The management of customer churn or turnover is a top priority of executives in almost all industries such as retail, banking and telecommunications. It is accepted wisdom in marketing that new customer acquisition is a far more costly undertaking than establishing a broader and deeper relationship with existing customers. Systematic research on consumer behavior toward brand extension was initiated by two seminal North American studies (Aaker & Keller, 1990 and Klink and Smith, 1993). Klink (2001) has warned about a limitation in current research on consumer attitudes toward brand extensions, stating that “in this area, as is often the case during the initial stages of knowledge development, concerns about external validity have taken a back seat to those about internal validity” (Klink & Smith, 2001, p. 326). Indeed, the bulk of research investigates, essentially through experimental designs, the main and interaction effects between a handful of cognitive and affective attitude constructs. Brand extensions are based on the basic premise that consumers hold positive attitudes toward the parent brand that can be transferred to an extension. This is true as long as there is a “fit” between the two, i.e., the extension associations are consistent with those of the parent brand (Basu Monga & Roedder John, 2007)
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Brand extension is the “use of established brand names to enter new product categories or classes” (Keller & Aaker, 1992, p. 35). The past 15 years have witnessed the development of an important body of empirical evidence on consumer attitude vis-à-vis brand extensions. The use of the established core brand name on the new brand extension product provides a signal to the consumer about some of the qualities or characteristics of that new product (Erdem and Swait, 1998). Although brand extensions aid in generating consumer acceptance for a new product by linking the new product with a known brand or company name (Tauber, 1988 and Moorman, 1998). There is also risk of decreasing or harming the equity, which has been built up within the company name or core brand name (Rangaswamy et al., 1993 and DeGraba and Sullivan, 1995). An inappropriate brand ex-tension could create damaging associations, which may be very difficult for a company to overcome (Ries and Trout, 1986 and Aaker, 1990). Brand extensions come in two primary forms: horizontal and vertical. A horizontal brand extension involves the application of an existing brand name to a new product introduction, either in a similar product class or in a product category completely new to the firm. An example of this would be Ivory soap introducing brand extensions such as Ivory detergent or Ivory dishwashing liquid. Several studies have examined how horizontal brand extensions are evaluated. A vertical extension, on the other hand, involves introducing a similar brand in the same product category, but usually at a different price or quality point (Sullivan, 1990 and Keller and Aaker, 1992). The direction of a vertical brand extension may be characterized as being either a step-up or a step-down from the core brand. Brand extension could be further classified into three brand categories that is (1) Horizontal Extension (2) Distance Extension (3) Vertical Extension (Kamal, 2003). In horizontal extension. concept, the existing product name is used for extending to a new product in the same product class or to a product category new to the company (Kamal, 2003). Close extensions are those where the distance between the core product and extended product is nominal. Distance extensions are the extension to unrelated product category.
The purpose of the study is to examine and empirically test how consumers in Pakistan evaluate close brand extensions in reference to variables such as (1) Brand Similarity (2) Brand Reputation (3) Multiple Brand Extension (4) Parent Brand Characteristics and (5) Brand Concept consistency.
Our research hypotheses are as follows:
- H1A: Brands extended to similar category would have a positive consumer evaluation.
- H2A: The consumer evaluation of brand extension would be positive for those brand extensions whose parent's brand has stronger reputation.
- H3A: Consumer evaluation would be positive for those companies that have a reputation of introducing multiple brand extensions.
- H4A: Consumer would evaluate those brands positively that have strong association as compared to those that have weaker association.
- H5A: The consumer's brand evaluation would be positive for those brands that have more concept consistency.
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The research will be based on primary data. The respondents of the study are consumers in Islamabad, Rawalpindi, Lahore, Multan and Bahawalpur.
Convenience sample technique will be used for collecting the data.
The research will be based on primary data. Data will be collected by using verified structured questionnaire (Tariq Jaless & Tahir Ali, 2008).
The sample size for the subject study will be 200. We will distribute sample size as 100 for male and 100 for female consumers.
Data Analysis Method:
Data will be entered, edited and analyzed by using SPSS software. Data analysis technique Regression will be used.