Anubhav Anand Mishra is a doctorial campaigner and module of selling at the Icfai University Dehradun, India. The focal point of his PhD research is on the relationship between consumer ‘s perceived shopping value on satisfaction and its behavioral results in the purchase of private label branded merchandises. He has published a few articles in refereed international and national diaries every bit good as a book reappraisal. His other research involvements lie in the field of relationship selling, services selling, and consumer behavior.
“ At caterpillar, we build the machines that help our client construct a better universe, the boots and places we build are made with the same committedness. ”
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Since clip immemorial administrations have sought new schemes to establish their new merchandises. Brand extension is one of the most sought after schemes as it enhances the equity associated with well-known and well-respected trade names ( Kapferer, 2000 ) . In simpler footings, trade name extensions are merchandises and services that an organisation offers beyond its core merchandise ( Keller, 2003 ) . Harmonizing to Lynne and Dan ( 2003 ) , trade name extension is, “ The fond regard of a specific label successful in one market to a new merchandise line offered by the house in its attempt to come in a different market. ” When a trade name uses its established name to present a new merchandise, the hazards associated with the launch of the new offering every bit good as the investings needed are lowered, and there are higher opportunities that the new merchandise will be successful ( Tauber, 1988 ) . Brand extension schemes are widely used because of by establishing a new merchandise under the established trade name names, houses hope that consumers will react favorably to the new merchandise offering by pass oning a strong trade name placement, heightening consciousness and quality associations, and in bend, increases the chance of test by decreasing new merchandise hazard for consumers ( Reddy, Holak and Bhat 1994 ; Chowdhury 2001 ; Taylor and Beardon 2002 ) . Brand extension schemes are considered to be profitable than presenting a new trade name in the market. So it is non surprising that in today ‘s competitory environment many houses choose to trust on their bing trade names to present new merchandises.
To simplify and farther exemplify the grounds for widening trade name across varied merchandise classs are following:
The intensifying cost of set uping trade names in a competitory market, as consumers become immune to promotional activities creates greater force per unit area to leverage bing trade names into new merchandise classs ( Aaker and Keller 1990 ) .
In an progressively busy market topographic point, trade name extensions allow makers trade names to keep more shelf infinite and retain a higher profile in the client ‘s head ( Farquhar 1990 ) .
The trade name extensions can diminish the costs of deriving distribution and/or increase the efficiency of promotional outgos ( Morein 1975 ) .
The trade name extensions help in increasing the opportunity of new merchandise ‘s success and take downing its launch costs ( Kapferer 1997 ; Chowdhary 2002 )
The most logical principle behind an organisation traveling for trade name extension is the clip tried belief that the new merchandise or service can piggyback on the perceptual experiences and feelings associated with the parent trade name. The best illustration for this is Caterpillar, whose strength lies in the maker of building and excavation equipment, and their successful extension into footwear market. This was possible because of their ability to arouse the same trade name property associations for the extension as they had created for the parent trade name. Virgin Group, one of the most successful companies in the universe, extended its merchandise portfolio to such diverse classs ( from the original class of air hoses to sails, espousal services, telecommunications, music records and others ) . Yahoo, which began as a hunt engine in 1994, now operates in different Fieldss like auctions, confab suites, games, stock quotation marks, fiscal information, shopping portals and many other services. Closer place, the Tata trade name is to be found in many countries runing from computing machine instruction to package development, to production of steel, to fabrication of salt and even mobile telephone service.
However, a incorrect extension can be really detrimental to the parent trade name. These detrimental associations can be really expensive, or even impossible to alter ( Ries and Trout, 1981 ; Loken and Roedder-John, 1993 ) . Besides, a incorrect opinion can take to a loss in important clip ( other market chances ) and resources ( Aaker and Keller, 1990 ) . It has been antecedently estimated that failure rates of trade name extensions in many fast-moving consumer good ( FMCG ) merchandise classs are about 80 % ( Ernst & A ; Young and ACNielsen 1999 ; Marketing 2003 ) . Furthermore, unsuccessful trade name extensions sometimes may harm the nucleus trade name lead to deformation of nucleus or female parent trade name equity.
Most of the past research surveies have chiefly depended on experimental lab scenes in which respondents were largely pupils and were typically provided with conjectural trade name extensions and asked to supply their instantaneous reactions ( e.g. Aaker and Keller 1990 ; Broniarczyk and Alba 1994 ; Dacin and Smith 1994 ) . Second, really small attending has been devoted towards the pertinence of the findings across the Earth as a huge bulk of old surveies has been conducted with the U.S. consumers, whereas many trade names operate multinationally and they launch their trade name extensions globally ( Monga and John, 2007 ) . Therefore, the external cogency of these surveies has been questioned and unfavorable judgments have been leveled against their generalizability ( Lynch 1999 ; Winer 1999 ; Klink and Smith 2001 ) . From that survey they identified some of the factors that affect trade name extensions like perceived quality, similarity tantrum, trouble etc. , The subsequent surveies comes out with and added some more relevant.
Based on an extended reappraisal of the past surveies, a few unfavorable judgment is being raised and the chief contentions are elaborated below:
Very small has been known about the comparative importance of the factors that explain the success of trade name extensions. About all the surveies to day of the month hold investigated the chief and interaction effects of merely a little fraction of relevant success factors ( Franziska and Henrik 2004 ) . This has lead to the belief that there exists a theoretical account specification mistake in past surveies. Therefore, there is a demand to stipulate the theoretical account right in a mode that includes all the relevant factors that affect trade name extension rating.
With respect to the inclusion of merchandise classs, most of the old surveies have limited themselves to durable goodss, non-durables or services, and merely a few of them ( Lahiri and Gupta, 2005 ) have included these three merchandise classs at the same time. In the organic structure of service selling literature, considerable differences have been identified between services and goods ( Iacobucci 1998 ) . Nonetheless, old research has about centered on consumer goods trade names ( Aaker and Keller 1990 ; Bottomley and Doyle 1996 ; Broniarczyk and Alba 1994 ; Gurhan-Canli and Maheswaran 1998 ; Han 1998 ; Lane and Jacobson 1995 ; Nijssen and Hartman 1994 ; Parm, Jun, and Shocker 1996 ; Rangaswamy, Burke and Oliva 1993 ; Sullivan 1992 ; Sunde and Brodie 1993 ) .
Another point of contention is the usage of conjectural trade name extensions ( extensions that are non introduced in the market ) ( Aaker and Keller 1990 ; Park, Milberg and Lawson 1991 ; Keller and Aaker 1992 ; Park, McCarthy, and Milberg 1993 ; Broniarczyk and Alba 1994 ; Bottomley and Doyle1996 ; Barone, Miniard and Rome 2000 ; Lane 2000 ; Bottomley and Holden 2001 ; Boush and Loken 2001 ; Klink and Smith 2001 ) . These conjectural trade name extension ratings are entirely based on the information being provided by the research worker sing a peculiar trade name class and this might take to the possibility of research worker influence on the rating of trade name extension or the possibility of conjectural biasness. Even though, the internal cogency of these surveies seems to be high, their generalisation to existent life ingestion context is problematic ( Czellar 2003 ) .
Another of import job associated with most of the past surveies is the job of multicollinearity. The job of multicollinearity was recognized by Aaker and Keller ( 1990 ) and hence, they attempted to cover with it by showing the consequences for both the full consequence theoretical account and the chief effects-only theoretical account that excluded the three interaction footings. Although, excepting collinear footings is one attack to the job, it has been criticized by research workers who believe that theoretical account specification should be theory driven ( Belsley 1991 ) .
One of the most of import restrictions of the past research in trade name extension rating is the usage of single-item graduated tables to mensurate the variables. Many of the subsequent reproductions have confirmed it to be a large restriction of their survey. In the restriction subdivision of their survey, Bottomley and Doyle ( 1996, p.376 ) note, “ the development of a multiple point graduated table to mensurate consumers ‘ attitude towards the extension may turn out good because of the comparatively low correlativity found between perceived likeliness of test and sensed quality of the extension in the survey. ”
A big figure of old surveies have taken into consideration the direct relationship between dependant ( extension success ) and independent variables ( factors in consumer rating ) . Therefore, these surveies have failed to see the relationship of the dependence of independent variables ( i.e. sometimes the independent variables may go dependent variable ) .
Therefore, the enterprise of the present survey is to cover up these failings through analysing coincident relationships of these variables by the aid coincident equation mold ( SEM ) . The chief advantage of this mold is that it provides a more valid and dependable every bit good as frees the survey from the measuring mistake. In short, the present research is motivated by the general demand to plan the of import factors that determine consumer rating of trade name extension and in bend provide with a sound cognition base to academic practicians, research workers every bit good as field practicians. This would be achieved by understanding how consumers evaluate trade name extensions in three wide and diverse merchandise classs like consumer durable goodss, non-durables and services. In this context, this research aims to give a large-scale part through an empirical survey that would work out the likely restrictions of the old literature.
Aims of the Study
The success of trade name extension depends on how consumers evaluate trade name extensions ( Klink and Smith 2001 ) . Therefore, possible determiners of success ( the success factors of trade name extension ) have emerged as an of import focal point of research question to supply penetrations that may assist directors to cut down failure rates of trade name extension ( Aaker and Keller 1990 ; Bottomley and Doyle 1996 ) .
In this visible radiation, the following are the aims of the survey:
To Analyze the comparative importance of the factors that affect consumer ‘s rating of trade name extension.
To analyze the consequence these factors in such diverse merchandise classs as consumer durable goodss, non durable goodss and services.
To understand the differences in the mechanism by which consumers evaluate trade name extensions in consumer durable goodss, non-durables and services.
To understand the methodological jobs associated with bing trade name extension literature vis a six by comparing with an advanced theoretical account ( SEM ) .
Features of the Parent Brand
Perceived Quality of the Parent Brand
Aaker and Keller ( 1990 ) have proposed a positive relationship between perceived quality and attitude towards the extension. In simpler footings, if the parent trade name is associated with high quality, so it ‘s extension will besides be perceived likewise and if the parent trade name is associated with inferior quality, the extension will be harmed. A nucleus trade name that has high-perceived quality affords more growing chances through extensions ( Keller and Aaker 1992, Smith and Park 1992 ) . Zeithaml ( 1988 ) have defined perceived quality to be a planetary appraisal of a consumer ‘s opinion about the high quality or excellence of a merchandise, and she concluded that sensed quality is at a higher degree of abstraction than a specific property of a merchandise. Categorization theory suggests that if a merchandise possesses all the belongingss required by the specifying standards of a class, the merchandise belongs to the mentioning class ( Alba and Hutchinson 1987 ) . Once the merchandise is activated as a class, the consumer will instantly deduce cognitive opinion associated with the merchandise and if the merchandise is associated with high-perceived quality, the consumer ‘s memory dry run about the new trade name will center on pleasant ideas in relation with his expected value. So when a favorable perceptual experience of quality towards the original trade name increases the trust and satisfaction towards the extension ( Chowdhury, 2007 ) .