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Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
Consumer evaluation of brand extensions: can online brands be extended to offline products?
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Consumer evaluation of brand extensions: can online brands be extended to offline products?

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  • 1. MSc in INTERNATIONAL BUSINESS WITH MARKETING 2011 CONSUMER EVALUATIONS OF BRANDEXTENSIONS: CAN ONLINE BRANDS BE EXTENDED TO OFFLINE MARKETS? By ANTONIO MARTINEZ H00023227 Presented for the award of MSc. Heriot-Watt University i
  • 2. Can online brand be extended to offline products? ACKNOWLEDGEMNENTI would like to thank my parents for their continual support throughout myundergraduate and postgraduate years of study.To my supervisor, Steve Clode, thank you for allowing me to learn from my ownmistakes, and for encouraging me to explore. Your faultless guidance and unwaveringtrust will remain a standard of comparison for me in my future academic endeavours.To Ana Martinez, for being there, and for providing an ever-sympathetic ear to mygrievances. Thank you for your succor and faith.To my friend, Claudio Rider, without whom these academic year would have beenconsiderably less enriching. I also thank Dolores Rider for her assistance in providinggrammatical proof reading.Lastly, I offer my regards and blessings to all of those who supported me in anyrespect during the completion of the dissertation.Declaration I declare that the thesis embodies the results of my own work and has beencomposed by myself and meets the University policies on plagiarism and ethicalresearch. Where appropriate within the thesis I have made full acknowledgement tothe work and ideas of others or have made reference to work carried out incollaboration with other persons.Signature of student ………………………… Date: …………….Word count: 14,989 i
  • 3. ABSTRACT Increasing competence within the marketplace has provoked that firms seek togo beyond the boundaries of their actual businesses by offering products in totallynew markets. Companies attempt to reduce the risk associated with launching thesenew products by using an existing brand name, which allows the companies toleverage brand equity in the new product categories. Brand extension has become apopular strategy not only within the limits of offline markets but, also in an onlinecontext to the extent that numerous offline companies have extended their brands toonline markets. Nevertheless, a recent trend shows that the reverse is also possible,and Internet brands can also benefit from entering in new offline product categories.This study examines whether online brands can be successfully extended to offlineproduct categories from a consumer perspective. Specifically, this study develops anexplanatory model of consumer evaluation of brand extensions which combinesvariables previously studied in the literature with other extracted from online brandingand applies them to the research context. Empirical survey data are analysed through aregression analysis applied to different online brands and their offline extensions toidentify the most important factors influencing consumers´ attitude toward the brandextensions. The main results indicate that the attitude towards the offline extensionslaunched by online companies is determined by the degree of product similarity, thetransference of emotional associations with the parent brand to the new product, themarketing support received by the extension and the extent to which the consumersare involved with the new product category. As consequence of these findings, thesuccess of online brands going offline will depend on the capability of managers tobuild a strong and positive brand personality and organisational relationships withconsumers as well as implementing marketing activities which reinforce productsimilarity perceptions and foster consumer involvement with the brand extension.Keywords: Brand extensions, Brand equity, Brand associations, Brand knowledge,Brand loyalty, Brand image, online companies, perceived quality, similarity,consumer innovativeness, consumer involvement. ii
  • 4. TABLE OF CONTENTSACKNOWLEDGEMNENT ...................................................................................................................... IABSTRACT .......................................................................................................................................... IILIST OF FIGURES ................................................................................................................................VILIST OF TABLES ..................................................................................................................................VICHAPTER 1.INTRODUCTION ...................................................................................................... 1 1.1 BACKGROUND..................................................................................................................................... 1 1.2 PROBLEM STATEMENT.......................................................................................................................... 3 1.3 CONTRIBUTIONS .................................................................................................................................. 4 1.3.1 Theoretical Contributions ........................................................................................................ 4 1.3.2 Practical Contributions ............................................................................................................ 5 1.4 THESIS OUTLINE .................................................................................................................................. 5CHAPTER 2.BRAND EXTENSIONS ............................................................................................. 6 2.1 INTRODUCTION ................................................................................................................................... 6 2.2 CONCEPTUALISATION. .......................................................................................................................... 6 2.3 PSYCHOLOGICAL PROCESSES INVOLVED IN BRAND EXTENSION EVALUATIONS .................................................. 9 2.4 CONSUMER EVALUATIONS OF BRAND EXTENSIONS .................................................................................. 10 2.4.1 Similarity ............................................................................................................................... 12 2.4.2 Characteristics of the parent brand ...................................................................................... 13 2.4.3 The extension´s marketing context ....................................................................................... 14 2.4.4 Consumer characteristics ...................................................................................................... 14 2.4.5 Limitations of the current research on brand extensions...................................................... 15 2.5 BRAND EXTENSIONS OF ONLINE BRANDS ............................................................................................... 16 2.6 SUMMARY ....................................................................................................................................... 18CHAPTER 3. HYPOTHESES........................................................................................................ 20 3.1 INTRODUCTION ................................................................................................................................. 20 3.2 BRAND EQUITY VARIABLES................................................................................................................... 20 3.2.1 Brand knowledge .................................................................................................................. 22 3.2.2 Perceived Quality .................................................................................................................. 23 3.2.3 Brand Associations. ............................................................................................................... 24 3.2.4 Brand Loyalty ........................................................................................................................ 27 3.3 MARKETING SUPPORT ........................................................................................................................ 28 3.4 PERCEIVED SIMILARITY ........................................................................................................................ 29 3.4.1 Product category similarity ................................................................................................... 29 3.4.2 Brand image Similarity .......................................................................................................... 30 iii
  • 5. 3.5 INVOLVEMENT IN THE EXTENSION PRODUCT CATEGORY ............................................................................. 31 3.6 CONSUMER INNOVATIVENESS .............................................................................................................. 32 3.7 THE HYPOTHESIZED MODEL ................................................................................................................ 34 3.8 SUMMARY ....................................................................................................................................... 35CHAPTER 4. METHODOLOGY .................................................................................................. 36 4.1 INTRODUCTION ................................................................................................................................. 36 4.2 RESEARCH PHILOSOPHY ...................................................................................................................... 36 4.3 RESEARCH DESIGN ............................................................................................................................. 37 4.3.1 Research strategy ................................................................................................................. 38 4.3.1 Time horizon ......................................................................................................................... 39 4.4 SURVEY DEVELOPMENT ...................................................................................................................... 39 4.4.1 Selection of brands and extensions ....................................................................................... 40 4.4.2 Scaling and multi-item scales................................................................................................ 41 4.5 SAMPLING........................................................................................................................................ 46CHAPTER 5. DISCUSSION .......................................................................................................... 48 5.1 INTRODUCTION ................................................................................................................................. 48 5.2 RELIABILITY AND CORRELATION ANALYSES. ............................................................................................. 48 5.2.1 Reliability analysis ................................................................................................................. 48 5.2.2 Correlation analysis............................................................................................................... 49 5.3 REGRESSION ANALYSIS ........................................................................................................................ 50 5.4 HYPOTHESES TESTING ........................................................................................................................ 53 5.5 DISCUSSION ..................................................................................................................................... 55 5.6 SUMMARY ....................................................................................................................................... 57CHAPTER 7. CONCLUSION........................................................................................................ 59 7.1 CONCLUSION .................................................................................................................................... 59 7.2 IMPLICATIONS ................................................................................................................................... 59 7.2.1 Theoretical Implications ........................................................................................................ 59 7.2.2 Managerial Implications ....................................................................................................... 60 7.3 LIMITATIONS AND DIRECTIONS FOR FURTHER RESEARCH ........................................................................... 61REFERENCES ..................................................................................................................................... 63APPENDIX ........................................................................................................................................ 78 APPENDIX A – SPSS DATA ...................................................................................................................... 78 Appendix A.1: Reliability Analysis .................................................................................................. 78 Appendix A.2: Correlation analysis ................................................................................................ 80 Appendix A.3: Regression analysis ................................................................................................. 82 iv
  • 6. APPENDIX B - QUESTIONNAIRES ........................................................................................................... 90 QUESTIONNAIRE 1: GOOGLE.......................................................................................................... 91 QUESTIONNAIRE 2: AMAZON ........................................................................................................ 95 v
  • 7. LIST OF FIGURESFIGURE 2.1: TAUBER´S GROWTH MATRIX ......................................................................................................... 7FIGURE 2.2: E-SERVICE PORTALS GRID ........................................................................................................... 17FIGURE 3.1: HYPOTHESIZED MODEL .............................................................................................................. 35LIST OF TABLESTABLE 2.1: MAIN FACTORS OF BRAND EXTENSION EVALUATION ......................................................................... 11TABLE 3.1: HYPOTHESES ............................................................................................................................. 33TABLE 4.1: OVERVIEW OF ONLINE BRANDS AND OFFLINE EXTENSIONS .................................................................. 41TABLE 4.2: SCALES USED IN THE QUESTIONNAIRES ............................................................................................ 44TABLE 5.1: CRONBACH´S ALPHA COEFFICIENTS FOR MULTI-ITEMS CONSTRUCTS.................................................... 49TABLE 5.2: CORRELATIONS .......................................................................................................................... 50TABLE 5.3: REGRESSION I (AGGREGATED COMPONENTS OF SIMILARITY) ............................................................... 51TABLE 5.4: REGRESSION II (SEPARATED COMPONENTS OF SIMILARITY)................................................................. 52TABLE 5.5: REGRESSION ANALYSIS BY TYPE OF COMPANY .................................................................................. 53TABLE 5.6: REVIEW ON HYPOTHESES ............................................................................................................. 58 vi
  • 8. Can online brand be extended to offline products? CHAPTER 1.INTRODUCTION1.1 Background. Increasingly competitive forces in the global markets are forcing companies todifferentiate themselves from competitors in order to survive and take advantage ofthe current opportunities of growth. One way to differentiate from competitors is theestablishment of strong brands that allow companies to increase the efficiency of theirmarketing expenses (Keller, 1993) achieving thus benefits to the company such as amore favourable perception of the products by the customers, greater loyalty, lessvulnerability to competitors´ marketing actions, high profits margins, less negativereactions by consumers to price increases, higher support of middlemen, highermarketing promotion effectiveness, increasing licensing and brand extensionsopportunities (Keller, 2008). In other words, while competitors can emulate financialand physical assets, intangible assets, as brands, represent a more sustainablecompetitive advantage (Hunt and Morgan 1995). The importance of brands is not onlymeasured in terms of the competitive advantages that they provide in their presentmarkets but also the future opportunities that they provide in untapped markets(Srivastava and Shocker, 1991). This way, firms can enter new markets by using anexisting, well-known brand name in order to reduce both the cost of launching newproducts and the risk of product failure. The strategy behind the leverage of thecompany brand equity to new markets, products or sectors is known as brandextension. The acceptance of brand extension is principally due to the benefits that bothbrand and extension provide (Keller, 2003). On the one hand, the productcommercialised under a well-known brand is more attractive to the consumers (Aakerand Keller 1990) and suppliers, thus reducing the marketing costs and increasing thechance of success (Morrin, 1999). On the other hand, brand extensions reinforcebrand image and notoriety, which make consumers purchase other products offered bythe brand (Chen and Liu, 2004). All this allows an increase of the market share andefficiency of market efforts (Smith and Park, 1992). In other words, extensions benefitthe companies because they transfer intangible components of the brand such as brandawareness, trust or other specific brand associations (Broniarczyk and Alba, 1994) 1
  • 9. stored in the consumers´ minds to the new products. For example, NationalGeographic has been able to extend successfully its brand by transferring associationsof nature, adventure and multiculturalism from photography and documentaries totravel products, furniture or outdoors clothing (shop.nationalgeographic.com). Despite the positive effects of brand extensions, their inappropriate use mayharm the company´s brand image if the new products do not fit with the consumers´brand associations. This does not mean that a high degree of similarity between theparent brand product category and the new product has to be present; in fact, somecompanies have stretched their brands to very dissimilar product classes. For instance,Louis Vuitton successfully extended to luxury resorts although it is a differentbusiness from fashion (Passariello, 2010). The use of brand extensions as a strategy to achieve growth has drasticallyincreased in recent years. In fact, between 80 and 90% of new products are launchedunder the name of an existing brand (Völckner and Sattler, 2004). This recentproliferation of brand extensions has contributed to change market structures in manysectors. For example, in the financial services sector the entry of new competitorsfrom the retailing sector (e.g., Tesco or Sainsbury´s) has intensified the competenceand divided even more the market among participants. On the other hand, extensionshave also gone through the borders of the offline markets to markets from the onlinedomain. Consequently, companies have stretched their brands within and towards theonline markets. Traditionally based offline companies, in addition to use the internetas an alternative distribution channel (Levin et al. 2003) or mean of runningcommunication campaigns (Srisuwan and Barnes, 2008), have considered the onlinedomain as a valuable market to commercialise both their current products or servicesand their extensions. For instance, Apple sells mobile applications and music on theinternet through its iTunes shop (Bravo et al., 2010). For offline brands, the expansioninto the online market increases the brand value for consumers by providingadditional availability and exposure through the internet (Rubinstein and Griffiths,2001). On the other hand, some online businesses, such as Google, Amazon, Yahooand eBay, have extended their brands within the Internet limits, becoming some of thetop 100 global brands according to the Interbrand report (Interbrand, 2010). Amazon,for instance, started to sell electronic goods and music online in addition to books.It isalso possible to extend online brands to offline markets. Following this trend, Google 2
  • 10. has launched a new mobile phone which uses Google´s mobile operation system,Android. Besides, Amazon has extended its name to a new device, Amazon Kindle,which enables consumers to read eBooks, newspapers and magazines through anInternet connection. Therefore, offline markets enable Internet brands to enhancebrand awareness by making them more tangible for consumers, which may createstronger trust and consequently higher brand loyalty (Yoo and Donthu, 2001; Delgadoand Hernández, 2008). Furthermore, the adaptation of online brands´ competences(communication, customer service, IT) to the commercialisation of offline productsand the absence of some of the costs originally attributed to brick and mortarcompanies such as, costs linked to the establishment of stores, turn offline productinto attractive markets where online brands can be extended. Hence, it would beinteresting to investigate how online brands can leverage brand equity to new offlineproducts.1.2 Problem Statement. Customer evaluation of brand extensions plays a vital role in the success orfail of new products launched into the markets (Klink and Smith, 2001). Numerousacademic studies have contributed to determinate the factors that shape customerattitudes towards the extension. However, there is a lack of agreement regarding thevalidity of these factors across sectors, brands and product categories. This studyinvestigates the applicability of the aforementioned factors in the context of onlinebrands that launch their products into offline markets. In other words, the studyattempts to answer the following statement: Can online brands be extended to offline products? Additionally, the purpose of this research is to: (1) determine the feasibility offactors proposed by previous research within the context of online brands, (2) assessthe significance of the variables within the brand equity construct (Aaker, 1996) inpredicting consumer attitude towards extensions, (3) examine whether antecedentsfrom brand extension theory can be combined with those related to online brandmanagement in order to build a valid model to predict consumer acceptance of brandextensions in the research context; and (4) establish managerial recommendations 3
  • 11. based on the research´s findings that may help online brand managers to developstrategies oriented to enhance the acceptance of brand extensions.1.3 Contributions 1.3.1 Theoretical Contributions Extensive research on brand extension has added a considerable number ofpotential determinants of brand extension success without achieving generallyaccepted conclusions (Czellar, 2003; Völckner and Sattler, 2007). Indeed,approximately 15 explicative factors of brand extension success have been found tobe significantly relevant in at least one empirical study (Völckner and Sattler, 2006).However, the majority of these studies are focused on a limited number of variablesand they do not consider possible relationships among determinants (Buil et al.,2008b). The current study includes the determinants that have been mostly accepted byscholars within a unique model with the objective of assessing the validity of thesefactors when they are applied to a different scope (online brands). In other words, thestudy will examine whether current research is extra-sectoral and thus, brand equitycan be leveraged beyond the online limits towards offline products. Besides the above mentioned replication, the study contributes to the existingtheory on brand extension by measuring the similarities between the parent brand andthe extension as a multidimensional construct. Along with the product categorydimension suggested by Aaker and Keller, (1990), the proposed model includes theperceive similarity between the new extension and brand image (Park et al., 1991). On the other hand, an additional contribution of this study is the incorporationof brand equity variables such as brand loyalty (Yoo and Donthu, 2001), brandknowledge (Dawar, 1996) and brand associations (Aaker, 1996) as determinantsfactors of the success of brand extensions. Specially, brand associations areintroduced within the model according to the differentiation made by Aaker, (1996)who distinguished three types of associations: brand-as-product (value associations),brand-as-person (brand personality) and brand-as-organisation (organisationalassociations). This study also contributes to extend the current research on online brandextensions (van Riel and Ouwersloot, 2005) by incorporating new factors, relative to 4
  • 12. consumer characteristics such as innovativeness and involvement with the extension,to the explanatory model of brand extension evaluations. Finally, the theoretical findings of this study contribute and complement thecurrent understanding within the online branding theory. 1.3.2 Practical Contributions This study may help managers identify and monitor the factors that stimulatethe acceptance of offline products launched under online brand names as well as todetect harmful factors to the parent brand image. Moreover, the findings of thisresearch may determine whether the explicative factors affect in the same manner todifferent kinds of online brands which have a virtual origin (e-portals and e-tailers)and thus, brand extension strategies for each of these types of online brands should beadapted accordingly.1.4 Thesis Outline The thesis is structured as follows: the first part reviews the existing literatureon brand extension concepts and antecedents as well as the studies that haveconsidered brand extensions in the context of online brands. Thereafter, the secondpart introduces a conceptual framework and, establishes a set of hypotheses based onthe theories provided in the preceding chapters and presents the hypothesizedtheoretical model applied to online companies. This is followed by a research designsection where the applied methodology is described. The third part presents theresearch findings, where the proposed hypotheses and model are tested by analysingand interpreting the empirical data. Finally, the last section is related to theconclusions and provides a summary of the main findings, obtained conclusions,theoretical and managerial implications, as well as, limitations and directions forfuture research. 5
  • 13. CHAPTER 2.BRAND EXTENSIONS2.1 Introduction Brand extensions represent an important growth strategy for companies facinga fierce competence within the marketplace. The use of an already existing brandwhen launching new products into the market increases the likelihood of successbecause consumers perceive a lower risk in their purchasing process (Montgomeryand Wernerfelt, 1992) and transfer positive consumer associations to the new product(Aaker and Keller, 1990). Therefore, the way in which consumers evaluate the newextensions and the determinants involved in this process will determine the success orfail of brand extensions and, consequently, the image of the parent brand may bereinforced or harmed (Keller, 2003) In order to investigate how consumers evaluate brand extensions, scholarshave proposed numerous explicative factors of consumers´ attitude towards the newproducts and they have applied them to different types of products, companies andmarkets. Following this idea, this chapter reviews the existing literature regardingconsumer evaluation of brand extensions. The chapter begins with a conceptualisationof the different strategies in which a company can make use of its band in order tolaunch new products. Afterwards, the psychological processes involved in consumers´evaluations of new products are described. Thirdly, a review of the main explicativefactors of brand extensions evaluation is provided along with the limitations on brandextension research. Finally, the chapter concludes with a review of the studies thathave been applied to the context of online companies in which this research worktakes place.2.2 Conceptualisation. Intense competition forces companies to adopt strategies that allow them toremain in the market while taking advantage of the opportunities of growth that arepresent across sectors. Tauber (1981) categorised the opportunities of growth for afirm by using two dimensions: product category and firm´s brand name as shown inthe matrix in Figure 1. 6
  • 14. FIGURE 2.1: Tauber´s growth matrix New Existing New New product Flanker brand Brand name Existing Franchise extension Line extension Product categorySource: Tauber, (1981) Tauber made a difference between four possible strategies that utilise a new orexisting brand name in order to commercialise products within a new or existingproduct category for the company (new product, flanker brand, franchise extensionand line extension). Regarding the strategies where the company adopts an existingbrand name to take advantage of market opportunities by leveraging the benefitslinked with the brand such as customer awareness, goodwill and impressionsconveyed by its brand name, Tauber identified two ways to extent an existing brand,termed as line extension and franchise extension. Whereas line extension representsnew sizes, flavours, and the like where items use an existing brand name in a firm´spresent category, franchise extensions refers to taking a brand name familiar to theconsumer and apply it to products that are in a new category to the parent brand.Following Tauber´s definition of extension strategies, scholars have also identifiedtwo extension strategies: line extensions and brand extensions. Keller and Aaker(1992) defined line extension as the fact of extending a current brand name into a newmarket segment in its product category. In contrast, Brand extensions are those thatuse a current brand name to enter a completely different product class or category(Aaker and Keller, 1990). According to Ambler and Styles (1997) the definition ofbrand extension proposed by Aaker and Keller (1990) acknowledges to the Tauber´sconcept of franchise extension. The different attempts to define brand extension by academics shownoticeable variations in the literature. Kotler (1991) defined brand extensions using aholistic approach as “any effort to extend a successful brand name to launch new ormodified products or lines”. On the other hand, Choi (1998) supported that brandextensions are explained as the use of an existing brand name in a category to 7
  • 15. introduce products in a totally different category. A more general definition of brandextension was given by Keller (2003, p. 577) who held that “a brand extension iswhen a firm uses an established brand name to introduce a new product”. Extension strategies have not only been classified according to differences inproduct category but also regarding quality of the extension and similarity amongcategories. In this line, Randall et al. (1998) distinguished between horizontal andvertical brand extensions. The former is regarded as dissimilar brand extensionswhich apply an available brand name to enter a new product category. Vertical brandextensions involve products with similar or modified features within the same productcategory, although at a different price or quality level (Reddy et al., 1994). Therefore,according to Buil et al. (2008b) the definition of vertical brand extension addsdifferences in quality and price to the definitions of line extension proposed by Tauber(1981) and Keller and Aaker (1992), but represent the same concept. The differences in quality and price within vertical brand extensions can becategorized in upscale and downscale brand extensions (Pitta and Katsanis, 1995).The first one is related to extension with higher quality and price than the parent brandproducts. On the other hand, downscale extensions involve products in the samecategory of the parent brand products but at a lower price and quality. The category ofvertical extension, upscale or downscale, depends on the type of product offered bythe company. Whereas downscale vertical extensions allow consumers try and learnabout the new functional product based on brand awareness and parent brandcompany prestige (Xie, 2008), upscale extensions are more effective for luxuryproducts where consumers are more likely to transfer perceptions about quality andconsequently high price to the new products (Pitta and Katsanis, 1995) All these definitions agree with the fact that an existing or established brandcan be used as ways of commercialising products which are, in certain degree, new tothe firm. Nevertheless, the degree to which scholars define the product category hascaused that the terms of brand and line extensions are used interchangeably dependingon how broad the product category is defined (Ambler and Styles, 1997). Forexample, Sony´s range of mobile phones could not be considered as brand extensionif Sony´s product category was defined more broadly as “consumer electronics” andthus mobile phones would represent a line extension in this case (Ambler and Styles,1997). Regardless, the existence of variations in defining brand extension, researchers 8
  • 16. (Volckner and Sattler, 2007) have mostly adopted the definition proposed by Aakerand Keller (1990) who defined brand extension as: “Brand Extensions involve the use of an established brand name to enter anew product category” However, whether the existing brand name is used to a new or existingproduct category; the company pursues the objective of transferring positiveconsumers´ associations towards the brand to the new products (Aaker and Keller,1990) and thus, the psychological processes by which customers assign certainproducts to one category rather than another (Kapferer, 1997), create impressions ofbrand extensions as well as of the factors involved in these processes, which willdeterminate whether a brand can be successfully extended to a given category (Klinkand Smith, 2001).2.3 Psychological Processes Involved in Brand ExtensionEvaluations Consumers play a significant role within brand extension strategy becausetheir judgements regarding the new extensions will be one of the principaldeterminants of successful brand extensions (Klink and Smith, 2001). Therefore,understanding how consumers evaluate brand extensions and the subjacentpsychological processes involved is crucial in order to elaborate and implementefficient branding strategies for new products. Two main psychological processes have been used in order to explain howconsumers evaluate the new products: categorical and piecemeal evaluation process.The former suggests that individuals evaluate the new instances by comparing themwith previous acquired information stored in form of categorical structures withinmemory (Fiske, 1982). In contrast, “piecemeal” information processes (Fiske, 1982),“analytical” (Cohen, 1982) or “computational” (Brooks, 1978) stated that evaluationsof a new instance are based on its specific attributes rather than on initial beliefs(Bristol, 1996). Related to the evaluation of brand extensions, Boush and Loken (1991)maintained that a categorical evaluation process is developed when the brandextension is perceived by consumers as belonging to an already existing category(brand). Therefore, beliefs and attitudes associated with the parent brand are 9
  • 17. transferred to the new product (Romeo, 1991). However, if consumers do notidentified congruence with the mental category associated to the brand, a piecemealprocess is activated in which consumers evaluate the new product by makinginferences over the extension individual attributes (Fiske and Pavelchack, 1986).Thus, both theories are not exclusive and result on a two-stage process where brandextensions are evaluated according to previous affect associations towards the brandin the first place and a second stage where consumers elicit an analytical evaluation ofthe extension (Fiske and Pavelchack, 1986).2.4 Consumer Evaluations of Brand Extensions Ever since the first relevant article on customer evaluations of brandextensions was published by Boush et al. (1987), researchers have focused theirresearches on investigating the antecedents, processes, and consequences of brandextension evaluation (Hem et al. 2003), as well as achieving a generalisation of thesefactors across product categories and parent brands (Volckner and Sattler, 2007;Czellar, 2003). Boush et al. (1987) identified perceived similarity and parent brand reputationas explicative factors of positive customer evaluations of extensions. They concludedthat similarities between product categories, original product and extension, enablethe transfer of positive affection to the new product. On the other hand, the studysuggested that a brand´s good reputation in one product area cannot be transferred inthe same way to a dissimilar product category, since it would produce negativeevaluations from consumers. Following the research line supported by Boush et al., (1987), Aaker andKeller´s (1990) seminal article assessed not only the role of similarity betweenoriginal and extension product classes but also proposed that customers´ qualityperceptions about the parent brand and the difficulty of producing the extensiondetermined the consumer acceptance of brand extensions. Despite of the fact thisarticle stated the base of subsequent research on brand extensions and it has beenapplied to different contexts such as services (Hem et al. 2003) or online extensions(van Riel and Ouwersloot, 2005), replications have emerged about the validity andgeneralisation of its conclusions (e.g., Broniarczyk and Alba, 1994; Bottomley andDoyle, 1996; Bottomley and Holoden, 2001). Moreover, additional factors such as 10
  • 18. consumer innovativeness (Klink and Smith, 2001), familiarity (Dawar et al., 1996) or marketing support (Reddy et al. 1994) were subsequently tested in brand extension literature with mixed conclusions. These factors can be classified, as shown in Table 1, in four groups: (1) parent brand characteristics, (2) perceived similarity, (3) the extension´s marketing context (Völckner and Sattler, 2006), and (4) consumer characteristics (Czellar, 2003).TABLE 2.1: Main factors of brand extension evaluationFactors related to the parent brandFactor Consumers evaluate positively the extension if… Source Bottomley and Holden, (2001);Perceived quality The perceived quality of the parent brand is high Gronhaug et al., (2002) Park et al., (1991); Hem et al., They transfer positive brand associations to theBrand associations (2003); De Ruyter and Wetzels, extension (2000) Hem et al, (2003), Buil and Pina,Brand Loyalty They are loyal to the parent brand (2008)Familiarity The familiarity with the parent brand is high Swaminathan, (2003)SimilarityProduct category similarity There is congruence between product categories Aaker and Keller, (1990)Brand concept consistency Parent brand and extension share the same image Park et al., (1991)The extension´s marketing contextMarketing support The extension receives appropriate marketing support Reddy et al.,(1994)Advertising The extension is well supported in terms of advertising Völckner and Sattler, (2006)Consumer characteristics Klink and Smith, (2001); Hem et al.,Innovativeness They are highly innovative (early adopters) (2003) They have a high motivation for purchasing theMotivation Gürhan-Canli and Maheswaran, (1998) extension There is an involvement in the brand extension Hansen and Hem, (2004); SteenkampInvolvement category and Baumgartner, (1992). 11
  • 19. 2.4.1 Similarity One of the most important contributions of Aaker and Keller´s (1990) studywas the role of similarity in consumer attitude towards brand extensions. Aaker andKeller (1990) included three dimensions of similarity: complementarity, substitutionand transfer. Whereas the two first concepts allude to how consumers view twoproducts classes as complement or substitutes respectively, transfer shows howconsumers evaluate whether the skills, competences and resources owned by theparent brand can be employed in producing the extension. The authors concluded thatonly the transfer dimension presented a direct association with attitude towards theextension. Boush and Loken (1991) defined similarity by evaluating how typical brandextensions are for consumers in terms of product features shared by the brand´scurrent products and the extension. Whereas typical or atypical extensions areevaluated by categorisation, moderately typical extensions are likely to be assessedthrough piecemeal process. Furthermore, they suggested that the direct relationshipbetween similarity and consumer evaluations of brand extensions can also producenegative effects to the parent brand, in the case of atypical brand extensions. Unlike the aforementioned studies that explain similarity by using a product-category approach, Park et al. (1991) suggested that extensions are more favourablyevaluated when they are consistent to the consumers´ brand-concept associations suchas reliability or status. Consequently, they concluded that similarity is explained bytwo factors, product feature similarity and brand-concept consistency. The importanceof brand concept consistence has been supported by subsequent studies (Broniarczykand Alba, 1994; Volcker and Sattler, 2006; Hem and Iversen 2009) In this line, Broniarczyk and Alba (1994) indicated the existence of specificbrand associations (e.g., friendliness or reliability) that moderate the influence ofproduct category similarity in extension evaluations because of the fact that theseassociations are strong, so they enable a brand to extend to dissimilar productcategories. Thus, the existence of a high degree of congruence between the consumerbrand specific associations and extension product concept has positive effects onconsumer appraisal. (Czellar, 2003) Regardless of the fact that positive outcomes of similarity have beenrecognised, scholars have found moderating conditions which affect similarity when it 12
  • 20. comes to explaining consumers´ attitude towards the extensions. Smith and Park(1992) considered that when a greater amount of product related information isavailable, consumers do not use similarity between the brand and the extensioncategories as a major cue in their evaluations and, hence, more analytical evaluationprocesses take place. Supporting these findings, Klink and Smith, (2001) argued thatthe limited extension attribute information provided in prior research has provoked anoverestimation of similarity as evaluation factor. Most recent studies have included other moderating variables of similaritysuch as the number of products associated with the brand (Del Vecchio, 2000), theexposure to the extension (Klink and Smith, 2001); and the price and perceivedquality of the extension (Taylor and Bearden, 2002). Despite of the aforementionedmoderating variables, there is an agreement among academics regarding theimportance of similarity on brand extension evaluation (Völckner and Sattler, 2006). 2.4.2 Characteristics of the parent brand The research on factors related to the parent brand has principally focused ondifferent elements of the brand equity construct (Aaker, 1996) such as perceivequality, brand familiarity, brand associations and brand loyalty. In Aaker and Keller´s,(1990) study, perceived quality of the parent brand did not present any positive directeffect on brand extension evaluation. Nevertheless, further empirical research(Bottomley and Holden, 2001; Gronhaug et al., 2002) demonstrated a positiverelationship between perceived quality and brand extension success. Supporting thesefinding, Rao et al., (1999) suggested that quality perceptions of parent brands aretransferred to new products. In a recent article, Völckner et al., (2010) went evenfurther by stating that perceived quality is the principal driver of brand extensionssuccess rather than similarity in the case of services. On the other hand, brandfamiliarity has proved to have a positive direct effect on brand extension evaluationbecause consumers are more inclined to buy products of brands they have previouslyconsumed (Swaminathan, 2003). Dawar, (1996) studied familiarity in relation toperceived fit and found contrasting results depending on the different associationsbetween the extension and the brand. Brand associations represent another importantfeature of the parent brand. These associations have been investigated in terms ofperceptions of credibility (De Ruyter and Wetzels, 2000), reputation (Hem et al., 13
  • 21. 2003), prestige (Park et al., 1991) and the consumers’ affection for the brand (Sheininand Schmitt, 1994). Regardless of the fact that brand associations have proved toproduce positive effect on quality, similarity and, consequently, attitude towards theextension (Martinez and Pina, 2005); there is a lack of agreement in the way in whichthey are measured. Finally, brand loyalty has been incorporated by recent studies(Hem and Iversen, 2003, Build and Pina, 2008) as an important driver of brandextension success. However, the implications of brand loyalty in brand extensionevaluation have not been replicated and tested in different contexts. 2.4.3 The extension´s marketing context A third group of brand extension factors has emerged in order to explain themarketing context in which extensions are developed. Therefore, scholars haveproposed variables such as the marketing support of the brand towards the newproducts and the role of advertising in brand extension evaluation. Reddy et al.,(1994) studied the effects of marketing competences and advertising support on brandextension evaluations. The author concluded that extensions which receive greatermarketing support in terms of advertising and promotional effort are more favourablyevaluated by consumers. However, this relationship was studied regarding lineextensions rather than brand extension. In order to test these findings, Völckner andSattler, (2006) applied Reddy et al´s, (1994) measures of marketing support to thecontext of fast moving consumer goods, supporting the positive effect of marketingsupport on consumers´ attitude towards extensions . 2.4.4 Consumer characteristics Certain consumer characteristics such as innovativeness, motivation orinvolvement with the extension category, have been introduced within the explicativefactors of consumer attitude towards brand extensions. Klink and Smith, (2001)suggested that highly innovative consumers (early adopters) perceive a lower riskfrom the new products and consequently, they do not base their evaluations onsimilarity. Hem et al., (2003) demonstrated a direct relationship betweeninnovativeness and consumer acceptance of brand extensions and suggested that thisis even stronger in the case of service brand extensions. A second factor is theconsumers´ motivation towards the extension. Gürhan-Canli and Maheswaran, (1998) 14
  • 22. found that whereas highly motivated consumers tend to evaluate the new products in apiecemeal manner, under low motivation conditions, consumers are more likely totransfer affect and prior beliefs from the parent brand to the new extension. On theother hand, consumer´s involvement with the extension product category has beenfound to increase the purchase intention of brand extensions (Hansen and Hem, 2004).In this way, highly involved consumers tend to be less risk averse than otherconsumers and therefore, they are believed to evaluate extensions more positively(Steenkamp and Baumgartner, 1992). The review of brand extension factors presented above only explains thosefactors that have been proved to be significantly relevant, as they are significant in atleast one empirical study, following the line proposed by Völckner and Sattler,(2006). However, literature on brand extension has not achieved a generalisationwhich is applicable across sectors, brands and extensions. In addition, it still presentsa series of limitations which have prevented scholars from elaborating an explanatoryempirical model of consumer evaluation of brand extensions. These limitations areoutlined in the following section. 2.4.5 Limitations of the current research on brand extensions According to the previous review of the drivers of brand extension success, thelimitations of the current research on brand extension are explained by: (1) the use ofhypothetical brand extensions rather than real extensions already introduced in themarket, (2) the scarce number of studies dedicated to obtain general conclusions(Völcker and Sattler, 2007) and (3) lack of studies in the online context. There is a preponderance of studies that have evaluated consumer attitudetowards brand extensions by making use of hypothetical brand extensions associatedto real brands (Aaker and Keller, 1990; Bottomley and Holden, 2001; Broniarczykand Alba, 1994). These extensions do not provide additional information from themarketplace as it is the case of extensions already introduced into the markets. Asmentioned, Klink and Smith, (1992) suggested that additional product informationmoderates the significance of perceived quality and similarity. Nevertheless, Völcknerand Sattler, (2007) argued that similarity and perceived quality are the two moresignificant drivers of both real and fictitious brand extensions. 15
  • 23. According to Buil et al., (2008) the majority of explanatory models proposedby scholars are centred on a limited number of factors rather than seekinggeneralisation. Only three studies have been addressed to achieve general results(Klink and Smith, 2001; Bottomley and Holden, 2001; Völckner and Sattler, 2007).Whereas Klink and Smith, (2001) considered that the positive effects of perceivedsimilarity were generally applicable across brands and extensions, Bottomley andHolden, (2001) suggested that, along with similarity, perceived quality and thedifficulty of producing the extension (Aaker and Keller, 1990) were common factorsof consumers´ evaluations of brand extensions. However, the pointed out that culturaldifferences may affect the intensity of these variables. Finally, Völckner and Sattler´s,(2007) findings reinforced the empirical generalizability of similarity and perceivedquality across product categories, parent brands, samples, success measures and bothreal and hypothetical extensions. Notwithstanding, these generalizations did not testother significant determinants of brand extension success (e.g., brand loyalty) and arefocused on fast moving consumer goods extensions and offline brands withoutmaking any consideration for online brands and extensions. Numerous empirical studies have been conducted in order to establish thepredictive factors of consumer attitude towards extensions in the cases of fast movingconsumer goods, durable goods and services within an offline context (Aaker andKeller, 1990; Martínez and De Chernatony, 2004; Völckner and Sattler, 2006;Martinez et al. 2008; Salinas and Perez 2009). However, scholars have not dedicatedmuch research to the study of the effects of these factors on online brands whichstretch their products or services (van Riel and Ouwersloot, 2005). The followingsection is dedicated to review the brand extension research in the case of onlinecompanies.2.5 Brand Extensions of Online Brands As mentioned, to the date, only a limited number of studies have investigatedthe explicative factors of brand extension success in the online context. Van Riel andOuwersloot, (2005) introduced the first study on brand extension applied to onlineservices. They categorised online services in four groups depending on the origin ofthe company (online or physical) and the type of product that provide (tangible goods 16
  • 24. and traditional services or virtual products). These four types of online companies areshown in Figure 2. FIGURE 2.2: e-service portals grid ORIGIN Virtual Physical E-portals (Click & bits) Company portals (Bricks & bits) Virtual  Google  MSNPRODUCT  Yahoo  CNN E-tailers (Click & mortar) E-sellers (Bricks & mortar) Physical  Amazon  EasyJet  DellSource: van Riel and Ouwersloot, (2005) Van Riel and Ouwersloot, (2005) tested the model proposed by Aaker andKeller, (1990) for each of the aforementioned types of e-service providers, mentionedin the grid. They found that the variables of similarity, perceived quality and difficultyof producing the extension help explain consumer attitude towards online servicesextensions. Therefore, they concluded that consumers perceive online extensions in asimilar way to other product categories. Despite these affirmations, the authorsmaintained that online services are subject to a more complex evaluation mechanismthan offline goods or services. Moreover, the research presented the limitation ofconsidering only factors previously proposed by Aaker and Keller, (1990) neglectingother important determinants of brand extension success such as brand image,consumers innovativeness or involvement in the extension. Following the line of van Riel and Ouwersloot, (2005), Song et al., (2010)proposed an explanatory model of brand extensions success in the online context. Inaddition to perceived quality and fit between the parent brand and the extension, theynoted that the existence of hyperlinks in the online environment enables interactionsbetween different online products and fosters the perceived tie between the currentproducts and the extension. For example, Google search engine provides access toother services such as Google Earth, Google News or Gmail with one click.Therefore, Song et al., (2010) suggested perceived tie as a significant factor of onlinebrand extension evaluation. The two aforementioned studies were only focused on 17
  • 25. extensions launched by online brands within the Internet limits. However, they did notconsider potential offline extensions. Bravo et al., (2010) covered this research gap by examining potential offlineextensions of online brands. In their study, they incorporated, along with perceived fit,brand image variables such as emotional, commitment or functional associations inorder to explain consumers´ evaluation of offline extensions. Their findings regardingsimilarity or fit are in line with the previous research (van Riel and Ouwersloot,2005), considering similarity as a key determinant of brand extensions. Moreover,they found that whereas emotional and commitment associations with the parentbrand are more likely to be transferred in the case of internet brands, more functionalassociations (e.g., perceived quality) are transferred from offline companies to brandextensions. Even though these findings contributed significantly to the currentresearch the authors recognised that this study did not test the moderating effects ofconsumer characteristics. Therefore, they recommended further research in order tobuild an updated model in the online context.2.6 Summary Consumer evaluation of brand extension is explained by means of twopsychological processes: a categorical evaluation process and a piecemeal oranalytical process. In the first one, consumer previous beliefs are transferred to thenew product. The analytical process is based on product attributes rather thanmemories in order to evaluate the new product. In addition to these psychologicalprocesses, scholars have identified a series of factors which explain consumer attitudetowards extensions. These factors have been classified in: factors of similarity,consumer characteristics, factor related to the parent brand and factors related to theextension´s marketing context. The current research shows an agreement regarding the generalizability of twoexplicative factors: similarity and perceived quality of the parent brand. However,scholars have proposed a broad variety of additional factors which call for furtherresearch in order to prove their significance as predictors of attitude towardsextensions across sectors and extensions. On the other hand, the literature reviewrevealed that scarce brand extension research has been addressed to the onlineenvironment and these research efforts have only considered a limited number of 18
  • 26. factors. Therefore, the following chapters of this study are oriented to build and testan empirical model applied to online brands which bridges these research gaps withthe aim of contributing to a better knowledge of brand extension evaluations. 19
  • 27. CHAPTER 3. HYPOTHESES3.1 Introduction Chapter 2 has reviewed the most relevant studies in the field of brandextension. It has also suggested the existence of a series of limitations in brandextension research such as the utilisation of a reduced number of factors inconsecutive research and the scarce investigation in the field of online companies,specifically in those online companies that utilise a brand extension strategy in orderto stretch their brands away from the internet world. In addition to address these research gaps in the literature, this chaptercontributes to fulfil the research objectives of contrasting the conclusions obtained byscholars regarding the implication of the explicative factors of consumer evaluationsof brand extensions in the area of online companies and particularly when extensionsare produced in an offline context, and examining whether antecedents from brandextension theory can be combined with those related to brand equity and online brandmanagement in order to build a valid model to predict consumer acceptance of brandextensions. In order to do so, hypotheses based on previous research in brandextension and online brand management are proposed by selecting those factors thathave generated major research and acceptance among scholars but have never beeninvestigated simultaneously in the context of online companies. Finally, the chapter concludes by describing the hypothesized model, based onthe formulated hypotheses, in which the overall attitude toward the extensionperforms as the dependent variable that is explained by the effects either positive ornegative of the independent variables or explicative factors included in the model.3.2 Brand Equity variables Brand equity has been the subject of increased interest in marketing in recentyears. The current research has identified benefits from achieving high brand equitysuch as consumer preference and purchase intention (Cobb-Walgren et al., 1995);consumer perceptions of quality (Dodds, Monroe and Grewal 1991) and consumerevaluations of brand extensions (Aaker and Keller 1990; Bottomley and Doyle 1996).Even though scholars agree on the positive effects of strong brands that have highbrand equity, the conceptualisation of the brand equity construct lacks of a general 20
  • 28. agreement that has provoked that numerous definitions and dimensions arise from theliterature (Christodoulides et al., 2006) Brand equity can be measured either from a consume level or a firm level.Whereas the firm-based brand equity is defined in terms of the financial market valueof a company and the cash flows generated from a product as a consequence of havinga brand name (Simon and Sullivan 1990), the consumer-based approach measuresbrand equity in terms of consumer behaviour which can be object of actionable brandstrategies (Keller 1993). Brand equity from a consumer perspective has been defined by two mainframeworks. On the one hand, Keller (1993) defined brand equity as “the differentialeffect of brand knowledge on consumer response to the marketing of the brand.”Therefore, he considered brand knowledge as the main determinant of brand equityand measured it in terms of two components, brand awareness and brand image. Onthe other hand, Aaker (1996) defined the concept of brand equity as “a set of assetsand liabilities linked to a brand, its name and symbol that adds to or subtracts fromthe value provided by its product or service to a firm and/or to that firm’s customers”and identified five dimensions of brand equity: brand awareness, perceived quality,brand associations, brand loyalty and proprietary brand. Although this last dimension,proprietary brand assets, is normally omitted in brand equity research since it is notdirectly related to consumers (Buil et al., 2008a) Both Keller´s and Aaker´s definitions of brand equity have been applied to thecontext of online companies. Page and Lepkowska-White, (2002) adopted Keller´sdefinition and stated that web equity (brand equity) for online companies can be madesimilar to offline companies´ brand equity by enhancing brand awareness and brandImage. They also suggested that Aaker´s dimension of brand loyalty was an outcomerather than a determinant to create high brand equity. In contrast, Rios and Riquelme(2008) used the conceptual framework from Aaker (1996) and considered brandLoyalty as an important source of online brand equity. Recent studies have introduced Aaker´s (1996) brand equity variables with theaim of evaluating consumer attitude towards brand extensions (Lassar et al. 1995; DeChernatony et al., 2004; Pappu et al., 2005; Buil et al. 2008b), However, these studieshave investigated a small group of these dimensions rather than them as if they were aunique construct in which the relationships between dimensions can be tested in orderto predict attitudes towards the extensions. 21
  • 29. The following sections develop the conceptual framework supported by Aaker(1996) in the context of online companies by establishing the hypothesescorresponding to the dimensions of brand awareness, perceived quality, brandassociations and brand loyalty. 3.2.1 Brand knowledge Aaker (1996) defined brand awareness as the salience of the brand in thecustomers´ mind and identified six levels of awareness: recognition, recall, top-of-mind, brand dominance, brand knowledge and brand opinion. The brand extensionresearch has focused its attention on brand knowledge in order to explain extensionevaluations. According to Aaker (1996), the concept of consumer brand knowledge isconcerned with the consumer awareness of what the brand stands for. Brucks (1985)identified three types of consumer knowledge, named subjective knowledge, objectiveknowledge and usage experience. Whereas subjective knowledge refers to whatcustomers believe they know about the brand, objective knowledge is related to whatis actually stored in consumer’s memory. The third type of knowledge, usageexperience, is related to the purchased amount or experience with the brand. Brucksalso stated that objective and experience-based measures are less directly linked topurchase behaviour than subjective knowledge measures and therefore customerbehaviour research has mostly utilised subjective consumer knowledge to measurebrand knowledge. Subjective knowledge has been applied within the brand extension domain todifferent variables (original product category, parent brand and extension category)with mixed results. Keller and Aaker (1992) examined the effects of high subjectiveknowledge about the original product category without finding any directrelationships with the way in which customers evaluate extensions. However, theyconcluded that a high perceived knowledge of the extension product category presentspositive effects on extensions assessments. In contrast, Smith and Park (1992)supported that if the knowledge of the extension category is low, consumers evaluateextensions more favourably. On the other hand, studies that researched the subjectiveknowledge or familiarity with the parent brand (Herr et al., 1996; Dawar, 1996) foundpositive effects on consumer attitude toward extensions. Finally, in a most recentstudy, Hem and Iversen (2009) discovered that a high subjective knowledge about the 22
  • 30. current product category of the parent brand correlates negatively to consumerevaluations, while knowledge about the parent brand and extensions favours howextensions are assessed. Hem and Iversen (2009) suggested that the conflicting resultsregarding brand knowledge are produced by the use of fictitious parent brand in theresearch (Keller and Aaker, 1992), the limited number of parent brands involved inthe studies (Dawar, 1996) and the diverse number of products associated with theparents brands. In the case of online companies which offer offline products, the role ofsubjective knowledge has not been investigated and therefore, in order to replicate theaforementioned conclusions, this research proposes the following hypothesis: H1. A high consumer subjective knowledge of the online brand, originalproduct category and offline extension category has positive effects on the extensionevaluation. 3.2.2 Perceived Quality According to Zeithaml (1988), Perceive quality designates a global assessmentof a consumer´s judgement about the superiority or excellence of a product. Theperceived quality construct has been included in diverse brand extension articles.Aaker and Keller (1990) suggested that when consumers have a high overallperception about the quality of the brand, the extension should be assessed morepositively than when they infer a low overall quality. Nevertheless, they found thatquality only affected the attitude towards the extension favourably when it wasaccompanied by a high degree of similarity. In contrast, Bottomley and Holden,(2001) concluded that there is a direct relationship between the quality of the parentbrand per se and consumer evaluations of the brand extension. Subsequent studieshave supported the positive effects of quality on consumers´ attitudes towardsextensions (van Riel et al., 2001), suggesting that if the brand is associated with a highlevel of quality, this perception is transferred to the extension products. However, ifthere is a perceived low quality of the parent brand, the extension is harmed as aresult. Völckner et al., (2010) measured the implications of parent brand quality inservice brand extension evaluation by distinguishing three different dimensions ofquality: outcome quality, interaction with service employee quality and psychical 23
  • 31. environment quality. They concluded that, in the case of extensions from servicebrands, quality represented the most significant factor of consumer evaluation ratherthan perceived fit or similarity. The implications of perceived quality have been testedin numerous contexts (Völckner and Sattler, 2006). For online brands, Danaher et al.,(2003) suggested that consumers base their quality inferences on the brand namerather than in more tangible product attributes due to the fact that products acquiredonline cannot be usually assessed prior to purchase. Therefore, only the dimensionsuggested by Völckner et al., (2010) regarding outcome quality is applicable to onlinebrands. Finally, van Riel and Ouwersloot, (2005), in their pioneer study about onlinebrand extensions, suggested that the quality of the parent brand helps explain positiveevaluations of extensions but its weight is relatively low compared to similarity.Hence: H.2 Higher quality perceptions toward the original online brand areassociated with more favourable attitudes toward the offline extension. 3.2.3 Brand Associations. Keller (1998) defines brand associations as “informational nodes linked to thebrand nodes in memory that contain the meaning of the brand for consumers”. Aaker,(1991, pp. 109-13) highlighted the importance of brand associations for bothmarketers and consumers. Consumers use their previous beliefs and attitudes towardsthe brand to help their purchase decision making process. On the other hand,marketers seek to differentiate the brand by creating positive attitudes and feelingtowards the brand. Brand associations have been considered as a multidimensional construct. Inthis line, Keller (1998) used the concept of brand image in order to explainconsumers´ perceptions about the brand. He suggested that brand image consists ofassociations of brand quality and attitude toward the brand. On the other hand, Aaker(1996) considered that brand associations can be categorised in value associations,organisational associations and brand personality. The first group of associations,value associations, is linked to functional benefits that the brand represents under theperspective of brand as a product. The value proposition is considered as amultidimensional concept (Anckar et al., 2002) which is formed by variables such asshopping convenience, customer service, broad product assortment and after sale- 24
  • 32. care. The organisational associations represent the brand-as-organisation perspectiveand consider facts such as concern for customers, being innovative, being successful,having visibility, being oriented towards the community, providing trust and being aglobal player. Finally, brand personality follows the brand-as-person approach whichmight transfer emotional and self-expressive benefits to consumers as well as being abasis for customer/brand relationships and differentiation. 3.2.3.1 Value associationsIn previous brand extension research (Bravo et al., 2010); value associations have notbeen separated from the concept of perceived quality. However, Aaker (1996)suggested that value associations represent a different dimension from perceivedquality. Whereas perceived quality makes reference to a more overall constructrelated to a higher level of abstraction (Zeithaml, 1988), perceived value reflect morespecific functional benefits and practical utility of the brand. Therefore, Zeithaml(1988) defines brand value as the consumers overall assessment of the utility of aproduct based on perceptions of what is received and what is given. These specificfunctional benefits have been measured in terms of convenience, value for money,accuracy and quality of product information (Burke, 2002). In the case of online brands, functional benefits can be measured in terms ofonline experience (Christodoulides et al., 2006), value for money (Anckar et al.,2002), shopping convenience, product breadth, and compensation (Rios andRiquelme, 2008). According to Aaker (1996, p.81), value associations also add theprice component to perceived quality. In addition, (Burke, 2002) noted the importanceof price availability and price comparison as required characteristics in onlineshopping. Hence, hypothesis 3 is proposed as follows: H.3 The offline extension will be more positively evaluated, if consumersperceive brand value in the online business 3.2.3.2 Brand personality The brand-as-person approach is represented in the concept of brandpersonality. Aaker, (1997, p.347) defined bran personality as “a set of humancharacteristics associated with a brand”. In this line, Keller (1993) suggested thatbrand personality consists of symbolic values which shape and maintain consumers´ 25
  • 33. social identity (Fiske, 1989). According to Aaker, (1996), brand personality providesself-expressive benefits to consumers. Thus, consumers can express their actual self,ideal self or social self through their relationships with the brand (Malhotra, 1988).Aaker (1997) also noticed that the formation of brand personality can be producedirectly or indirectly. Direct sources of brand personality are those related to thehuman characteristics of people associated with the brand such as customers, users,employees or managers. Indirect sources include decisions made by the company interms of marketing-mix variables such as advertising, promotion or brand symbol(Plummer, 1985). Freling and Forbes (2005) found that strong and positive brand personality haspositive effects on product evaluations. Moreover, Wang and Yang, (2008) suggestedthat brand personality also influences positively the consumers´ purchase intention. Inthe case of brand extensions, Czellar, (2003) suggested that consumers who give moreimportance to self-expressive associations with the parent brands are also more likelyto evaluate positively the new extensions. Hence: H.4 The offline extension will be more positively evaluated if consumersperceive a positive brand personality of the online brand. 3.2.3.3 Organisational associations Aaker (1996) identified a third category of brand associations which reflect thebrand as an organisation rather than as a product or a person. These organisationalassociations are related to consumer perceptions and attitudes of the brand in terms ofpeople, values and programs that lie behind the brand. In this line, Keller and Aaker,(1992) identified corporate credibility within these associations and noted itsimportance in consumer evaluation of new products. They distinguished threedimensions of credibility: expertise, trust and likability. Expertise refers to thecapability of the parent brand to produce or provide its products. Trust reflects theextent to which the brand is considered honest and sensitive to consumers´ needs.Finally, likability is the degree of interest and prestige that consumers perceive in theorganisation. On the other hand, Keller (1998) suggested that marketing campaignsaddressed to reinforce organisational associations such as innovativeness,environmental concern and community involvement favour brand extension 26
  • 34. evaluations even in presence of product-specific advertisement. Therefore, thefollowing hypothesis is suggested: H.5 The offline extension will be more positively evaluated if consumersperceive positive organisational associations in the online brand. 3.2.4 Brand Loyalty As mentioned before, Aaker (1991; 1996) introduced the concept of brandloyalty within the brand equity construct. Aaker (1991, p. 39) defines brand loyalty as“the attachment that a customer has to a brand”. This attachment involves abehavioural and attitudinal component (Keller, 1993). The customer behaviour linkedto loyalty is measured in terms of repeat purchase, whilst the attitudinal componentreflects the positive disposition towards the brand, which includes a commitment interms of some unique values associated with the brand (Chaudhuri and Holbrook,2001). Depending on the level of commitment with the brand, Oliver, (1997)identified four stages in which loyalty moves: First, cognitive loyalty, where theconsumer makes a cost-benefit evaluation of the product and act in consequence.Second, an affective loyalty in which consumers create positive feelings towards theproduct as a result of satisfactory usage occasions. Then, a conative loyalty isdeveloped by means of repeated affective situations which generate a behaviouralintention of repurchasing the product. Finally, an action loyalty in which behaviouralintention turns into a routine and positive word-of-mouth behaviour. Therefore,Oliver´s phases suggest how loyalty is created from attitude to behaviour (Kabiraj,2010). In this way, customers who are loyal to the brand present an action loyalty,which benefits the brand in terms of reduced customer acquisition costs, increasedbase revenues, positive word-of-mouth, and the ability to impose price premiums(Edvardsson et al., 2000). Brand loyalty has also had a significant relevance in studies focused on theonline context. Srinivasan et al., (2002), defined e-loyalty as a customer’s favourableattitude toward the e-retailer that results in repeat buying behaviour. Clarke, (2001)highlighted the difficulty of earning and maintaining customer loyalty for Internetcompanies where the cost of switching between online services is extremely low, andthus online companies often face constant competition with numerous others 27
  • 35. companies which are just one click away. In this line, van Riel and Ouwersloot,(2005) pointed that the lower heterogeneity among Internet services makes it moredifficult to create consumer loyalty. Regardless loyalty is more challenging for onlinecompanies, Srinivasan et al., (2002) coincided with previous offline brand loyaltystudies (Edvardsson et al., 2000) in the positive outcomes of online brand loyalty (e-loyalty): positive word-of-mouth and willingness to pay more for products or services.However, the majority of studies on online brand loyalty focus their research on e-retailers rather than other types of online companies such as e-portals in which there isnot a transactional component. The concept of brand loyalty has been scarcely studied in the context of brandextensions. Hem and Iversen, (2003) found that loyal behavioural intention towardsthe parent brand affects significantly the evaluation of brand extensions. Moreover,Buil and Pina, (2008) supported these findings by stating that grater consumer loyaltyincreases the probability of brand extension success. However, this relationship hasnot been investigated in the case of brand extensions from online companies.Therefore, the following hypothesis is proposed: H.6 Online brand loyalty has a positive effect on consumer attitudetowards the offline brand extension launched by online companies.3.3 Marketing Support As commented in chapter 2, the marketing support of brand extensions hasbeen found by previous literature as a crucial success factor (Klink and Smith, 1992;Reddy et al., 1994, Völckner and Sattler, 2006). Within these marketing activities,Sattler et al., (2010) studied the impact of advertising support and product availabilityin the distribution channel on consumers´ attitudes towards brand extensions. Theyconcluded that both advertising and product availability increase the probability of thenew extensions being purchased. In the case of online brands going offline,advertising and appropriate availability of the new offline product are necessary tocreate consumer awareness and perceptions of similarity on consumers´ minds.Hence: H.7 Offline brand extensions that received competent marketing supportfrom the online parent brand are more favourably evaluated by consumers. 28
  • 36. 3.4 Perceived similarity As mentioned in chapter 2, perceived similarity has been found to be a majordeterminant of brand extension evaluations (Aaker and Keller, 1990; Volckner andSattler, 2006). According to Gierl and Huettl, (2011), the rationale behind the effectsof similarity on attitude towards extensions is explained by the application of thecategorisation theory (see chapter two, section 2.4.1.2) to the brand extension domain.In this line, consumers compare their knowledge category related to the parent brandto the characteristics presented by the extension product (Park et al., 1991) and, ifthere is a sufficient level of similarity, this information about the brand, stored inconsumers’ memories, is transferred to the extension product (Boush and Loken,1991). Therefore, consumers evaluate more favourably those extensions that present ahigh degree of similarity or fit with the parent brand (Aaker & Keller, 1990; Czellar2003; Hem et al. 2003; Völckner & Sattler 2006, Hem and Iversen, 2009). Thisoverall dimension of similarity leads to the following hypothesis: H8. The overall perceived similarity between the online parent brand andthe extension has a positive effect on consumer attitude toward the offline extension. The provided definition of similarity mentions the congruence between theparent brand and extension in general terms. However, scholars have identifieddifferent levels within the similarity construct. Park et al., (1991) suggested that thedegree of consistency between the brand concept or image and the extension product,along with the product category similarity (Aaker and Keller, 1990), form the overallsimilarity perception in consumers´ minds so that consumers can establish attribute-based (features, or benefits) and non-attribute-based (image, or context) associationsthat link the parent brand and the extension. 3.4.1 Product category similarity Product category similarity is the degree to which consumers perceive theextension as similar to other products affiliated with the brand in terms of the needsthey satisfy, situations in which they are used, physical features or component parts,and skills necessary to manufacture them (Smith and Park, 1992). 29
  • 37. In the case of online brands going offline, the lack of practical examples mayproduce that consumers perceive a low overall degree of similarity between the brandand the extension, and thus consider offline extensions as incoherent with the imageof online brands (Bravo et al., 2010). However, product category fit can be explainedby the transference of competences or resources required to produce online productsto the new offline extensions. For example, the IT knowledge acquired by onlinebrands creating web applications may be applied to the development operatingsystems for electronic devices such as computers, mobile phones or GPS as Googledid by launching its operating system Android (Gandhewar and Sheikh, 2010).Moreover, the extensions to devices with connection to the internet enable thecomplementarity and adaptability between the parent brand original products (e.g.,search engines, web applications or ecommerce portals) and the new devices.Therefore, consumers may perceive these offline extensions as coherent with theonline parent brand. Hence: H8a. Offline brand extensions in to categories perceived as more similar tothe original product category of the online parent brand are more likely to beevaluated favourably by consumers. 3.4.2 Brand image Similarity Although a product class similarity may determine a positive attitude towardsthe extensions, the existence of successful brand extensions in dissimilar productcategories from those of the parent brand as for example, Tesco moving its brand intofinancial services (Alexander and Colgate, 2005), highlights the need to go beyondthe dimension of product category similarity (Hem and Iversen, 2009). Consumers also perceive similarity between the extension and the parentbrand image formed in their minds (Bhat and Reddy, 2001). This way, brand image ismade up of specific associations that set the brand apart from other competing brands.Park et al., (1991) suggested that whereas product features can vary from concretelevels to other more abstract ones, brand concepts are brand-unique abstract meaningsthat typically originate from a particular configuration of product features and a firmsefforts to create meanings from these arrangements. Hence, consumers evaluate the 30
  • 38. extensions more positively when there is a match between these associations towardsthe brand and the new product (Broniarczyk and Alba, 1994). In the case of online companies, associations linked to the brand image mustbe coherent with perceptions of the new product in order to achieve consumeracceptance. For example, if users consider Google as an innovative brand thatincorporate the latest technology to their products, they will expect that both onlineand offline extensions share the same degree of innovativeness. Hence: H8b. The match between the specific image of the online brand and theextension product has a positive effect on the attitude towards the offline extension.3.5 Involvement in the extension product category The relevance of consumer involvement in consumer behaviour has beenexplained by its influence in consumers´ decision making and communicationbehaviour (Hansen and Hem, 2004). Involvement concerns to “a person’s perceivedrelevance of the object based on inherent needs, values, and interests” (Antil, 1984;Zaichkowsky, 1985). The concept of consumer involvement has been categorised byHouston and Rothschild, (1978) as a multidimensional construct. The authorsdifferentiated between three types of involvement: enduring, situational and response.Enduring involvement is related to the long-term attachment of a consumer to aspecific product category. This type of involvement is characterised as an extensiveinformation search, brand knowledge and, eventually brand loyalty. (Mittal, 1989)considered that consumers who became involved with a specific situation, generally apurchase decision, present a situational involvement. Finally, a response involvementrefers to a behavioural orientation characterised as information acquisition anddecision processes (Leavitt et al., 1981). The study of involvement in brand extension evaluation has been focused onthe first type of involvement (enduring) which was measured by two dimensions:consumers knowledge of the product class of the extension (Smith and Park, 1992)and the importance of purchase decisions in the extensions product category (Nijssenand Bucklin, 1998). Therefore, high consumer´s knowledge of the extension productclass reduces the perceived risk of purchasing the new product and fosters the positiveevaluation of the extension (Smith and Park, 1992). Hence: 31
  • 39. H.9 High involved consumers in the extension category will positivelyevaluate the brand extension.3.6 Consumer innovativeness Rogers and Shoemaker, (1971, p. 27) defined consumer innovativeness as “thedegree to which an individual is relatively earlier in adopting an innovation thanother members of his system”. Roehrich, (2004) identified four explicative causes ofthis early adoption from consumers: (1) new products help satisfy consumers´ need ofstimulation, (2) consumers seek novelty in the new products in terms of information,adoption or use; (3) consumers make innovative decisions independently from thecommunicated experience of others (Midgley and Dowling, 1978), and (4) the need ofuniqueness which differentiates the consumer from others. Therefore, consumers whopresent a high degree of innovativeness, also known as early adopters, play a veryimportant role in the success of new products (Goldsmith and Flynn, 1992), since theyare more willing to try new products and brands (Steenkamp and Baumgartner 1992),are less price sensitive, but more knowledgeable about new products and less riskaverse (Rogers, 1983). Therefore, these characteristic of early adopters affect theirpurchase and learning processes within the marketplace. In evaluating brand extensions, consumer innovativeness has been consideredas an antecedent of positive consumer attitude towards extensions. Klink and Smith,(2001) concluded that early adopters react positively to a new extension in the case ofdurable goods. Furthermore, the authors found consumer innovativeness as amoderating factor of similarity, stating that consumers with high degree ofinnovativeness do not base their extension evaluation on perceived similarity. Hem etal., (2003) extended the Klink and Smith´s (2001) study to fast moving consumergoods and services finding positive effects of consumer innovativeness on consumers’evaluation of brand extensions. Xie (2008) studied consumer innovativeness withregard to different types of extensions, product information and interpersonalcommunication. The study found that innovative consumers evaluate extensions indifferent categories more favourably than those of the parent brand (horizontalextensions) and than those which present a lower degree of similarity with the parentbrand. In addition, the availability of product information and interpersonal 32
  • 40. communication moderate the effects of consumer innovativeness and the evaluation of extensions. Despite the research on consumer innovativeness for different kinds of product and extensions, there is no study regarding the positive role of consumer innovativeness in the evaluation of extensions from online companies. Therefore, the following hypothesis is suggested: H.10 Consumers with a high degree of innovativeness will evaluate more positively offline brand extensions from Internet brands. The hypotheses proposed by this research are summarised in the following table:TABLE 3.1: HypothesesH.1 A high consumer subjective knowledge of the online brand, original product category and offline extension category has positive effects on the extension evaluation.H.2 Higher quality perceptions toward the original online brand are associated with more favourable attitudes toward the offline extension.H.3 The offline extension will be more positively evaluated, if consumers perceive brand value in the online businessH.4 The offline extension will be more positively evaluated if consumers perceive a positive brand personality of the online brand.H.5 The offline extension will be more positively evaluated if consumers perceive positive organisational associations in the online brand.H.6 Online brand loyalty has a positive effect on consumer attitude towards the offline brand extension launched by online companies.H.7 Offline brand extensions that received competent marketing support from the online parent brand are more favourably evaluated by consumers.H.8 The overall perceived similarity between the online parent brand and the extension has a positive effect on consumer attitude toward the offline extension.H.8a Offline brand extensions into categories perceived as more similar to the original product category of the online parent brand are more likely to be evaluated favourably by consumers.H.8b The match between the specific image of the online brand and the extension product has a positive effect on the attitude towards the offline extension.H.9 High involved consumers in the extension category will positively evaluate the brand extension.H.10 Consumers with a high degree of innovativeness will evaluate more positively offline brand extensions from Internet brands. 33
  • 41. 3.7 The Hypothesized Model Following the procedures of the previous research (Aaker and Keller, 1990),the hypotheses proposed above are studied within a linear regression model, where thedependent variable, the attitude towards the extension, is explained by ten explicativefactors that represent the independent variables of the regression. The linearregression model is as follows:Where the dependent variable: ATT= Overall attitude towards the brand extension, and where the independent variables are: FAM= Brand knowledge or familiarity PQ= Perceived quality of the parent brand BAV= Value associations BAP= Brand personality BAO= Organisational associations BLO= Brand loyalty SIMP= Product category similarity SIMI= Brand image similarity MS= Marketing support INE= Consumer involvement in the extension product category CIN= Consumer innovativeness 34
  • 42. The hypothesized model is summarised in Figure 3.1:3.8 Summary This chapter has reviewed the factors that build an explanatory model of consumerattitude towards brad extensions which is applied to online brands that extend the brand nameto the offline context. A set of hypotheses related to the principal factors involved in themodel was proposed in order to demonstrate their implications on consumer evaluations ofbrand extensions. The next chapter will describe the research methodology which was used inorder to gather the required information to test the aforementioned hypotheses. 35
  • 43. CHAPTER 4. METHODOLOGY4.1 Introduction Chapters 2 and 3 have introduced the general theory about consumerevaluations of brand extensions. They have also stated the principal hypotheses thatconfigure a model applicable to offline brand extensions produced by onlinecompanies. Therefore, with the aims of determining the feasibility of the factorsproposed by previous research within the context of online brands as well asresponding to the main research question of whether online companies can leveragethe brand equity to offline products, this chapter justifies the research methods utilisedin this study by which the data has been gathered in order to test the suggestedhypotheses and validate the proposed model in chapter three (see Figure 3.1) The chapter begins by making a general description of the philosophyunderpinning the research project. The research design then justifies the adoption ofquantitative research in the field of brand extensions as well as the utilisation of themethod of survey as the most suitable to gather the required information to this study.The following section describes the different types of data, primary and secondary,that have been used in the research. Thereafter, a description of how the survey hasbeen built is provided by explaining the reasons that support the election of onlinebrands (Google and Amazon) and the extensions linked to them (Smartphone andeBook reader). This section also describes the typology and scaling of the items orquestions which have been introduced in the questionnaires to be answered by therespondents. Finally, the section related to the sampling describes the characteristicsof the used sample.4.2 Research philosophyThe selection of an appropriate methodology which fits the research purpose andfocus, has to be underpinned by a philosophical framework within which the researchproject is situated (Quinlan, 2011). In this line, two philosophical positions can beadopted by researchers: ontology and epistemology. Blaikie (1993) define ontology as“the science or study of being”, therefore, ontology describes the nature of being andour ways of being in the world (Crotty, 2005). On the other hand, epistemologyconsiders what knowledge is and what the sources and limits of knowledge are 36
  • 44. (Eriksson and Kovalainen, 2008). According to Easterby-Smith et al., (2008),epistemology also considers views of the most appropriate ways of enquiring into thenature of the world. Hatch and Cunliffe (2006) stated that there is an inter-dependentrelationship between ontology and epistemology so that the way in which they arerelated to each other determines different research philosophies (Saunders et al.,2009). Within the context of epistemology, the methodology of this study adopts apositivist approach which holds that an objective reality is out there to be found.Epistemologically this can be done with knowable degrees of certainty usingobjectively-correct scientific methods (Carson et al., 2001). The rationale behind thechoice of positivism for this study is derived from the additional research objective oftesting hypothesis developed from the existing theory through measuring theobservable social reality within the context of online brands. Thus, the study uses adeductive approach where the proposed hypotheses introduced in chapter 3 representthe theoretical considerations to which a quantitative research is addressed in order todevelop further theory in the context of this study (Saunders, 2009). Therefore, theresearch must be designed in order to contrast the formulated hypothesis andconsequently, answer the research questions. In the next section, the research design isexplained by developing the research strategy and the time horizon of the research.4.3 Research Design Once that the research has been positioned within a philosophical framework,it needs to be designed in order to collect the needed data that will lead to answer thefollowing research question: can online brands extend the brand name to offlineproducts successfully?. In order to do so, there are two different research designs tocollect the required data: the qualitative and quantitative research approach. Whereasqualitative research is oriented toward understanding of a natural world, and is highlyinterpretive in nature without depending on numerical measurements (Gall et al.,1996), quantitative research is addressed to investigate the relationship betweencertain variables and is based on statistical and numerical analysis of proposedhypothesis from previous theory (White, 2000). The utilisation of quantitative research in this study has a twofold objective: first,quantitative research design enables to measure the multiple factors involved in the 37
  • 45. model (e.g., brand knowledge, similarity, consumer innovativeness) and the potentialrelationships among factors (Easterby-Smith et al., 2008) and secondly, this studyattempts to replicate previous quantitative research on determinants of brandextension success. Therefore, the analysis of the obtained quantitative data will allowcomparing the results with those of previous studies. In order to fulfil these objectivesthe research must adopt a research strategy which is addressed to obtain thequalitative data to be analysed. 4.3.1 Research strategy This study makes use of a survey as a strategy by which the quantitative datais collected and subsequently analyzed by means of descriptive and inferentialstatistical methods. According to Saunders, (2009), the method of survey presents thefollowing advantages: it allows the collection of a large amount of data from ameasurable sample in an inexpensive way, allows comparison by providingstandardised data and it is easy to explain and understand. Despite these benefits,surveys require time to design and pilot data collection instruments, and to ensure thatthe sample is representative and there is a good rate of response (Saunders, 2009).These drawbacks are bridged in this study by the use of an internet survey whichpermits real time data capture and analysis, greater accuracy and respondentanonymity (Zikmund et al., 2011).The advantages of the survey fit with the researchobjectives of this study due to the need of a large amount of information regardingexplicative factors of brand extension success as well as a representative sample ofpotential consumers of the brand extensions. The method of survey has been used inprevious research by studies such as “Effects on market share and advertisingefficiency” (Smith and Park, 1992) or “Effects of different types of perceivedsimilarity and subjective knowledge in evaluations of brand extensions” (Hem andIversen, 2009), therefore, the use of a survey for this study allows comparing resultswith those of previous research. Within the survey strategy, the questionnaire represents the most suitablemethod to gather the necessary data for this study. A questionnaire is a technique ofdata collection in which each respondent is asked to answer the same questions in acertain order (deVaus, 2002 cited in Saunders, 2009). Hence, the questionnairepermits to this research makes use of standardised questions from previous literature 38
  • 46. regarding the determinants of consumer attitude towards brand extensions and appliesthem to a different context (offline extensions from online brands). Consequently, thestudy follows an explanatory approach in order to test and explain the relationshipsbetween the factors of band extension success and the consumer evaluation of brandextensions in the purposed context. This study uses self-administered questionnaires(respondents complete them on their own) which are administered online. This type ofquestionnaire benefits the study by gaining greater interactivity, control and fasterdata collection (Zikmund et al., 2011). 4.3.1 Time horizon This study is considered as a cross-sectional study or snapshot which studiesthe consumer attitude towards brand extensions at a particular time. The reasonsupporting the use of a cross-sectional study for this research is that cross-sectionalstudies are carried out to investigate associations between risk factors (brandextension success factors) and the outcome of interest (attitude towards brandextensions) at a single period of time (Levin, 2006). This characteristic benefits theresearch because less time is needed to gather and analyse the data. In addition, themajority of previous studies on brand extension are based on cross-sectional studieswhich allow findings of these studies to be compared with the conclusion obtained inthis study.4.4 Survey Development In order to test the proposed model (Figure 3.1), an empirical study wasconstructed. Firstly, two online brands were selected, Amazon and Google,distinguishing them in terms of type of online company, degree of familiarity, abilityto elicit unique associations and to be associated with multiple products. Secondly,real offline extensions of the selected brands were utilised (eBook reader and mobilephone) in contrast to the usual procedures from previous research (Aaker and Keller,1990; van Riel and Ouwersloot, 2005; Martinez and Pina, 2010). Afterwards,antecedents of consumer evaluations of brand extensions where measured by meansof multi-items rating scales based on previous research and adapted to a five-pointLikert scale in order to standardize the different scales used by researchers. Finally,two internet-mediated questionnaires were developed, one for each brand and its 39
  • 47. corresponding extension, in order to avoid bias produced by the comparison betweenbrands and extensions within the same questionnaire. The questionnaires wereadministered electronically through the Internet which allowed the interaction ofrespondents by providing the logos of Amazon and Google and real pictures of theextensions (mobile phone and e-reader). 4.4.1 Selection of brands and extensions Google and Amazon belong to different types of online brands or e-servicesaccording to the categorisation made by van Riel and Ouwersloot (2005). Google isconsidered an e-portal which was originated in the e-world and offers virtual productswithin the online limits, for instance web searching, video streaming or blogging, toname but a few. In contrast, Amazon is categorised as an e-tailer which offers moretangible products, such as books, apparel or electronic products through its websitewhich is used as a distribution channel, in spite of being equally originated in the e-world. Additionally, the two brands present differences in their experiencecommercialising their products. Whereas Google delivers fundamentally intangibleonline services through the web, Amazon manages tangible items from computerizedwarehouses and fulfilment centres where they are shipped direct to customers(Veverka, 2009). Therefore, these differences may arise contrasting perceptions ofsimilarity. Following the line of previous research (Aaker and Keller, 1990; Hem et al.,2003), the selected brands present a high degree of consumer familiarity according totheir unique audience or total number of visitors who visit their websites or use theirapplications at least once in a given period. Following this, Google and Amazon are infirst and eighth positions respectively as reported on the list of top 10 internetcompanies elaborated by Nielsen, (2010). Moreover, familiar brands have theadvantage of holding clear brand images on consumers´ minds (Van Heerden andPuth, 1995) and provoke more brand associations (Low and Lamb, 2000). The selected brands are also characterised by being associated to multipleproducts. According to Dawar et al., (1996), broad brands present different brandassociations that may influence consumers’ brand judgments. For instance, aconsumer may be familiar with Google Android (mobile software platform) but the 40
  • 48. product associations may be weak, with Google being more strongly associated withweb search services. Real offline extensions were chosen in order to test the influence of marketingcommunications on consumer evaluations of brand extensions. In the case of Google,the selected extension was its mobile phone also known as Nexus One, which becameavailable on January 5, 2010 and utilises Google´s own operating system, Android.The device was sold through Google online store until May 2010 when Googleannounced the closing of the web store, with the intention of distributing the phonethrough partners around the world (Official Google Blog, 2010). On the other hand,Amazon´s brand extension was its eBook reader, Kindle, which uses wirelessconnectivity to enable users to shop for, download, browse, and read e-books,newspapers, magazines, blogs, and other digital media (Loeffler, 2010). Real brandextensions already commercialised into the market have the advantage of providingadditional information to consumers in terms of marketing communications or wordof mouth which is employed to evaluate extensions. In contrast, hypotheticalextensions previously utilised in the literature only provide brand name and similarityas only stimulus to be evaluated and therefore, they may fail to reflect the processesconsumers use to evaluate a real-world, available extension (Völckner and Sattler,2007). Table 4.1: Overview of online brands and offline extensions Brand Original Category Brand Extension Extension Category Google e-portal Google Nexus One Mobile phone Amazon e-tailer Amazon Kindle eBook reader 4.4.2 Scaling and multi-item scales The items in the questionnaire were measured by means of five-point Likertscales. Respondents were requested to state their level of agreement with the specificstatement (e.g., 1= strongly disagree, 5 = strongly agree) or directly assess thevariable (e.g., 1 = One of the worst, 5 = One of the best). Likert-type scales aresuitable to be used on internet surveys because they are easy to build and administerto the sample and the respondents are familiar with the use of these scales. However, 41
  • 49. they require more time from respondents to read and consider each statement(Malhotra and Birks, 2003). The study uses multi-item measures for the overall evaluation of brandextension and for explicative factors. Traditionally, multi-item scales are used torepresent complex psychological constructs that cannot be summarized in a singlequestion: attitudes, stress levels, personality, loyalty and satisfaction, among others.The rationale behind the use of multi-items rating scales rather than single scales isthat by having several items that measure the same construct, the problem of having asingle representation variable is solved (Aaker, 1998). For example, if a respondentmisunderstands one part of the question, it will affect part of the measure rather thanall of the measure (Bearden and Netemeyer, 1999). Table 4.1 shows the items used to measured each variable. The overall attitudetowards the brand extension (ATT) was based on the studies of Aaker and Keller,(1990) and Broniarczyk and Alba (1994) and measured with three questions thatascertained (1) positive attitude towards the extension (1 = strongly disagree, 5 =strongly agree), (2) likelihood of trying the extension (1 = not at all likely, 5 = verylikely) and; (3) overall evaluation of the extension relating to the existing brands inthe extension category (1 = one of the worst, 5 = one of the best). In regards to the explicative factors linked to the parent brand, items of brandfamiliarity (FAM) were adapted from Dawar´s scale (Dawar, 1996). Participants wereasked to rate the following items: familiarity with the brand and its original productcategory (1 = not familiar, 5 = very familiar) and the purchase frequency of thebrand’s products (1 = not at all frequently, 5 = very frequently). Perceived quality(PQ) was measured with three items, previously used by Pappu et al., (2005). Theseare: (1) the brand offers good quality products, (2) the brand offers consistent qualityand (3) the brand offers products with excellent features (1 = strongly disagree, 5 =strongly agree). Brand associations items were divided, according to Aaker (1996), inthree categories: value associations (BAV), brand personality (BAP) andorganisational associations (BAO). As commented in chapter three, value associationsare related to brand-as-product associations, therefore, are linked to functionalbenefits provided by the brand (Aaker, 1996). In the questionnaire, value associationswere measured in terms of the online experience provided by the brand´s website andthe perceived value for money of the brand´s products (Christodoulides et al., 2006).The items adapted from Aaker (1996) to measure brand personality were: The brand 42
  • 50. has personality, the brand is interesting and I have a clear image of the type of personwho would use the brand. On the other hand, organisational associations weremeasured in terms of online trust which includes consumer perceptions of privacy,security and overall consumer confidence in the online business (Bart et al., 2005).All brand associations items were measured by means of a five-point Likert scaleanchored at 1 = “strongly disagree”, 5 = “strongly agree”. Finally, brand loyalty wasestimated through three items adapted from Rios and Riquelme, (2008) and anchoredat 1 = “strongly disagree”, 5 = “strongly agree”. Factors related to the extension were measured as follows: First, the subjectiveknowledge of the extension product category (FAM4) was asked through thequestion: overall, how much do you know about products in the extension category?(Hem and Iversen, 2009) where 1 = very little 5 = very much. Then, two types ofsimilarity were studied, product category similarity and brand image similarity.Product category similarity was estimated by using the following three items: howsimilar is the typical usage situation of the brand´s products with the usage of theextension? (Hem and Iversen, 2009), how similar is the competence required toproduce the brand´s products and the extension? (Aaker and Keller, 1990) where 1 =“not at all similar”, 5 = “very similar”; and there is complementarity of the brand´sproducts and services and the extension (1 = strongly disagree, 5 = strongly agree).Brand image similarity was measured with a single item which estimated the overallsimilarity between brand and extension regarding image (1 = not at all similar, 5 =very similar). Two variables were adapted from the literature in order to measuremarketing support: whether the extension is well supported in terms of advertising(Nijssen, 1999) and whether the extension receives competent marketing support(Reddy et al., (1994) where (1 = strongly disagree, 5 = strongly agree). Regarding consumer characteristics, the involvement in the extension productcategory was measured with two items which stated the importance of the extensionproduct category in consumers purchase intentions and the knowledge of the productsoffered within the extension category. Consumer innovativeness was measured withitems extracted from Hem et al., (2003): Overall, I enjoy buying the latest products; Ilike to purchase the latest products before others do and; overall, it is exciting to buythe latest products. Both involvement and consumer innovativeness items wereanchored at (1 = strongly disagree, 5 = strongly agree). 43
  • 51. Table. 4.2: Scales used in the questionnairesScale Measured ConceptOverall Attitude towards the brand extension ATT1: Positive attitude towards the extension(ATT). ATT2: Likelihood of trying the extensionAaker and Keller (1990) and Broniarczyk and Alba ATT3: Overall evaluation of the extension relative(1994) to the existing brand in the extension categoryFamiliarity (FAM). FAM1: Familiarity with the brandDawar, (1996); Hem and Iversen (2009) FAM2: Familiarity with the brand´s products FAM3: Purchase frequency of the brand’s products FAM4: Subjective knowledge of the extension product categoryPerceived quality (PQ). PQ1: Perceived quality of the brand´s productsPappu et al., (2005) PQ2: Quality consistence of the brand´s products PQ3:Quality of the brand´s products featuresBrand associations (BA)Value associations (BAV). BAV1: The brand´s website provides easy-to- follow search pathsChristodoulides et al., (2006) BAV2: I never feel lost when navigating through the brand’s website BAV3: Ability to obtain information without delay BAV4: Value for money of the brand´s productBrand Personality (BAP). BAP1: The brand has personalityAaker, (1996) BAP2: The brand is interesting BAP3: Image the type of person who would use the brand 44
  • 52. Organisational associations (BAO). BAO1: Overall trust in the brandAaker, (1996); Bart et al., (2005); Rios and BAO2: Safety to disclosure personal information toRiquelme, (2008) the brand BAO3: Safety to conduct transactions with the brand BAO4: Attitude towards the organisation behind the brand BAO5: Credibility of the organisation behind the brandBrand Loyalty (BLO). BLO1: It makes sense to use the brand´s products or services instead of other competing companies,Yoo and Donthu, (2001) even if they are the same BLO2: Even if other company has the same features as the brand´s products or services, I would prefer use the brand´s ones BLO3: I would definitely recommend the brand to friends, neighbors and relativesSimilarity (SIM)Product category similarity (SIMP). SIMP1:Similarity of usage situations between the brand and extensionHem and Iversen (2009), Aaker and Keller (1990) SIMP2: Transfer of competences between the brand´s products and the extension SIMP3: Complementarity between the extension and the brand´s productsBand image similarity (SIMI) SIMI: Similarity between the parent brand and the extension product categoryHem and Iversen (2009)Marketing Support (MS). MS1: Advertising supportReddy et al. (1994); Nijssen (1999) MS2: Marketing support 45
  • 53. Consumer involvement in the extension product INE1: Importance of the extension productcategory (INE). categorySmith and Park (1992); Nijssen and Bucklin (1998) INE2: Knowledge about the products in the extension categoryConsumer innovativeness (CIN). CIN1: I enjoy buying the latest productsHem et al.,(2003) CIN2: I like to purchase the latest products before others do CIN3: Overall, it is exciting to buy the latest products4.5 Sampling The difficulty of obtaining data corresponding to the entire population makesnecessary to limit the total population to a more suitable number of respondents orsample (Schiffman and Kanuk, 2007). This sample has to be as representative of theentire population as possible. Therefore, sampling techniques have to be configured inorder to reach the appropriate sample for the research (Saunders, 2009). There are twodifferent kinds of sample: probability sample and non-probability sample. The formeris adequate for studies where the researcher needs to make inferences from the sampleabout the population to answer the research questions. On the other hand, in non-probability samples statistical inferences about the characteristic of the populationcannot be made due to the probability of each case to be selected from the populationis not known (Saunders, 2009). This study adopts a probabilistic sample, since total population for this studywould be all the potential consumers of the suggested offline brand extensions. Inaddition, there is not any suitable sampling frame available to which, probabilisticsampling can be applied. However, it is possible to obtain a representative sample byconfiguring a quota sampling. Quota sampling is considered a type of stratifiedsample, where the selection of categories is not made randomly by the researcher(Barnet, 1991 cited in Saunders et al., 2007). This study has stratified potentialconsumers according to demographic characteristics by using quotas regarding age,gender and level of studies in order to capture the influence of these variables in theevaluation of brand extensions. 46
  • 54. A total of 160 respondents were sampled which varied in age between 18 to 55years old, 51.3% were male and 47.5% were female. In terms of level of education,the most important groups were graduate school 50.6% and college 28.1%. Finally thetwo most important groups regarding nationality were Spanish 27.5% and British26.3% 47
  • 55. CHAPTER 5. DISCUSSION5.1 Introduction This chapter presents the analysis and discussion of the collected data in thesurvey. The chapter begins with a reliability analysis where the internal validity of thevariables introduced in the model is tested. After that, the relationships among thevariables are discussed by means of a correlation analysis. Then, a regression analysisis provided for both an aggregated model and for each brand (Google and Amazon),with the aim of testing the proposed hypotheses in chapter 3. Afterwards, theregression results are discussed. Finally, the chapter concludes with a review of thefindings and their implications in the proposed model.5.2 Reliability and Correlation analyses. 5.2.1 Reliability analysis A reliability analysis was performed in order to test the internal validity of thevariables within the model. First, the attitude towards the extension (ATT) wasoperationalized as the average of overall attitude, likelihood of trial and overallevaluation of the extension relating to the existing brands in the extension category.Secondly, the independent variables were operationalized by aggregating the values oftheir multi-item scales. Reliability was assessed by measuring the values of the reliability coefficient,Cronbach´s alpha (α). As Table 5.1 exhibits, the coefficients revealed that allmeasures presented an alpha coefficient exceeding the recommended value of 0.7(Hair et al., 1998), except for the variable brand personality (α = 0.585). Furtheranalysis indicated that by removing the item related to the image of the person whouses the brand (BAP3), the coefficient (α) increased to 0.657. Consequently, this itemwas removed from further analyses. In the light of the results, all items appeared to gel really well together.Therefore, the model has a good internal consistency. 48
  • 56. TABLE 5.1: Cronbach´s Alpha Coefficients for Multi-Items Constructs Dependent variable Α No. items Attitude toward extension (ATT) 0.845 3 Independent variables Α No. items Brand knowledge (FAM) 0.828 3 Perceived quality (PQ) 0.846 3 Value associations (BAV) 0.743 4 Organisational associations (BAO) 0.853 5 Brand personality (BAP) 0.657 2 Brand Loyalty (BLO) 0.840 3 Marketing support (MS) 0.806 2 Consumer innovativeness (CIN) 0.900 3 Involvement with the extension (INE) 0.825 2 Product Similarity (SIMP) 0.733 3 5.2.2 Correlation analysis A correlation Analyses identifies how variables in the conceptual model relateto each other. The correlation coefficients which are shown in Table 5.2 (AppendixA.2.1) prove that all variables have a positive relationship to attitude towards theextension, particular BAO (0.57), BLO (0.415), BAP (0.454), SIMP (0.597), SIMI(0.443) and MS (0.445). Furthermore, a strong relationship is shown in the case ofperceived quality and value associations (0.687**), which is in accordance withprevious research on perceived quality (Aaker, 1996). On the other hand, Brandloyalty is also strongly related to perceived quality (0.631**) and organisationalassociations (0.662**) which supports the idea that perceive quality and trust in theonline brand help increase consumer e-loyalty (Reinartz & Kumar, 2000). 49
  • 57. TABLE 5.2: Correlations ATT FAM PQ BAV BAO BLO SIMP MS INE CIN BAP SIMI * ** ** ** ** ** ** ** ** ** ** ATT 1 .191 .313 .268 .570 .415 .597 .445 .330 .358 .454 .443 * ** ** ** ** ** ** ** ** FAM .191 1 .574 .439 .322 .459 .220 .021 .396 .232 .350 .145 ** ** ** ** ** ** ** ** ** ** PQ .313 .574 1 .687 .498 .631 .294 .117 .216 .221 .440 .354 ** ** ** ** ** ** ** * ** ** BAV .268 .439 .687 1 .459 .553 .230 .130 .297 .180 .454 .327 ** ** ** ** ** ** ** * ** ** ** BAO .570 .322 .498 .459 1 .662 .443 .261 .194 .399 .547 .350 ** ** ** ** ** ** ** ** ** ** BLO .415 .459 .631 .553 .662 1 .341 .043 .372 .323 .578 .272 ** ** ** ** ** ** ** ** ** ** ** SIMP .597 .220 .294 .230 .443 .341 1 .329 .301 .330 .331 .588 ** ** ** * ** MS .445 .021 .117 .130 .261 .043 .329 1 .158 .113 .043 .232 ** ** ** ** * ** ** * ** * * INE .330 .396 .216 .297 .194 .372 .301 .158 1 .439 .185 .172 ** ** ** * ** ** ** ** ** * CIN .358 .232 .221 .180 .399 .323 .330 .113 .439 1 .208 .192 ** ** ** ** ** ** ** * ** ** BAP .454 .350 .440 .454 .547 .578 .331 .043 .185 .208 1 .234 ** ** ** ** ** ** ** * * ** SIMI .443 .145 .354 .327 .350 .272 .588 .232 .172 .192 .234 1 *. Correlation is significant at the 0.05 level (2-tailed). **. Correlation is significant at the 0.01 level (2-tailed).5.3 Regression analysis The study employed multiple regression analysis in order to test thehypotheses proposed in chapter 3. Two different regressions were conducted with theaim of testing the role of the two dimensions of similarity. In the first model shown inTable 5.3, the two components of similarity, product category similarity (SIMP) andbrand image similarity (SIMI) were aggregated in the variable similarity (SIM) whichmeasures the overall similarity construct. The second regression (Table 5.4) separatedthese two components in order to assess their individual effects on attitude towardsthe extension (ATT). As it is logical, both models explain the same percentage of the dependentvariable´s variance (Adjusted R2 = 0.57) because they represent the same model beingonly differentiated by its level of aggregation. The computed F-statistic is 17.87 forthe first regression, and 16.13 for the second regression which are significant atp=0.000. It means that at least one variable within the model is relevant and itsregression coefficient is different from zero (Thomas, 1997). 50
  • 58. TABLE 5.3: Regression I (Aggregated components of similarity)Independent variables Full model Predicted Std. B Beta T-value direction errorConstant -0.70 0.42 -1.64H.1: Subjective knowledge (FAM) + -0.07 0.08 -0.07 -0.92H.2: Perceived quality (PQ) + -0.04 0.13 -0.03 -0.31H.3: Value associations (BAV) + -0.18 0.11 -0.31 -1.61H.4: Organisational associations (BAO) + 0.32 0.12 0.25*** 2.62H.5: Brand personality (BAP) + 0.23 0.11 0.18** 2.20H.6: Brand loyalty (BLO) + 0.05 0.12 0.05 0.48H.7 Marketing Support (MS) + 0.22 0.06 0.25**** 3.87H.8 Similarity (SIM) + 0.43 0.09 0.34**** 4.77H.9: Involvement (INE) + 0.14 0.07 0.17** 2.19H.10: Consumer innovativeness (CIN) + 0.06 0.06 0.08 1.06F statistic 17.87****R squared 0.60Adjusted R squared 0.57Significant at ****p<.000;***p<.01;**p<.05;*p<.10 51
  • 59. TABLE 5.4: Regression II (Separated components of Similarity)Independent variables Full model Predicted B Std. Beta T-value direction errorConstant -0.72 0.43 -1.67H.1: Subjective knowledge (FAM) + -0.08 0.08 -0.07 -0.95H.2: Perceived quality (PQ) + -0.04 0.14 -0.03 -0.27H.3: Value associations (BAV) + -0.18 0.12 -0.13 -1.53H.4: Organisational associations (BAO) + .033 0.12 0.25*** 2.62H.5: Brand personality (BAP) + 0.23 0.11 0.17** 2.10H.6: Brand loyalty (BLO) + 0.06 0.11 0.05 0.47H.7 Marketing Support (MS) + 0.24 0.06 0.25**** 3.86H.8a: Product similarity (SIMP) + 0.35 0.10 0.28*** 3.50H.8b: Brand Image Similarity (SIMI) + .09 0.07 0.10 1.26H.9: Involvement (INE) + .14 0.06 0.17** 2.19H.10: Consumer innovativeness (CIN) + .06 0.06 0.07 1.02F statistic 16.13****R squared 0.60Adjusted R squared 0.57Significant at ****p<.000;***p<.01;**p<.05;*p<.10 Regression was also conducted at a brand level in order to assess the effects of the independent variables on attitude towards extension when different types of online brands are involved. The proposed model explains 73% and 53% of the attitude towards the extension for Amazon and Google respectively. The findings from the analysis are shown in Table 5.5. 52
  • 60. TABLE 5.5: Regression analysis by type of company Full model Amazon GoogleVariable Beta T-value Beta T-value Beta T-valueConstant -1.67 -.360 -1.848FAM -.072 -.94 -.117 -.996 .073 .742PQ -.025 -.27 -.250* -1.848 .067 .494BAV -.126 -1.53 .043 .385 -.045 -.368BAO .249*** 2.62 .228* 1.677 .081 .643BAP .170** 2.10 .107 1.109 .325*** 2.633BLO .047 .47 .124 1.007 .021 .144SIMP .282*** 3.50 .124 1.027 .255** 2.162SIMI .095 1.26 .105 1.153 .099 .885MS .250**** 3.86 .268*** 3.011 .175* 1.750INE .166** 2.19 .503**** 4.924 -.072 -.574CIN .073 1.02 -.002 -.020 .220** 1.999R squared 0.60 0.86 0.73Adjusted R 2 0.57 0.73 0.53Significant at ****p<.000;***p<.01;**p<.05;*p<.105.4 Hypotheses Testing Surprisingly, the results for the regression analysis for the full model (Table5.5) showed that both brand knowledge (FAM) and perceived quality of the parentbrand (PQ) had no significant effect on attitude towards the extension (ATT). Thebeta coefficient related to brand knowledge (FAM) appeared to be no significant atany level of significance (p>0.1) and negative (0.72), therefore the first hypothesis(H1) is rejected. Moreover, brand knowledge was not significant on a brand level,which supports the declination of H1. The variable also presents a negative sign in thecase of Amazon which differs from the predicted direction of this hypothesis. Perceived quality (PQ) appeared to be no significant on an aggregated level(p> 0.1) and its beta coefficient presented a negative sign for the full model (β= -0.02). Therefore, the second hypothesis has to be rejected. On a brand level, perceivequality of the parent brand (PQ) was significant (p<0.1) and substantial (β= -0.25) inthe case of Amazon but no significant for Google. However, the negative sign of PQ 53
  • 61. is opposed to the proposed direction and therefore H2 was rejected for Amazon. In thesame line, value associations towards the brand (BAV) are not significant at any level.Thus the third hypothesis (H3) is also rejected. The results also suggested that five variables present significant betacoefficients: organisational associations (BAO), brand personality (BAP), productcategory similarity (SIMP), marketing support (MS) and involvement in the extensioncategory (INE). Organisational associations (BAO) presented a considerable andpositive beta coefficient of 0.25 which was significant at p<0.01. Thus, the hypothesis4 is accepted at an aggregated level. On a brand level, organisational associationswere only found significant for Amazon (β=0.228; p<0.1). Thus, H4 is also acceptedin the case of Amazon but rejected for Google. Brand personality (BOP) was found also significant and positive (β=0.17;p<0.05) supporting the acceptance of H5 for the aggregated model. The impact ofbrand personality is also relevant in the case of Google (p<0.01), which showed a betacoefficient of 0.325. The fifth hypothesis (H5) is therefore accepted on a brand levelfor Google but rejected for Amazon. On the other hand, brand loyalty (BLO) wasfound no significant at any level p>0.1 and H6 was therefore rejected. The impact of overall similarity (SIM) on attitude towards the extension wasfound significant and positive, see Table 5.4, on an aggregated level (β=0.25;p<0.000). However, when the dimensions of similarity, product category similarity(SIMP) and brand image similarity (SIMI), were introduced in the regressionseparately, only product similarity appeared to be significant (β=0.282; p<0.01).These findings support the acceptance of H8 and H8a but reject H8b. On a brand level,product similarity is significant for Google at p< 0.01, (β=0.255). In the case ofAmazon, H8a and H8b have to be rejected. The variable marketing support (MS) appeared to predict 5.06%[(0.225*0.225)*100] (β=0.25) of variation in attitude towards the extension (seeappendix A.3.3.3). The impact of Marketing support is significant at p<0.000.Therefore, the seventh hypothesis (H7) has to be accepted. Marketing support is alsosignificant for Amazon (β=0.268; p<0.01) and Google (β=0.175; p<0.1). Therefore,H7 is also accepted for both brands. Regarding the variables related to consumer characteristics, only involvementin the extension category was found significant (p<0.05) and presented a positive andconsiderable beta coefficient of 0.166. Hence, the ninth hypothesis (H9) was accepted 54
  • 62. for the aggregated model. Consumer involvement in the extension product categoryalso presented a significant value of its beta coefficient (β=0.503; p<0.00) in the caseof Amazon, which support the acceptance of H9 for Amazon. This hypothesis wasrejected for Google. On the other hand, consumer innovativeness was found nosignificant at any level, rejecting H10 except in the case of Google in which it wasfound significant (β=0.22; p<0.05) and therefore, H10 is accepted on a brand level forGoogle.5.5 Discussion In the light of the results presented in the regressions, certain interpretationscan be suggested. First, in contrast with previous studies (Herr et al., 1996; Dawar,1996), brand knowledge does not present a significant effect on attitude towards theextension. It may be explained by the existence of piecemeal evaluation processes(Fiske and Pavelchak, 1986) in which consumers evaluate the new extensionaccording to their features and attributes rather than by transfer of their previousbeliefs or attitudes towards the brand. The extension from an online environment to anoffline product may explain the negative sign of the brand knowledge beta coefficient(-0.072), due to the fact that consumers may perceive these extensions as atypical orunrealistic. The absence of significance in the case of perceived quality (PQ) may suggestthat, according to Bravo et al., (2010), functional associations, such as qualityperceptions, do not impact attitude towards the extension when an online brand isextended to offline products. Therefore, the impact of perceived quality is diluted bythe existence of emotional and self-expressive associations towards the extension. Supporting this theory, the values presented by the three different categories ofbrand associations suggest that whereas value associations related to more specificfunctional attributes are not found significant, both organisational associations andbrand personality, which reflect more self-expressive and emotional perceptions of thebrand, appeared to have a significant impact on attitude towards the extension. The no significance of brand loyalty within the model may be explained by thefact that the lower heterogeneity in the online environment and the facility to changefrom one brand to another (Clarke, 2001) provoke that relationships of loyalty areharder to develop in the offline context (van Riel and Ouwersloot, 2005). 55
  • 63. The importance of overall similarity within the model is in line with previousstudies (Aaker and Keller, 1990) which considered it as the most important predictingfactor of attitude towards extensions. However, this study showed that only productsimilarity is considered significant within the model which contrasts with Park et al.,(1991) who suggested that consumers evaluate extensions more favourably when theyfind congruence between the parent brand image and the extension. In the line of Reddy et al., (1994) and Völckner and Sattler, (2007), themarketing support of the extension was found significant. This result suggests thatmarketing strategies have an important impact in consumer evaluation of offlineextensions launched by online companies. As mentioned in chapter 4, this study usedreal brand extensions with the objective of testing the impact of existing marketingefforts on consumers´ attitude towards the extension. Finally, the involvement withthe extension product category appeared to have a significant effect on attitudetowards the extension. Therefore, when consumers feel that the extension productcategory is important when it comes to their purchase decisions and they are familiarwith the existing products in this category, their will have a more positive attitudetowards the new product. The regression results also have implications on a brand level. The relativelittle weight of perceived quality in the cases of Amazon and Google may suggest thatconsumers expect online brands to explore the boundaries of technical possibilities inthe new offline product categories. Therefore, quality perceptions are not transferredto the new extensions (van Riel and Ouwersloot, 2005). The relationships between brand associations and attitude towards theextension presented differences on a brand level. Whereas Amazon´s consumers weremore likely to transfer organisational associations based on trust and credibility, moreemotional associations regarding Google´s brand personality were transferred to thenew product. Product similarity was a significant determinant of brand extension success forGoogle. This suggests that consumers evaluate more favourably those offlineextensions which present complementarity with the product of the parent brand anduse the same competences. In the case of Amazon, none of the categories ofsimilarity, product similarity and brand image similarity, was found to be relevant.This result can be explained by the broad variety of products provided by Amazon, 56
  • 64. which does not provide a clear basis for categorizing subsequent extensions.Therefore, the transfer of similarity perceptions is reduced (Smith and Park, 1992). Marketing support of the extensions seemed to have a considerable weight onconsumer evaluations in both brands. Thus, extensions that receive strong advertising,distribution or promotion are more accepted among consumers (Reddy et al, 1994). Finally, consumer characteristics presented variations across brands. Theinvolvement in the extension has an important weight in the case of Amazon but it isnot relevant for Google. It may be explained by the extension product category and itslifecycle. EBook readers are considered as a relatively new product in a growth phasewhere marketing efforts are more intensive and consumers are gathering informationabout the product. On the other hand, mobile phones are more mature products inwhich consumers´ motivation is reduced progressively. Thus, companies seek todifferentiate and gain consumer interest by adding new product features. These newfeatures will be better evaluated by highly innovative consumers, early adopters,which reflect the importance of consumer innovativeness in the case of Google.5.6 Summary The principal findings of the analysis of the research data have been presentedand discussed in this chapter. These findings seemed to have significant implicationson consumers´ attitude towards offline extensions launched by online companies. Thefollowing table (Table 5.6) presents the obtained conclusions from the analysis andcontrasting of the hypotheses in chapter 3. 57
  • 65. TABLE 5.6: Review on hypotheses Hypothesis Variable Full Model Amazon Google H1 FAM Not Supported Not Supported Not Supported H2 PQ Not Supported Not Supported Not Supported H3 BAV Not Supported Not Supported Not Supported H4 BAO Supported Supported Not Supported H5 BAP Supported Not Supported Supported H6 BLO Not Supported Not Supported Not Supported H7 MS Supported Supported Supported H8 SIM Supported Not Supported Supported H8a SIMP Supported Not Supported Supported H8b SIMI Not Supported Not Supported Not Supported H9 INE Supported Supported Not Supported H10 CIN Not Supported Not Supported Supported The most interesting research findings are: First, organisational and brandpersonality associations which transfer emotional and self-expressive benefits to theconsumers are used in order to evaluate the new extensions. Second, in the same lineas previous research, similarity appeared to be a significant factor within consumerevaluation of brand extensions. However, consumers did not consider brand imagesimilarity in their evaluation process. Finally, marketing support and consumerinvolvement in the extension were significant explicative factors of attitude towardsthe extension. The theoretical and managerial implications of the findings will bepresented in the next chapter. 58
  • 66. CHAPTER 7. CONCLUSION7.1 Conclusion This study attempts to provide a better understanding of the factors thatinfluence consumers´ evaluations of brand extensions in the context of online brandsand, in particular, when these extensions are launched away from the Internet limitstowards offline markets. The findings of this study suggested that the launching ofoffline brand extensions by online companies is indeed possible. More specifically,this study showed that consumers employ brand personality and organisationalassociations rather than perceptions of quality and value in order to evaluate the newoffline extensions. Furthermore, this study seems to follow the line of previousresearch by supporting the role of product similarity as predictor of brand extensionsuccess. On the other hand, the marketing support provided by the parent brand to theoffline extension creates more positive consumer attitudes towards the extension as itis demonstrated in this study. Finally, consumer involvement in the extension productcategory appears to have a considerable weight in consumer evaluation of brandextensions.7.2 Implications 7.2.1 Theoretical Implications The theoretical implications of this study are multifold. First, this studyextends the research on consumer evaluations of brand extensions in the onlineenvironment by including new factors which have not been yet studied in the existingresearch. In general terms, the acceptance of offline extensions launched by onlinecompanies depends on the degree of product similarity perceived by consumers andtheir relationships with the organisation behind the brand in terms of trust andcredibility. Additionally, consumers´ self-expressive feelings linked to the brandpersonality are more likely to be transferred to the new extensions in the case ofonline companies. Although overlooked in previous online brand extension research,this study shows that marketing support of the extension and consumer involvementin the extension product category play a significant role in predicting consumerattitude towards the extensions. Secondly, this study also introduces differences with 59
  • 67. regard to the type of online brand which is extended to offline products. The studysuggests that organisational associations are more likely to be transferred in theevaluation of extensions launched by e-tailers (Amazon). In the case of e-portals(Google) which are less accustomed to carry out online transactions with customers,perceptions of trust, credibility and online safety are less significant. However, e-portals are capable to transfer its band personality to the offline extensions. On theother hand, similarity perceptions are better transferred from e-portals, in terms ofcomplementarity and transference of competences, than in the case of e-tailers. This isprovoked by the broader variety of tangible products that are provided by e-tailerswhich blur consumers´ perceptions of similarity. Finally, the product category of theextensions seems to play an important role regarding factors related to consumercharacteristics. Whereas consumer innovativeness is more linked to mature productssuch as mobile phones, the relevance of consumer involvement in the extensioncategory seems to be more related to products in the growth phase (ebook readers)which require a greater effort and motivation from consumers in order to gatherinformation about the new product. 7.2.2 Managerial Implications The findings of this study also provide some implications for businesspractice. Firstly, according to the significant role of product similarity on consumers´evaluations of the extensions, managers of online brands have to decide the type ofproduct that is to be extended. This new product must be perceived as similar to thecurrent products of the parent brand. Therefore, managers must select offlineextensions which enable the Internet access and can be used together with theproducts of the brand. Secondly, the study confirms that consumers´ emotional andself-expressive associations toward the parent brand are also used to evaluate theoffline extensions. Thus, managers have to develop marketing campaigns addressed tocreate a stronger brand personality as well as to reinforce relationships of trust andcredibility. Furthermore, managers have to invest highly in implementing marketingtechniques which support the new extensions with the aim of gaining greater perceiveproduct similarity and consumer involvement, which should as well be directed to thecorrect segments (early adopters or late adopters). To summarize, such support willhelp achieve two objectives: (1) it will facilitate a very aggressive push and pull 60
  • 68. demand for the brand extension and (2) it will help create positive perceptions aboutthe company in the minds of the consumers.7.3 Limitations and Directions for Further Research Regardless of the importance of the implications mentioned above, this studypresents several ways in which it can be extended. Firstly, this study only assessed thedirect relationships between the determinants of brand extension success andconsumer attitude toward the extension. Possible interactions between explicativevariables may help improve the understanding of consumers´ evaluations of theextensions. In this way, variables such as brand loyalty or brand knowledge thatappeared to be not significant within the model may play an important role when theyinteract with other explicative variables. More specifically, it would be interesting toinvestigate the interaction effects between brand loyalty and brand associations aswell as perceived quality and value associations, because these factors presented aconsiderable correlation as commented in chapter 5. Therefore, further researchshould investigate the existence of relationships between the proposed determinants ofbrand extension success. Secondly, this study only examined one brand within each of the two studiedcategories of online brands (e-tailers and e-portals) which stops results from beinggeneralised. Therefore, further research should extend this research to the study of abroader number of companies in each category in order to generalize the findings toother e-tailers and e-portals. Moreover, only one offline extension was investigatedfor each company. Therefore, additional product categories can be useful to testwhether the proposed model is applicable across different types of offline products. Another substantial limitation is that this study is only focused in twocategories of online brands (e-tailers and e-portals) which were initially originated inthe online environment. However, van Riel and Ouwersloot, (2005) proposed twoadditional categories of online brands (e-sellers and company portals) which have atraditionally physical origin. Differences in origin may change the way in whichconsumer evaluated the offline brand extensions, since they may perceive moretangible relationships with these kinds of Internet companies. Finally, this study consists in a cross-sectional analysis of the collected data.However, the utilised variables were not statics. Moreover, given the importance of 61
  • 69. marketing activities in the evaluation of brand extensions, which may haveprogressive effects on the suggested explicative variables, this study may not fullycapture consumers´ attitudes toward the extension across time. Therefore, furtherresearch should employ longitudinal studies to examine the dynamic effects of brandextension evaluation. 62
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  • 85. APPENDIXAppendix A – SPSS DATA Appendix A.1: Reliability AnalysisA.1.1 Attitude towards the extension Reliability Statistics Cronbachs Alpha N of Items .845 3A.1.2 Brand knowledge Reliability Statistics Cronbachs Alpha N of Items .828 3A.1.3 Perceived quality Reliability Statistics Cronbachs Alpha N of Items .846 3A.1.4 Value associations Reliability Statistics Cronbachs Alpha N of Items .743 4A.1.5 Organisational organisation 78
  • 86. Reliability Statistics Cronbachs Alpha N of Items .853 5 A.1.6 Brand personality Reliability Statistics Cronbachs Alpha N of Items .585 3 Item-Total Statistics Corrected Item- Squared Cronbachs Scale Mean if Scale Variance Total Multiple Alpha if Item Item Deleted if Item Deleted Correlation Correlation DeletedThe brand has a personality 6.87 2.358 .420 .254 .456I have a clear image of the type 7.56 1.706 .338 .122 .657of person who would use thebrandThe brand is interesting 6.65 2.447 .498 .288 .390 A.1.7 Brand loyalty Reliability Statistics Cronbachs Alpha N of Items .840 3 A.1.8 Marketing support Reliability Statistics Cronbachs Alpha N of Items .806 2 79
  • 87. A.1.9 Consumer innovativeness Reliability Statistics Cronbachs Alpha N of Items .900 3 A.1.10 Involvement with the extension Reliability Statistics Cronbachs Alpha N of Items .825 2 A.1.11 Product Similarity Reliability Statistics Cronbachs Alpha N of Items .733 3 Appendix A.2: Correlation analysis A.2.1 Correlations between the conceptual model aggregates Correlations ATT FAM PQ BAV BAO BLO SIMP MS INE CIN BAP SIMI * ** ** ** ** ** ** ** ** ** **ATT Pearson 1 .191 .313 .268 .570 .415 .597 .445 .330 .358 .454 .443 Correlation Sig. (2- .017 .000 .001 .000 .000 .000 .000 .000 .000 .000 .000 tailed) * ** ** ** ** ** ** ** **FAM Pearson .191 1 .574 .439 .322 .459 .220 .021 .396 .232 .350 .145 Correlation Sig. (2- .017 .000 .000 .000 .000 .006 .791 .000 .004 .000 .070 tailed) ** ** ** ** ** ** ** ** ** **PQ Pearson .313 .574 1 .687 .498 .631 .294 .117 .216 .221 .440 .354 Correlation Sig. (2- .000 .000 .000 .000 .000 .000 .150 .007 .006 .000 .000 tailed) 80
  • 88. ** ** ** ** ** ** ** * ** **BAV Pearson .268 .439 .687 1 .459 .553 .230 .130 .297 .180 .454 .327 Correlation Sig. (2- .001 .000 .000 .000 .000 .005 .111 .000 .027 .000 .000 tailed) ** ** ** ** ** ** ** * ** ** **BAO Pearson .570 .322 .498 .459 1 .662 .443 .261 .194 .399 .547 .350 Correlation Sig. (2- .000 .000 .000 .000 .000 .000 .001 .017 .000 .000 .000 tailed) ** ** ** ** ** ** ** ** ** **BLO Pearson .415 .459 .631 .553 .662 1 .341 .043 .372 .323 .578 .272 Correlation Sig. (2- .000 .000 .000 .000 .000 .000 .595 .000 .000 .000 .001 tailed) ** ** ** ** ** ** ** ** ** ** **SIMP Pearson .597 .220 .294 .230 .443 .341 1 .329 .301 .330 .331 .588 Correlation Sig. (2- .000 .006 .000 .005 .000 .000 .000 .000 .000 .000 .000 tailed) ** ** ** * **MS Pearson .445 .021 .117 .130 .261 .043 .329 1 .158 .113 .043 .232 Correlation Sig. (2- .000 .791 .150 .111 .001 .595 .000 .049 .158 .593 .003 tailed) ** ** ** ** * ** ** * ** * *INE Pearson .330 .396 .216 .297 .194 .372 .301 .158 1 .439 .185 .172 Correlation Sig. (2- .000 .000 .007 .000 .017 .000 .000 .049 .000 .021 .031 tailed) ** ** ** * ** ** ** ** ** *CIN Pearson .358 .232 .221 .180 .399 .323 .330 .113 .439 1 .208 .192 Correlation Sig. (2- .000 .004 .006 .027 .000 .000 .000 .158 .000 .009 .016 tailed) ** ** ** ** ** ** ** * ** **BAP Pearson .454 .350 .440 .454 .547 .578 .331 .043 .185 .208 1 .234 Correlation Sig. (2- .000 .000 .000 .000 .000 .000 .000 .593 .021 .009 .003 tailed) ** ** ** ** ** ** ** * * **SIMI Pearson .443 .145 .354 .327 .350 .272 .588 .232 .172 .192 .234 1 Correlation Sig. (2- .000 .070 .000 .000 .000 .001 .000 .003 .031 .016 .003 tailed)*. Correlation is significant at the 0.05 level (2-tailed).**. Correlation is significant at the 0.01 level (2-tailed). 81
  • 89. Appendix A.3: Regression analysisA.3.1 Amazon b Variables Entered/RemovedModel Variables Entered Variables Removed Method1 CIN, MS, SIMI, BLO, INE, . Enter BAV, BAP, FAM, SIMP, PQ, BAOa. All requested variables entered.b. Dependent Variable: ATT b ANOVAModel Sum of Squares df Mean Square F Sig. a1 Regression 37.434 11 3.403 13.443 .000 Residual 13.670 54 .253 Total 51.104 65a. Predictors: (Constant), CIN, MS, SIMI, BLO, INE, BAV, BAP, FAM, SIMP, PQ, BAODependent Variable: ATTb. Dependent Variable: ATT Model Summary Adjusted R Std. Error of theModel R R Square Square Estimate a1 .856 .733 .678 .50314a. Predictors: (Constant), CIN, MS, SIMI, BLO, INE, BAV, BAP, FAM,SIMP, PQ, BAO a Coefficients Standardized Unstandardized Coefficients CoefficientsModel B Std. Error Beta t Sig.1 (Constant) -.195 .542 -.360 .720 FAM -.105 .105 -.117 -.996 .324 PQ -.374 .202 -.250 -1.848 .070 BAV .062 .160 .043 .385 .701 BAO .315 .188 .228 1.677 .099 BAP .164 .148 .107 1.109 .272 BLO .140 .139 .124 1.007 .319 82
  • 90. SIMP .160 .156 .124 1.027 .309 SIMI .094 .082 .105 1.153 .254 MS .260 .086 .268 3.011 .004 INE .454 .092 .503 4.924 .000 CIN -.001 .074 -.002 -.020 .984a. Dependent Variable: ATTA.3.2 Google b Variables Entered/Removed Variables VariablesModel Entered Removed Method1 CIN, MS, BAV, . Enter FAM, SIMI, BAP, INE, SIMP, BAO, PQ, BLOa. All requested variables entered.b. Dependent Variable: ATT Model Summary Adjusted R Std. Error of theModel R R Square Square Estimate a1 .726 .528 .451 .65650a. Predictors: (Constant), CIN, MS, BAV, FAM, SIMI, BAP, INE, SIMP,BAO, PQ, BLO b ANOVAModel Sum of Squares df Mean Square F Sig. a1 Regression 32.736 11 2.976 6.905 .000 Residual 29.307 68 .431 Total 62.043 79a. Predictors: (Constant), CIN, MS, BAV, FAM, SMI, BAP, INE, SIMP, BAO, PQ, BLO Dependent Variable: ATTb. Dependent Variable: ATT 83
  • 91. 84
  • 92. a Coefficients Unstandardized Standardized Collinearity Coefficients Coefficients StatisticsModel B Std. Error Beta t Sig. Tolerance VIF1 (Constant) -1.597 .864 -1.848 .069 FAM .128 .173 .073 .742 .461 .710 1.409 PQ .089 .180 .067 .494 .623 .375 2.666 BAV -.061 .165 -.045 -.368 .714 .456 2.195 BAO .105 .164 .081 .643 .522 .438 2.285 BAP .392 .149 .325 2.633 .010 .456 2.194 BLO .025 .170 .021 .144 .886 .333 3.004 SIMP .271 .126 .255 2.162 .034 .500 2.001 SIMI .083 .093 .099 .885 .379 .556 1.799 MS .175 .100 .175 1.750 .085 .697 1.434 INE -.059 .103 -.072 -.574 .568 .445 2.247 CIN .195 .098 .220 1.999 .050 .572 1.747a. Dependent Variable: ATT 85
  • 93. A.3.3 Aggregated model A.3.3.1 Model with aggregated Similarity b Variables Entered/Removed Variables VariablesModel Entered Removed Method1 BAP, MS, INE, . Enter CIN, PQ, SIM, FAM, BAV, BAO, BLOa. All requested variables entered.b. Dependent Variable: ATT Model Summary Adjusted R Std. Error of theModel R R Square Square Estimate a1 .776 .602 .569 .60508a. Predictors: (Constant), BAP, MS, INE, CIN, PQ, SIM, FAM, BAV,BAO, BLO b ANOVAModel Sum of Squares df Mean Square F Sig. a1 Regression 65.420 10 6.542 17.869 .000 Residual 43.202 118 .366 Total 108.622 128a. Predictors: (Constant), BAP, MS, INE, CIN, PQ, SIM, FAM, BAV, BAO, BLOb. Dependent Variable: ATT 86
  • 94. a Coefficients Standardized Unstandardized Coefficients CoefficientsModel B Std. Error Beta t Sig.1 (Constant) -.692 .422 -1.641 .103 FAM -.074 .081 -.069 -.915 .362 PQ -.042 .134 -.029 -.310 .757 BAV -.183 .113 -.130 -1.611 .110 BAO .325 .124 .248 2.622 .010 BLO .056 .116 .048 .482 .630 SIM .431 .090 .344 4.770 .000 MS .244 .063 .250 3.874 .000 INE .143 .065 .166 2.192 .030 CIN .064 .061 .075 1.062 .290 BAP .237 .108 .175 2.191 .030a. Dependent Variable: ATT A.3.3.2 Model contrasting two dimensions of similarity b Variables Entered/Removed Variables VariablesModel Entered Removed Method1 CIN, MS, BAV, . Enter FAM, SIMI, BAP, INE, SIMP, BLO, PQ, BAOa. All requested variables entered.b. Dependent Variable: ATT Model Summary Adjusted R Std. Error of theModel R R Square Square Estimate a1 .776 .603 .565 .60733a. Predictors: (Constant), CIN, MS, BAV, FAM,SIMI, BAP, INE, SIMP,BLO, PQ, BAO 87
  • 95. b ANOVAModel Sum of Squares df Mean Square F Sig. a1 Regression 65.467 11 5.952 16.135 .000 Residual 43.155 117 .369 Total 108.622 128a. Predictors: (Constant), CIN, MS, BAV, FAM, SIMI, BAP, INE, SIMP, BLO, PQ, BAODependent Variable: ATTb. Dependent Variable: ATT Coefficients Unstandardized Standardized Coefficients Coefficients Collinearity StatisticsModel B Std. Error Beta T Sig. Tolerance VIF1 (Constant) -.715 .428 -1.669 .098 FAM -.077 .081 -.072 -.946 .346 .588 1.700 PQ -.037 .136 -.025 -.272 .786 .395 2.531 BAV -.176 .115 -.126 -1.529 .129 .502 1.991 BAO .326 .124 .249 2.622 .010 .376 2.662 BAP .231 .110 .170 2.102 .038 .517 1.936 BLO .055 .116 .047 .474 .637 .343 2.914 SIMP .349 .099 .282 3.504 .001 .525 1.903 SIMI .085 .068 .095 1.260 .210 .597 1.676 MS .244 .063 .250 3.855 .000 .809 1.236 INE .143 .065 .166 2.186 .031 .590 1.696 CIN .062 .061 .073 1.022 .309 .670 1.493a. Dependent Variable: ATT 88
  • 96. A.3.3.3 Correlations Correlations Zero- Model order Partial Part 1 (Constant) FAM .217 -.087 -.055 PQ .300 -.025 -.016 BAV .251 -.140 -.089 BAO .582 .236 .153 BLO .409 .044 .028 SIMP .620 .308 .204 MS .442 .336 .225 INE .365 .198 .127 CIN .388 .094 .060 BAP .448 .191 .122 SIMI .452 .116 .073 89
  • 97. Appendix B - QUESTIONNAIRES Heriot Watt University SURVEY ON BRAND EXTENSIONDear participant,My name is Antonio Martinez, and I am conducting a survey for my final dissertationon branding.I am interested in your opinion about different online brands and the brand extensionslinked to them.I would be glad if you could help me to do this survey by taking the time to completethis questionnaire. All information will be treated in the strictest confidence andresults will be produced in form of aggregated data only.Thank you for your time and collaboration. INSTRUCTIONS As mentioned, this questionnaire is about online brands and their real andhypothetical brand extensions. A brand extension is a new product which uses analready existing band name. You will be asked about your opinion about one onlinebrand and its brand extensions. The questionnaire requires some time and effort to fillout, therefore please try to do your best and make both your and my time worthwhile. 90
  • 98. QUESTIONNAIRE 1: GOOGLEConsider the following brand: Google Inc.For the next several questions, please choose a number from 1-5 to each statement toindicate how much you agree with that statement. NON VERY FAMILIAR FAMILIAR1. Are you familiar to the brand Google? 1 2 3 4 52. Are you familiar with the products offered by Google? 1 2 3 4 5 NOT AT ALL VERY FREQUENTLY FREQUENTLY3. I use frequently Google products or services 1 2 3 4 5 STRONGLY STRONGLY DISAGREE AGREE4. Google offers very good quality products 1 2 3 4 55. Google offers products of consistent quality 1 2 3 4 56. Google offers products with excellent features 1 2 3 4 5 STRONGLY STRONGLY DISAGREE AGREE7. Google’s website provides easy-to-follow search paths 1 2 3 4 58. I never feel lost when navigating through Google’s website 1 2 3 4 59. I was able to obtain the information I wanted without any delay 1 2 3 4 510. Considering what I would pay for Google, I would get much more than 1 2 3 4 5my money’s worth 91
  • 99. 11. Google has a personality 1 2 3 4 512. Google is interesting 1 2 3 4 513. I have a clear image of the type of person who would use Google 1 2 3 4 514. I trust the company which makes Google 1 2 3 4 515. It feels safe to disclose personal information in Google 1 2 3 4 516. It feels safe to conduct transactions in Google 1 2 3 4 517. I like the company which makes Google 1 2 3 4 518. The company which makes Google has credibility 1 2 3 4 5 STRONGLY STRONGLY DISAGREE AGREE19. It makes sense use Google´s products or services instead of other 1 2 3 4 5competing companies, even if they are the same20. Even if other company has the same features as Google´s products or 1 2 3 4 5services, I would prefer use Google 21. I would definitely recommend Google to friends, neighbours and 1 2 3 4 5relativesConsider the following extension:a) Google smartphone 92
  • 100. VERY VERY MUCH LITTLE22. Overall, how much do you know about products in the smartphone 1 2 3 4 5category? NOT AT ALL HIGHLY SIMILAR SIMILAR23. Think of Google. How similar is the typical usage situation of 1 2 3 4 5Google´s products with the usage of mobile phones?24. Think of Google. How similar is Google compared with mobile 1 2 3 4 5phones regarding image? 25. Think of Google. How similar is the competence required to 1 2 3 4 5produce Google products and mobile phones? TOTALLY TOTALLY DISAGREE AGREE26. There is complementarity of Google´s products and services and 1 2 3 4 5mobile phones STRONGLY STRONGLY DISAGREE AGREE27. Google smartphone is well supported in terms of advertising 1 2 3 4 528.Google smartphone receives competent marketing support 1 2 3 4 5 STRONGLY STRONGLY DISAGREE AGREE29. Buying a smartphone is important to me 1 2 3 4 530. I know the products offered by the smartphone category 1 2 3 4 5 STRONGLY STRONGLY DISAGREE AGREE31. Overall, I enjoy buying the latest products 1 2 3 4 532. I like to purchase the latest products before others do 1 2 3 4 533. Overall, it is exciting to buy the latest products 1 2 3 4 5 93
  • 101. STRONGLY STRONGLY DISAGREE AGREE34. Overall, I am very positive to Google mobile phone 1 2 3 4 5 NOT AT ALL VERY LIKELY LIKELY35. I am likely to try Google smartphone 1 2 3 4 5 ONE OF THE ONE OF THE WORST BEST36. Overall evaluation of Google smartphone relative to existing brands in 1 2 3 4 5mobile phones categoryFinally, answer the following questions about youWhat is your age?( ) 18-24 ( ) 25-34 ( ) 35-45 ( ) 45-55 ( ) 55+What is your gender?( ) Male ( ) FemaleWhat is your marital status?( ) Single ( ) Married ( ) Divorced ( ) SeparatedWhat is your employment status?( ) Full time employed ( ) Part time employed ( ) Self-employed ( ) Housewife/husband ( ) Unemployed ( ) RetiredWhat is your highest level of education?( ) Elementary school ( ) High school ( ) College ( ) Graduate schoolWhat is your degree level?( ) High school diploma ( ) Bachelors Degree ( ) Masters ( ) PhD ( ) NoneWhat is your nationality? 94
  • 102. QUESTIONNAIRE 2: AMAZONConsider the following brand: Amazon.com For the next several questions, please choose a number from 1-5 to eachstatement to indicate how much you agree with that statement. NON VERY FAMILIAR FAMILIAR1. Are you familiar to the brand Amazon? 1 2 3 4 52. Are you familiar with the products offered by Amazon? 1 2 3 4 5 NOT AT ALL VERY FREQUENTLY FREQUENTLY3. I use frequently Amazon products or services 1 2 3 4 5 STRONGLY STRONGLY DISAGREE AGREE4. Amazon offers very good quality products 1 2 3 4 55. Amazon offers products of consistent quality 1 2 3 4 56. Amazon offers products with excellent features 1 2 3 4 5 STRONGLY STRONGLY DISAGREE AGREE7. Amazon’s website provides easy-to-follow search paths 1 2 3 4 58. I never feel lost when navigating through Amazon’s website 1 2 3 4 59. I was able to obtain the information I wanted without any delay 1 2 3 4 5 95
  • 103. 10. Considering what I would pay for Amazon, I would get much more than 1 2 3 4 5my money’s worth11. Amazon has a personality 1 2 3 4 512. Amazon is interesting 1 2 3 4 513. I have a clear image of the type of person who would use Amazon 1 2 3 4 514. I trust the company which makes Amazon 1 2 3 4 515. It feels safe to disclose personal information in Amazon 1 2 3 4 516. It feels safe to conduct transactions in Amazon 1 2 3 4 517. I like the company which makes Amazon 1 2 3 4 518. The company which makes Amazon has credibility 1 2 3 4 5 STRONGLY STRONGLY DISAGREE AGREE19. It makes sense use Amazon´s products or services instead of other 1 2 3 4 5competing companies, even if they are the same20. Even if other company has the same features as Amazon´s products or 1 2 3 4 5services, I would prefer use Amazon 21. I would definitely recommend Amazon to friends, neighbours and 1 2 3 4 5relativesConsider the following extension:a) Amazon ebook reader (Kindle) 96
  • 104. VERY VERY MUCH LITTLE22. Overall, how much do you know about products in the ebook reader 1 2 3 4 5category? NOT AT ALL HIGHLY SIMILAR SIMILAR23. Think of Amazon. How similar is the typical usage situation of 1 2 3 4 5Amazon´s products with the usage of ebook reader?24. Think of Amazon. How similar is Amazon compared with ebook 1 2 3 4 5readers regarding image? 25. Think of Amazon. How similar is the competence required to 1 2 3 4 5produce Amazon products and ebook readers? TOTALLY TOTALLY DISAGREE AGREE26. There is complementarity of Amazon´s products and services and 1 2 3 4 5ebook readers STRONGLY STRONGLY DISAGREE AGREE27. Amazon ebook reader is well supported in terms of advertising 1 2 3 4 528.Amazon ebook reader receives competent marketing support 1 2 3 4 5 97
  • 105. STRONGLY STRONGLY DISAGREE AGREE29. Buying an ebook reader is important to me 1 2 3 4 530. I know the products offered by the ebook reader category 1 2 3 4 5 STRONGLY STRONGLY DISAGREE AGREE31. Overall, I enjoy buying the latest products 1 2 3 4 532. I like to purchase the latest products before others do 1 2 3 4 533. Overall, it is exciting to buy the latest products 1 2 3 4 5 STRONGLY STRONGLY DISAGREE AGREE34. Overall, I am very positive to Amazon ebook reader 1 2 3 4 5 NOT AT ALL VERY LIKELY LIKELY35. I am likely to try Amazon ebook reader 1 2 3 4 5 ONE OF THE ONE OF THE WORST BEST36. Overall evaluation of Amazon ebook reader relative to existing brands in 1 2 3 4 5mobile phones categoryFinally, answer the following questions about youWhat is your age?( ) 18-24 ( ) 25-34 ( ) 35-45 ( ) 45-55 ( ) 55+What is your gender?( ) Male ( ) FemaleWhat is your marital status?( ) Single ( ) Married ( ) Divorced ( ) SeparatedWhat is your employment status?( ) Full time employed ( ) Part time employed ( ) Self-employed ( ) Housewife/husband ( ) Unemployed ( ) RetiredWhat is your highest level of education? 98
  • 106. ( ) Elementary school ( ) High school ( ) College ( ) Graduate schoolWhat is your degree level?( ) High school diploma ( ) Bachelors Degree ( ) Masters ( ) PhD ( ) NoneWhat is your nationality? 99

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