.3 Consumer involvement in relation to consumer product attitude

2.6.4 Measurement of consumer involvement

A part of the academic literature on consumer involvement concerns the development of a reliable scale in order to measure consumer involvement. In the beginning the consumer involvement scales were in general based on a semantic scale. An example of such a scale is the scale developed by Zaichkowsky (1985) other formats were based on likert scales (Mittal, 1995). The semantic scale commonly consisted of five ranging to 20 items, which each item measured on a five a seven point semantic scale. A scale of 20 items was developed by Zaichkowsky (1985). This personal involvement inventory (PII) had a high reliability with an alpha of .95 to .97. The PII of Zaichkowsky (1985) was useable for different product categories. Zaichkowsky (1994) later on further developed the PII into a ten item scale and also reported with this measurement a strong reliability. Mittal (1995) builds further on the work of Zaichkowsky (1994) and find support for a reduction of the PII 20 item scale into a five item scale after comparing different variations of buying decision making involvement. The reduced scale of Mittal (1995) had a high reliability of .90 with is a reason of a to believe this measurement with a consumable product as objective. Mittal (1995) furthermore recognized that the major factors should be represented in the involvement scale and that found that five item scale of involvement is valid in many cases and occasions. Based on the findings of Mittal (1995) the five item consumer involvement scale developed by Mittal (1995) is found suitable to measure consumer product involvement in a fast moving consumer goods category which is of interest in this present study. Therefore this measurement scale will be used in the present study as proposed by Vandecasteele & Geuens (2009). In the measurement and scale paragraph the measurement scale will be discussed into more depth.

2.6.5 Conclusion

3.

Conceptual Model

The previous presented academic literature will be utilized in determining the expectations concerning the subjects of interest. These expectations will be formulated as hypotheses and are supported by academic literature in the following paragraphs.

3.1

Hypotheses

As mentioned before, among the various factors that influence the success of a brand extension, four factors are of principal interest in this study. These are, (1) the brand equity of the parent brand, (2) the brand name strategy used for the extension, (3) consumer innovativeness and (4) consumer product involvement.

Research indicates that extensions of high equity brands receive a more positive attitude by consumers (Keller, 2003). Strong brands have a high level of awareness and clearly defined associations. These associations are furthermore, strong, unique and favorable (Keller, 2003). Thus, consumers have clearer and stronger images and beliefs about strong brands above weaker brands. This makes these brands less vulnerable to brand extension failure (Morrin, 1999). The brand equity of a strong brand serves as a defender for brand extensions failures and thus avoids brand equity diminishing or negative spillover effects (Keller and Sood, 2003). Based on this, brands with higher equity are expected to have a more positive consumer attitude towards the extension. Furthermore, it is expected that the purchase intention and willingness to pay a price premium will be higher when the perceived brand equity is considered as high. This results in the following hypotheses:

H1A: There is a positive relationship between the perceived brand equity of the parent brand and the consumer evaluation of the brand extension.

H1B: There is a positive relationship between the perceived brand equity of the parent brand and the purchase intention of the brand extension.

H1C: There is a positive relationship between the perceived brand equity of the parent brand and the willingness to pay a price premium for the brand extension.

Milberg et al. (1997), Vanhonacker (2007) and Bhat et al. (1998) investigated the effects of different brand name strategies on brand extension evaluation. Bhat et al. (1998) stated that when consumers perceive a degree of fit between the extension and the parent brand that a descriptor is seen as the most accurate strategy besides the existing brand name. When the perceived fit is stated as excellent by consumers, they do not differ on the evaluation of a brand extension between a sub brand or a brand extension strategy (Bhat et al., 1998). When the fit is poor, a new brand seems the best strategy according to Bhat et al. (1998). Milberg et

al. (1997) explored the differences among direct brand extension strategy (Marriott Hotels) and sub branding