Brand Extensions: Prestige Brand Effects

Abstract

Competition and consumer brand attitudes make introducing a new brand risky and very expensive, increasing the attractiveness of brand extensions. Brand extension research has established that original brand quality perceptions, product category fit, consumer perceptions of the product category complementarity and substitutability, plus the transferability of design and manufacturing capability significantly influence extension attitude formation. However, these studies fail to differentiate between brand types and have aggregated out category effects. Using a national survey we show that brand type (prestige, functional) and extension category are important variables in consumer brand extension attitude formation. Perceived quality influences functional brands more than prestige brands as prestige brand attitudes assume quality. Functional brands experience less dilution than prestige brands, implying less risk and greater expandability than argued by previous authors.