The effect of service brand extensions on corporate image

Abstract

Purpose The main objective of this study is to analyse the influence that service brand extensions have on corporate image. Design/methodology/approach After reviewing the previous literature, a model is proposed and tested that shows how extending a services brand affects the overall corporate image. Statistical analysis of data from a market survey involving actual services brands and hypothetical extensions was undertaken. Structural equation modelling was the main methodology employed. Findings It was found that the extent of perceived fit between the corporate brand and the service extension influences the perceived quality of the extension, which in turn affects corporate image, especially for corporate brands that originally had highly rated images. Research limitations/implications Given that the study was done with hypothetical brand extensions, the proposed model is not tested in a real situation. Practical implications The results offer important implications, both for academics and managers. Through an effective communication policy, the company must increase the perceived fit. The results also suggest directions for further research. For example, it would be interesting to explore how the model works across services categorised on the continuum of search, experience and credence. Originality/value In the literature, there are few works analysing the effect of service extensions on corporate image. The research allows the understanding of the concept of corporate image and the role performed by service brand extensions. The proposed model and the estimation with SEM methodology add value to the existing knowledge.

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