Ad spending on brand extensions: Does similarity matter?
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VALERIE A. TAYLOR is Assistant Professor of Marketing at the University of Tennessee at Chattanooga. Her research interests include product branding strategies, consumer information processing and health communication issues. Her research has been published in the Journal of the Academy of Marketing Science, the Journal of Empirical Generalizations in Marketing Science and the Journal of Health Communications.
WILLIAM O. BEARDEN is the Bank of America Chaired Professor of Marketing in the Moore School of Business at the University of South Carolina. He serves on the editorial review boards of the Journal of Consumer Research, the Journal of Marketing, the Journal of Retailing and the Marketing Education Review. He has published in these journals and in other marketing and consumer research journals.
Abstract This research explores the effects of information about ad spending on brand extension evaluations over different levels of similarity. Brand extension similarity is proposed as a moderator of the effects of perceived ad spending on the perceived quality of brand extensions and on purchase intentions. Results of a field study show that positive ad spending inference effects were more likely to occur for similar than dissimilar extensions. Additionally, though, results show that respondents were more likely to question the veracity of high ad spending levels for a dissimilar extension than a similar extension, possibly resulting in lower product evaluations. Consequently, results of this research are probably most useful to manufacturers attempting to leverage brand equity by introducing brand extensions which are supported at introduction with large ad spending.
INTRODUCTION
Valerie A. Taylor Department of Marketing, College of Business Administration, University of Tennessee at Chattanooga, Chattanooga, TN 37403-2598, USA Tel: 1 423 425 4419 Fax: 1 423 425 4158 E-mail: [email protected]
It has been estimated that almost half of all new products introduced fail within five years. One way to hedge the risk associated with new products is to introduce them under an existing brand name.1 One such strategy, known as brand extension, introduces a new product under an established brand name in a category different from that in which the brand already competes (eg Crest toothbrush; Life Savers juice; Kodak batteries).2 The present research considers the effect that the brand extension context may have on the impact and processing of marketer-provided quality cue information,3 specifically ad expenditures, in a new product situation.
Research has demonstrated that marketer-provided information regarding extrinsic quality cues such as price, brand name, ad expenditures, store name, or warranty information is often used to infer product quality.4 That research stream largely focuses on identifying the boundary conditions surrounding the use of quality cues and how multiple cues provided simultaneously are interpreted. The current research seeks to contribute to both the brand extension and quality cue research
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