Brand Extension Effects on Brand Equity: A Cross-National Study

Abstract

The objective of this paper is to analyze the effect that brand extension strategies have on parent brand equity. Specifically, we propose and test a model to explore how variables related to the parent brand, the extension and the consumers personality influence parent brand equity after the extension. Data was gathered from a survey in the UK and Spain. Results show that brand extension strategies dilute parent brand equity in both markets. We found that the initial parent brand equity and the perceived fit (category and image fit) have a positive effect on consumers' attitude toward brand extensions. Consumers' attitude and the initial parent brand equity also influence parent brand equity after the extension. Finally, through a multi-sample analysis we demonstrate that brand extensions have similar effects on brand equity among the UK and Spanish consumers' samples.

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