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					Brand extension




                     BRAND EXTENSION

 Is there an effect of the perceived fit and the parent brand image before extension
                         on the parent brand image after extension?




Vrije Universiteit Amsterdam
Premaster Marketing, Drs. I. Leijen
2008

Author
A.S. Perverian 1642057




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Brand extension


Table of Contents


Preface                                                                                 2

Abstract                                                                                3

Introduction                                                                            4

1         Theoretical model                                                             8

1.1       Sports marketing                                                              8
          1.1.1 Evolution sport marketing                                               8
          1.1.2 Sports industry                                                         9
          1.1.3 Sports advertising                                                      9
          1.1.4 Creating image through sponsorship                                      10

1.2       Brand extension                                                               11
          1.2.1 Horizontal brand extension                                              11
          1.2.2 Vertical brand extension                                                11
          1.2.3 Benefits brand extensions                                               12
          1.2.4 Risks brand extensions                                                  12

1.3       Brand Image                                                                   13
          1.3.1 Associations                                                            13
          1.3.2 Classifying method                                                      14
          1.3.3 Symbol, icon and index                                                  15
          1.3.4 Benefits of a strong brand                                              16
          1.3.5 The effect of the brand image before extension
                 on the brand image after extension                                     16

1.4       Perceived fit by the consumer                                                 17
          1.4.1 Dimensions of fit                                                       17
          1.4.2 The effect of fit on brand image                                        18

2         Conceptual framework and hypotheses                                           20
          2.1   Conceptual framework                                                    20
          2.2   Hypotheses                                                              20

3         Research Method                                                               21
          3.1   Pre-Test                                                                21
          3.2   Sample_                                                                 21
          3.3   Measures                                                                22
          3.4   Data analysis__________________________________________________         23

4         Results_                                                                      25

5         Discussion and future research__________                               ____   27
          5.1    Conclusion and discussion_______________________________________       27
          5.2    Implications__________________________________________________         29
          5.3    Further research and limitations__________________________________     30
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Acknowledgements   32

References         33

Appendix 1         36
Interview
Appendix 2         38
Questionnaire
Appendix 3         42
pre-test
Appendix 3         42
Spss output




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Preface

This thesis is written within the program of the pre-master course Marketing 2007/2008 at the
VU University of Amsterdam. I have always been interested in the topic brand image. The
reason for this is that brand image plays a very important role in the success of products and
companies. To really be successful for any kind of business it is important to create positive
brand recognition and associations.

Artin Perverian
25 juni 2008




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Abstract

Purpose
Brand extensions have been researched quite a few times within the literature. The objective of this
research is to investigate the effect of the change that take place in brand’s image as a result of a brand
extension strategy specific for companies with sport related products in their product portfolio. In this
study the influence of the variables; perceived fit between the brand and the extension and perception of
the parent brand image before the extension on the parent brand image after extension are investigated.
This will be done in a different setting and for a different company; producers of sport related goods.


Design
After studying the literature, a model is proposed and hypotheses are formulated to answer the research
question. Statistical analysis of the data from a market survey relating a concrete brand and a fictional
extension was carried out.


Findings
The results of this research show the image before extension will positively influence the perceived image
after extension. On the other hand there is no direct effect found of the perceived fit on the parent brand
image after extension.


Implications
The results offer implications for academics and managers. The initial image positively influences the
image after extension and a higher score on the fit perceived by the consumer not automatically leads to a
positive influence on the brand image. Companies are advised to think about the advantages and
disadvantages of using a brand extension strategy. The outcomes of this research also propose directions
for further research. For example, this research can be held in different countries with different product
and it would be interesting to compare the results.


Originality
In the literature, there is a lack of connecting the companies that produce sport related goods which act in
an affective orientated market, with the effect of brand extensions strategies on the image of the company
after extension. The research permits understanding of the concept brand image and the role carried out
by brand extension. The outcomes of this research will add value to the current knowledge.



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Introduction

In the last decades, companies have been using brand extensions as a strategy for introducing new
products. This strategy decreases the risk of failure of new products, because the consumers are more
willing to accept products marketed under known brands. However this strategy is not risk free, it could
have negative effects on the image of the parent brand (Martinez and Pina, 2003). The probability of the
success of a new product is higher with a well know parent brand (Aaker, 1991) thereby the costs for
introducing a new brand in consumer markets is very high ( Pitta ans Katsanis, 1995).

Brands make it possible that consumers efficiently encode their emotional and functional values in their
mind (Franzen and Bouwman, 2001). A definition of brand image that is generally accepted is the one
described by Keller (1993),” the perceptions about a brand reflected as associations existing in the
memory of the consumer”. In generally it is assumed that brand extensions both within and beyond the
original product category is profitable, because general companies take for granted that brands that are
already known and recognized need lesser new product introduction costs (Collins-Dodd and Louviere,
1999).

Nowadays sport plays an important role in the society, where it influences many facets in the modern
society. If sports are studied from an economic perspective, it is responsible for a large part of the
entertainment and service industries (Pons, Mourali and Nyeck, 2006).
Quite a few researchers mentioned the fact that sport is becoming a component of cultural, economic and
social powers in many countries (Pons, Mourali and Nyeck, 2006). The same researchers came to the
conclusion that modern consumers frequently spend large amounts of money on going to sport events and
buying sport related goods and services.

Nike is an example of a company that is a really big player in the sports goods market. Nike plans to grow
to almost 15 billion euros revenue by 2011 (www.nikebiz.com). By seeing this kind of revenues, it is
obvious that such a large company must be careful with extension strategies which can dilute the strong
build company image or parent brand image and this dilution can cost the company millions of euros.

Owing to the popularity of brand extensions there is great literature on the subject investigating how
consumers react on brand extensions. On the other hand there is little attention in the literature about the
effect of brand extension for a company that sells sport related goods on their image after the extension.




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Individuals make purchase decisions based on ratio (cognitive) and on emotion (affective). An emotional
purchase decision is a high involvement purchase. In this society the consumer is trying to find his
identity through means of emotional groups. These “groups” can provide explanations about the purchase
decisions made by these groups. Sport organizations which can draw on these emotional evolution, will
gain extra perspectives for their marketing campaigns (Ferrand and Pages, 1999). There is a difference
between sport marketing and other branches. Sport marketing has more to do with affection and for
example the electronic market has more to do with cognition. A consumer in such a market will base her
purchase decision on cognitive motives. Purchase decisions in the sport industry will be made on affective
motives. The important role of sports in people’s everyday life could not leave marketers unaffected
(Kambitis, Harahousou, Theodorakis and Chatzibeis, 2002). Followers of sport are most of the time a
highly involved and intensely loyal target group (Shannon, 1999). This is also argued by Colwell and
Hogarth-Scott (2004), they propose that consumers’ who feel affection towards the relationship with the
company are more expected to continue the relationship. The success of a sponsorship or collaboration
depends on the level of emotional involvement from the consumer in an event, a team or a sports star
(Ferrand and Pages, 1999). Earlier research focused on other product categories, where cognitive
purchase decisions play a major role. This research wants to reveal if there different outcomes if such a
research is done in the sport segment where affective purchase decisions are important.

Sport related good producers are becoming larger and larger and their profits are increasing. Sport related
companies extend their product portfolio only with products that are related to their product portfolio. The
time will come, that they want to use their strong brand name to play a role on other markets and gain
other profit incomes. For this research it is relevant to know why sport athletes can successfully endorse
products that are not sport related and sport related companies could not extend their product portfolio
with not sport related products. Such a step could have major consequences for the company and their
brand image. This paper will give an answer on the question in which way these kinds of brand
extensions will influence the brand image. If this research shows a positive effect for non sport related
extensions for sport products companies, it gives a lot of opportunities for gaining more profits from other
resources then their core products do.

During this research there was a meeting with the business analyst marketing Europe of Tommy Hilfiger
Europe BV. This meeting was held to find out if this research has practical relevance. Pedro Aykaz
emphasized that this research is absolutely relevant for companies and that results of these kinds of
researches will influence future decisions from the company. In appendix 1 the major points discussed
with Pedro Aykaz are included.

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Brand extension


The objective of this research is to investigate the effect of the change that take place in brand’s image as
a result of a brand extension strategy specific for companies with sport related products in their product
portfolio. In this study the influence of the variables; the perceived fit between the brand and the
extension and the perception of the parent brand image before the extension on the parent brand image
after extension is investigated.

This research will be focused on Nike. First of all there will be a pre-test to examine which product will
have the highest score on the perceived fit by the consumer with the brand Nike. Hereafter there is going
to be investigated what the effect is of this fictional brand extension on the perceived image of Nike.

Brand extensions are researched quite a few times but there is little information about the study in this
context. The results from this research will be extremely useful for companies in this branch. Nike is
chosen because of the reputation of the company and the affection that people have to this kind of brands.

The research question is:

Is there an effect of the perceived fit and the image of the parent brand before extension on the parent
brand image after extension?

The visual reproduction of the research question is as follows:




      Image before
        extension

                                                             Parent brand
                                                              image after
                                                               extension
      Perceived Fit




This model is adapted and modified from Pina, Martinez de Chernatony and Drury (2006). In this
research they had more dependent variables and they researched it in the bank and mobile phone market
in Spain. Similar researches were done in the food and shampoo market. In this research the model is
going to be tested for three different extensions on the image of a producer of sport related goods in the
Netherlands.
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Brand extension


To answer the research question a few sub questions must be answered:

What is sports marketing?
What is brand extension?
What is brand image?
What is perceived fit?

The paper starts with the theoretical framework. In this framework the sub questions will be answered.
This starts with the question what is sports marketing. This is being clarified because this research is
focused on sport related companies. The following paragraph is about brand extensions. In this paragraph
will be discussed what brand extension is and what the benefits and risks are for companies to make use
of a brand extension strategy. After this is discussed the variable brand image gets the attention.

This paragraph contains the definition of brand image, the associations that may lead to brand image,
classifying method, the benefits of a strong image and the influence of brand image before extension on
brand image after extension will be outlined. The following paragraph contains the dimensions of
perceived fit and the effect of perceived fit on brand image will pass the revue.
In the following chapters the conceptual framework and the hypotheses will be discussed. After this there
will be a chapter with the research method, where the pre-test, sample, measures and the data analysis will
be discussed. Hereafter the conclusions will be discussed and finally the discussion and further research
will get attention in the last chapter.




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2       Theoretical model

2.1     Sports marketing

Numerous researchers argued that the only way that a profit business would survive is with effective
marketing operations. Dunn, Norburn and Birley (1994) propose in their assessment the impact of
organizational goals, values and climate on marketing usefulness that it became an increasingly important
business philosophy. Irwin and Zick (1999) mentioned in their article that marketing practises and strong
consumer orientation are factors that separate excellent companies from their rivals. Furthermore, the
marketing division is only one component in an organization; nevertheless marketing is important to an
organization successful business performance. Phil Knight argues that marketing is what unites the entire
organization together (Irwin and Zwick, 1999). Nike and the NBA are examples of successful
organisations in the sporting industry that recognized the importance of marketing and being a marketing
company (Irwan and Zwick). The same authors argued that sport needs unique demands of marketing,
management and personal. In the United States professional sport had always been a profit needing
business rivalling for consumers in the entertainment marketplace. As a matter of fact professional sport
executives argue that sport and business are managed the same way.


2.1.1   Evolution sport marketing

Sports marketing began in ancient Rome, when Roman patriarchs sponsored gladiator games for the same
reason companies do it nowadays, to win public esteem (Shannon, 1999). Sports became an essential
shared manifestation of popular free time and pleasure. Officially mass media and sports are separate
social and cultural institutions that are linked together at such a high level over the past century, that it is
difficult to picture their independent existence (Schlesinger and Rowe, 2001).

Mass media and sports developed quickly in the late nineteenth and early twentieth centuries in the
successful Western modernity. Since the late nineteenth century the popularity of sports increased, it
began to mention itself to the media as a perfect source of content. A source that is able to flow across the
entire variety of news, entertainment and public affairs in the international media.

Through the development of organized sport, they became more popular, prominent and commercially
important. This lead to more discussion in the media and sports event were analysed minutely. The
illustrations, photographs and advertisements about sport developed the media of sports.



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Nowadays live TV sport is the most prized and valuable form of mass media sports in spite of the
development of new media (Schlesinger and Rowe, 2001).

It is reasonable that one of the most important boost sport marketing had been in 1971. The American
government banned cigarette advertising on the television and radio. Sports marketing specifically
sponsorship like auto racing and tennis kept cigarette brand names in front of the audience and the
television watchers at home (Shannon, 1999). Another big boost for the sports marketing was the Los
Angeles Olympics in 1984. It was the first Olympics with such a high level of commercialism. Within
thirty years the broadcast rights for the Olympics rose with more than 800 million dollar (Schlossberg,
1991). It is clear that sport became big business, multi-million euros salaries, newer and more excessive
facilities and the costs of sport franchises increasing into the hundred of millions of euros. Television
contracts for professional sports are nowadays more than billions of euros worth (Shannon, 1999).

2.1.2   Sports industry

In the literature there are several different definitions about the industry size. This gives question about
the actual size of the sports industry. Several authors take only the marketing of sporting events and
sporting goods in their definition of the sports industry. Others take also marketing of non sport products
at sporting events and there are others that include marketing which uses sport figures as product
endorsers in their definition. So it is obvious that it is important how to define the sports industry because
this has great impact on the size of the sports industry. There is no doubt about the fact that the sport
industry is large and has great impact in spending on sports marketing and in the sales of products in the
sports industry (Shannon, 1999). The author of this article accepts the opinion that the marketing of
sporting events and sporting goods are the sports industry.

2.1.3 Sports advertising

An active role for advertising in the economy began in the early 1930s (Kambitsis, Harahousou,
Theodorakis and Chatzibeis, 2002). Nowadays sports have a worldwide appeal and are linked with many
aspects of life. Through the global use of colour television and sports on television the population that
follows and is influenced by sports is spectacularly increased (Irwin and Zwick, 1999). Generally the
1984 Olympics are seen as the beginning of the trend turning athletes into sponsored business
(Schlossberg, 1991). Advertisers could not overlook the important role of sports in the everyday’s life of
the people.



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Kambitis, Harahousou, Theodorakis and Chatzibeis (2002) argue that athletes as a source become more
attractive when a fit exists between the source and the receiver. From the consumers point of view the
more similarities they can find between themselves and the source, the higher the chance that they are
going to be influenced by the message or the source in this case the athlete.

2.1.4   Creating image through sponsorship

At the moment companies invest million of Euros in sponsorship to link their names and brands with
sport athletes, sport teams and sport events (Kambitsis, Harahousou, Theodorakis and Chatzibeis, 2002).
Amis, Slack and Berret (1999) believe that for a sponsorship deal to extend into a characteristic ability, it
must contain three elements. The deal must increase the perceived customer value of the product or
service presented by the company. Second, the sponsorship must be unique to make it possible to
differentiate the company from the rivals. The last element is that it must be exploitable in different areas.

A sponsorship is for a company an opportunity to gain a competitive advantage, but this is only so if it
presents benefits preferred by customers (Mosakowski, 1993). Brand equity, combination of image and
reputation, classifies the value to a customer of a perceived product over an equal product without the
brand’s name (Amis, Slack and Berret, 1999).

A fundamental part of sponsorship deals are celebrity endorsements. Celebrities are the individuals
known to the public for success in areas either associated or not associated to the product class being
endorsed. More then 55 percent of the celebrity endorsements are being done by sport figures (Agrawal
and Kamakura, 1995). Important for the success of sponsorship deals with sports team, leagues or other
organizations is that the sponsored person or organization appeals to the target market of the sponsor
(Amis, Slack and Berret, 1999). An example is given by Till and Busler (1998), they argued that
consumers understand if Ronaldinho promotes football boots or that Michael Jordan endorses sport shoes,
because these people are seen as experts. In contrast the link between Shakira and Seat, is she really
driving Seat?

Mosakowski (1993) proposes that any sponsorship undertaken by a company should take care of an
image that is superior and that differentiates the company from its rivals. If the company wants a non-
imitable image, they need to link the image of the company through its sponsorship and other marketing
campaigns. Otherwise every rival company can build their image with a similar sponsorship campaign
(Amis, Slack and Berret, 1999).



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2.2     Brand extension

Companies in the corporate world acknowledged already for a long time the strategic role of brand
extension (Chen and Liu, 2004). Brand extensions, the use of well-known brand names to launch new
products in a completely different product class, represent a large amount of the used branding strategies
(Collins-Dodd and Louviere, 1999; Aaker and Keller, 1990).
Launching new products give high rates of failure, to avoid this company’s use the brand extension
strategy as one of the most lucrative growth opportunities in the last decades (Martinez and Chernatony,
2004). In general eight out of every ten new launched products is an extension of an existing brand
(Ourusoff, Ozanian, Brown and Starr, 1992). A company or brand name can be used to make instant
credibility to a new product or service possible (Amis, Slack and Berrett, 1999).

2.2.1   Horizontal brand extension

There are two different brand extension strategies, horizontal and vertical type. If a company uses a
horizontal brand extension they apply or extend an existing product’s name to a new product in the same
product class or to a product category new to the company. There are two different horizontal brand
extensions, line extensions and franchise extensions. Line extension is the use of a current brand name to
enter a new market segment in its product class. The type of extension that is investigated in this article
are franchise extensions which are used to enter a product category new to the company with the use of a
current brand name (Aaker and Keller, 1990).

2.2.2   Vertical brand extension

Vertical brand extension is launching a related brand in the similar product category but with a different
quality point and price (Keller and Aaker, 1992). Just like by the horizontal extension, vertical extension
gives two probable alternatives. The first alternative is the step down option, in this situation the brand
extension is launched at a lower price and lower quality level than the core brand. The second alternative
is the step up option, a higher price and quality level than the core brand (Chen and Liu, 2004). In this
situation, the second brand name is most of the times introduced next to the core brand name this to make
the link among the brand extension and the core brand name obvious (Chen and Liu, 2004).




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2.2.3    Benefits of brand extensions

The use of brand extensions gives benefits for companies. Key benefits are a decrease of advertising costs
(Aaker and Keller, 1990, Morrin, 1992), decrease of entrance barriers (van Riel, Lemmink and
Ouwersloot, 2001), exploit brand equity (Aaker and Keller, 1990), enlarge the success of the market
actions (Morrin, 1992) and risk reduction (van Riel, Lemmink and Ouwersloot, 2001). Martinez and Pina
(2004) point out that the reduction of marketing costs and sales stimulus are well-known. Consumer
awareness of the core brand name gives support to brand extension to enter the marketplace and to
capture new markets rapidly (Dawar and Anderson, 1994).

2.2.4    Risks of brand extensions

Brand extensions may also bring some risks with them. By connecting the new product with a known
brand or company name a brand extension can help in creating consumer acceptance, it also risks
weakening the core brand image which has been built up with the core brand name (Aaker, 1990).
The possible harm caused by brand extensions is not always caused by extension failure (Chen and Chen,
2000) or negative information (Ahluwalia and Gurhan, 2000). Another great threat is the fact that brand
extensions can weaken consumer’s beliefs about the extended brand (Martinez and de Chernatony, 2004).
Nike sees the sponsored athlete or team not just as a paid promoter but as an important part of the
organization. The two components become more and more identical with each other. In abstracter terms
the more that the resource is used and developed, the more value it creates for the organization that uses
it. This happen because the extensions create new associations in the mind of the consumer (Sharp,
1993).
Unsuccessful brand extensions weaken the positive associations and could harm the brand equity and at
the same time it could weaken the value of the brand for future extensions (van Riel, Lemmink and
Ouwersloot, 2001) or it can cause undesirable associations (Aaker, 1990). Another risk is cannibalization;
Buday (1989) proposes that excessive cannibalization is one of the common arguments against brand
extending. Common branding implies a similarity: similarity invites replacement. Umbrella branding
increases the risk of a disaster for the company because if one of the brands under the umbrella has
negative publicity, the effect can spill over to the rest of the brands (Sullivan, 1990).




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2.3     Brand image

In the framework of marketing the concept of image has been declared many times. A broadly accepted
definition of brand image is the one that is contributed by Keller (1993), he defines brand image as the
perceptions about a brand reflected as associations existing in the memory of the consumer”.
The term image is described as the “set of meanings by which an object is known and through which
people describe, remember and relate to it” (Pina, Martinez, de Chernatony and Drury, 2006). This
definition can be specified by replacing the word object with company, brand, products etc. This
definition is also relevant for the specific companies investigated in this article.

2.3.1   Associations

The consumer will get his or her perceived strength of the brand from factors that are linked to the brands
(Uggla, 2006). Keller (1993) proposes that associations can be created by three ways; the first way is by
direct experience with the good or service, the second is by receiving information that is communicated
by the company or by other commercial sources and by word of mouth, the third way is by making
conclusions by using already active associations about the company, origin etc.

Aaker (1991 in Ferrand and Pages, 1999) argues that a set of associations are represented by the brand
and that these associations differentiate the brand offers in the marketplace. Associations like the name,
logo, values, causes, and/or other organization-specific attributes help consumers to make selection
decisions within the alternatives that are given (Aaker, 1991 in Ferrand and Pages, 1999). Ferrand and
Pages (1999) suggests that the framework from Aaker (1991) can be applied to sporting organisations.
Image supports the process of screening and measures the information because it’s combining a set of
characteristics. It helps an individual that is interested in sport to pull out the information from available
services and to use this information. McDonald (1991) argued in his article the point that well-directed
sponsorship can help to boost the perception of the company and its products. Sponsorship can also have
no effect at all or in the most unpleasant way it could have the opposite effect. The associations above
mentioned lead to relationships; these relationships are created between consumers’ personalities and the
perceived personalities of the brand (Hogg, Cox and Keeling, 2000). The brand image that is been made
up by associations perceived by the consumer can refer to intrinsic and extrinsic tangible and intangible
facets and can be outcome of external and internal stimuli from the consumer; this depends on the
experience of the consumer with the brand (Martinez and Pina, 2003).




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Keller (1993) argues that when a brand is linked to another brand or entity, brand knowledge is changing.
For sport related companies this is the case if they sponsor an athlete or sports team or if the company
cooperate with a not sport related company (Wong, 2006).
Uggla (2006) gives an example for this in his article; he proposes that there is a difference in brand image
between Coca-Cola Company as a corporate brand and Coca-Cola as an individual soft drink brand and as
a part of the mix-drink Rum and Coca-Cola. In the first way the consumer will view Coca-Cola as a
source of core values and brand vision, in the second way it will be viewed as an autonomous soft drink
brand placed on the market by the corporate brand, in the last way the consumer will see Coca-Cola as an
ingredient for the mix drink.

2.3.2   Classifying method

A well thought-out classifying method for the variables mentioned by Aaker (1994 in Keller, 1993) is
presented by Keller (1993). Keller (1993) also argues that brand associations can be sorted into attitudes,
attributes and benefits. Keller (1993) proposes that consumers will evaluate the brand overall, to the level
that the characteristics of the good or service fit to the consumers. According to this author the positive
attitude towards a brand will differ on the level to which the attributes and benefits of the brand attend to
satisfy its target market. Thereby the kind of associations will be less of more strong in the memory of the
individual consumer along to the degree of information that is supplied and it depends on the information
process. In addition, Keller points the need out to measure analogy between the different associations for
a specified brand and the action by secondary associations like the company, the country of origin, the
distribution channels and the event or the celebrity spokesperson or someone else that is stimulating
customers to buy the product or service and the diversity of associations for a certain brand. There are
many other authors that investigated the relevance of some variables. Gwinner and Eaton (1999) pointed
out the significance of the retail setting and event sponsorship. Other key aspects that can influence the
image are the benefits of the product, the packaging, the communication, the name of the brand, the
symbol and slogan (Martinez and Pina, 2003).




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2.3.3    Symbol, icon and index

If a consumer would take a look to a brand from a brand image perspective, they can see the brand as a
symbol, an icon or as an index (Uggla, 2006). A symbol is a random sign that is based on an agreement. It
is something that the consumer is used to. In the consumers’ point of view Nike is a symbol for sports
fashion. Index can be explained as an essential link between the product and the brand. To link this with
Nike, Michael Jordan was an index for Nike basketball shoes, subscribing to Nike corporate brand values
like winning and sport elitism.

There are several ways of developing a relationship between a partner and a company; it is only limited
by the imagination of the manager. Nike grew quickly in the seventies but by 1984 their market share was
declining. Reebok passed Nike through its development and promotion of stylish, comfortable aerobic
shoes. Nike needed a powerful image to get their market share back. Nike turned into Michael Jordan,
who was at that time not more than a student during his last year at the university. At that time these kinds
of relationships were not seen in sports marketing. The Vice President of Nike wanted that the Jordan
name became a marketing package for the image they wanted which includes the brand, the product, the
advertising and the athlete. Jordan could not only be a face that is used for the product that Nike sells.
Nike pushed Jordan into everything from shoes to clothes to television commercials. This move of Nike
sorted an effect that nobody expected. Air Jordan became the most successful sports line of all time. One
of the three pairs of athletic shoes that was sold in the United States at 1993 were made by Nike, Air
Jordan shoes contributed over 130 million euros a year for the Nike company (Amis, Slack and Berret,
1999).

An icon is seems to be the same as its object and is based on comparability. Beckham, Roger Federer and
Lebron James are examples of sportsmen that are icons (Uggla, 2006).
At the openings page of the website, Nike shows an icon for every sport they sell related products for
(www.nike.com). Another example of the use of icons is Adidas this company opens his website with a
movie over the football players Steven Gerard and Kaka’ other icons for Adidas are basketball player
Kevin Garnett and tennis player Anna Chakvetadze (www.adidas.com).
If Nike would choose for another endorser then sportsmen, for example an artist or a musician it would
add depth and that could extent and change the meaning of the brand (Uggla, 2006).




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2.3.4   Benefits of a strong brand

Nowadays brands play an important role in the marketing strategy. The reason for this phenomenon is
that brands are an important marketing component to the producer (Motament and Shahrokhi, 1998),
another benefit of a strong brand is that they make financial returns safe (Collins-Dodd and Louviere,
1999). Between the consumer and the producer of the brand a bond could take shape, for the consumer a
brand classifies the source of the product (Lassar, Mittal and Sharma, 1995) thereby brands are a source
of information for the consumer (Grace and O’Cass, 2002).

Furthermore brands could reduce consumers’ search costs (Biswas, 1992), and the perceived risk intensity
and it is a measure of the quality of the product (Janiszewski and van Osselaer, 2000). Out of this point
of view the brand becomes a supplier of advantages in terms of symbolic and economic value to the
consumer (Grace and O’Cass, 2002).

2.3.5   The effect of the brand image before extension on the brand image after extension

In agreement with the associative network theory (Morrin, 1999 in Pina et all, 2006), what is described as
image association’s result from a system of hierarchical networks in consumers’ minds. If consumers
become aware of the extensions’ brand name, they support the brand memory structures and ease the
retrieval processes (Morrin, 1999 in Pina et all, 2006). Pina, Martinez, de Chernatony and Drury (2006)
propose that from the associative theory the image after an extension is forecasted by the original image.
In the same article it becomes clear that prior expectations have effect on the brand interpretations from
consumers to such a extend that the effectiveness of company actions on brand equity are moderated by
earlier beliefs. The same authors propose that companies that have a positive image are better able to have
success with a brand extension strategy then companies that start with a poor image.

Based on this literature there is evidence that brand image before extension will influence the brand image
after extension. The following hypothesis is postulated:

H1: The brand image before the extension will positively influence the perceived image after extension




                                                                                                             19
Brand extension


2.4     Perceived fit by the consumer

When investigating the impact of an extension on the parent brand image after extension the fit perceived
between the parent brand and the extended brand by the consumer are reasonable to influence the brands
image (Martinez and de Chernatony, 2004). Tauber (1988 in Aaker and Keller, 1990) clarified the
perceived fit as “consumer perceives the new item to be consistent with the parent brand”, the author
argues that perceived fit is accomplished when the consumer accepts the new product as logical and
would expect it from the brand. This researcher studied 276 actual extensions and he came to the
conclusion that perceptual fit is a key factor in predicting the success of brand extensions. Aaker and
Keller (1990) suggest that if consumers see the new product or service as consistent with the parent brand
perceived fit is the case. One of the reasons mentioned is that a poor fit may do harm to the transfer of
positive associations and could also stimulate undesirable beliefs and associations, at last if the fit could
perceived humorous or ridiculous by the consumer which could cause a diluted brand image.

2.4.1   Dimensions of fit

Despite the fact that the importance of fit is broadly accepted, there is no consensus reached about the
dimensions of fit (Grime, Diamantopoulos and Smith, 2002). Aaker and Keller (1990) developed three
ways to measure fit. The first measure is complement, this measure point out the degree to which
consumers see the two product classes as complements. This refers to the joint use of the extended brand
and the core brand. The second measure is substitute; this measure is the point out the degree to which
consumers see the two product classes as substitutes. The last measure is transfer, this measure lets see
how consumers see relationships in product development. Other dimensions mentioned in the literature
are similarity, typicality, relatedness and brand concept consistency (Aaker and Keller, 1990; Grime,
Diamantopoulos and Smith, 2002).

An occurring problem in discussions about fit are the terms similarity, typicality and relatedness there is
not enough differentiation between the terms (Grime, Diamantopoulos and Smith, 2002). The same
authors propose that the dimension of fit which is most often referred to is similarity. Aaker and Keller
(1990) describe similarity as how similar the current and the new product classes are in terms of features,
attributes or benefits. Another point that is suggested by several researchers is that consumers also
evaluate fit with concept consistency between the image represented by the brand and the extension (Park,
Milberg and Lawson, 1991). The level of consistency between an extension and the brand image is
supposed to be just as important as the similarity between the product classes (Park, Milberg and Lawson,
1991). Concept consistency is different from the similarity and relatedness of the product category.

                                                                                                            20
Brand extension


It shows how a brand influences the fit perceptions of consumers. Bhat and Reddy (1997 in Grime,
Diamantopoulos and Smith, 2002) propose two dimensions for fit: product category fit; the similarity
between the product category of the parent brand and its extension and brand image fit; the similarity
between the image of the parent brand and its extension.
Park, Milberg and Lawson (1991) argued that there are two important elements when analysing the fit.
These two elements are the similarity between the new product and the core products of the company and
the consistency between the new product and the parent brand. This paper adopts Park, Milberg and
Lawson’s (1991) vision and similarity and consistency are the two major dimensions of fit.

2.4.2   The effect of fit on brand image

Aaker and Keller (1990) argue that a good fit is important for positive consumer evaluations of the core
brand in extending a brand. Aaker (1990) proposes that an introduced extension with a good fit, the core
brand must be amplified. The core brand values can be amplified through an extension that support brand
associations. The personality and image can also be amplified by an extension that points out the
symbolic values wanted by the core brand (Grime, Diamantopoulos and Smith, 2002). Aaker and Keller
(1990) suggests that the majority of the literature points out that the fit between core brand and extension
is the most important element for core brand enhancement. The same authors argue that using a well-
known brand name can cause dilution of the brand in the long run. Extensions that do not fit can also
cause damaged associations and confused potential customers (Park, Milberg and Lawson, 1991).
Martinez and de Chernatony (2004) suggest that extensions only support the product brand image if the fit
is becoming higher. The same authors argue that extension with no fit with the core products will have
negative effect on consumers’ perceptions of the brand image. However if the brand name is strong
enough the general brand image would not be diluted. To maintain the image there is a strong need to
communication campaigns that light out the brand name in stead of the products being marketed
(Martinez and de Chernatony, 2004).

In earlier research the lesser the fit, the greater the negative consequences were to the image. John, Loken
and Joiner (1998) investigated this with the products bath oil and bath powder. Loken and John (1993)
did earlier research and came to the same conclusion that lesser fit had a negative effect on the image.
These authors used a sample with only women and investigated the effect of a company that produced
shampoo and extended with facial tissues. A more recent study from Martinez and Pina (2004) showed
the same results, they investigated it with five different brands in three different product segments.



                                                                                                           21
Brand extension


Based on this literature there is strong evidence that a higher score on the fit perceived by the consumer
will positively influence the score on brand image. The following hypothesis is postulated:

H2: A higher score on the fit perceived by the consumer will positively influence the score on brand
image




                                                                                                             22
Brand extension


3       Conceptual framework and hypotheses

3.1     Conceptual framework




      Image before
        extension
                                         H1
                                                             Parent brand
                                                              image after
                                                               extension
      Perceived Fit                      H2




Source: Adapted and modified from Pina et al. (2006)



3.2     Hypotheses

This research will be focused on Nike. There is going to be investigated what the effect is of a fictional
brand extension on the perceived image of Nike. This is being measured with the independent variables
image before extension and perceived fit. Before starting the research there will be held a pre-test to
investigate which product will have the highest score on the perceived fit by the consumer with the brand
Nike. Brand extensions are researched quite a few times but there is little information about the study in
this context. The results from this research will be extremely useful for companies in this branch. Nike is
chosen because of the reputation of the company and the affection that people have to this kind of brands.

To measure the effect of the independent variables; image before extension and perceived fit on the
dependent variable parent brand image after extension, hypotheses are crucial. To answer the research
question “Is there an effect of the perceived fit and the image of the parent brand before extension on the
parent brand image after extension?” there are 2 hypotheses formulated which will test the variables.

H1: The brand image before the extension will positively influence the perceived image after extension

H2: A higher score on the fit with extension perceived by the consumer will positively influence the score
on brand image



                                                                                                             23
Brand extension


4       Research method

4.1     Pretest

Before carrying out the study, there is composed a pre test amongst students, with the objective to select a
product extension which is going to be investigated in further research.

The pretest had an objective to obtain a product with a high perceived fit. A total amount of 50 people
were asked to give a score to the perceived fit between six different kinds of products and the image of
Nike. The score is measured on a Seven point Likert scale (1 not at all similar/ 7 very similar). The
products are different from the products Nike normally produces. They differ from the normal product
portfolio, because the aim of this research is to investigate the effect of a brand extension. The six
products which are been judged are cameras, laptops, jeans, televisions, mobile telephones and energy
drinks. The results led to one product that is being investigated in the further research. The chosen brand
is the energy drink, the one with the highest perceived fit score (5.31). The results can be viewed in the
appendix.

4.2     Sample

In order to validate this research a questionnaire is held. This was necessary to be able to research the
hypotheses and to give an answer to the research question. To have a reliable research and to obtain this
data about 70 answered questionnaires are needed. This study will be focused on students. To measure
brand image after extension the questionnaire will be held at different universities in Amsterdam.
Students regularly use A-brands and they are easy to reach.

After the pretest, a questionnaire is designed. The questionnaire starts with questions about the gender,
age, income and education from the respondent. Following questions are measuring the brand image.
After these questions the brand extension is visually showed and the questions are measuring the
perceived fit and finally the brand image after the brand extension is measured. The questionnaire is being
filled in at once, so there is not a big interval between the questions about the image before and after
extension. This problem could not be solved because the data (before and after) for each respondent is
needed to investigate the effect of a brand extension on the image.

Incomplete questionnaires will not be included in the final sample. The questionnaire can be founded in
appendix.



                                                                                                             24
Brand extension


4.3     Measures

The questionnaire that is going to be used for data collection includes scales to measure the different
constructs showed in the conceptual model. The out coming data will be processed in the program SPSS.
SPSS makes it possible to analyze the collected data and it has been used in many earlier studies to
support or to reject the predicted hypothesis. SPSS makes clear which of the variables, perceived fit or
image before extension have an effect on parent brand image after extension. In this study the items are
measured on a seven point Likert scale. There are also added some control variables like age, gender,
income and education to this questionnaire.

Parent brand image before and after extension:

The parent brand image will be measured using items before extension and after extension. The image
will be measured using items that were used by Martinez and de Chernatony (2003). These items are this
brand provides good value for money, there is a reason to buy the brand instead of others, the brand has
personality, the brand is interesting, I have a clear impression of the type of people who consume the
brand and this brand is different from competing brands. From the research of Pina et al. (2006) there will
be added one extra question about the trustworthy of the brand to measure the image.

Perceived fit:

Two major dimensions of fit are similarity and consistency (Park, Milberg and Lawson, 1991). The
similarity is going to be measured like Volckner and Sattler (2006) did in their research. They assessed
the similarity between the parent brand and the extension product. It was measured with -3= not very
similar and 3= very similar in this research it will be measured with a seven point Likert scale. Other
measure would be the question if people, facilities and skills used in making the original product be
helpful if the manufacturer were to make the extension product? This also used by Volckner and Sattler
(2006) and is going to be measured by a seven point Likert scale. The consistency is being measured
through the question if the fit between the extended product and de brand image is 1=very inconsistent
and 7= very consistent.




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Brand extension


4.4     Data analysis

Based on the Central Limit Theorem (Basic Business Statistics) it can be assumed that this research is a
parametric research because the sample size of 80 is greater than 30. This theory states that if the sample
size is greater than 30 the sampling distribution can be seen as a normal distribution. So it can be
concluded that the variables are normally distributed. The Kolmogorov-Smirnov test shows that the
variables image before extension and image after extension are distributed normally and the variable fit is
not normally distributed.

To test the reliability of the questions, the Cronbach alpha is useful. The Cronbach alpha measures how
well the variables measure a single construct. The Cronbach alpha’s in this research are all above the
critical value 0,6. A reliability coefficient of 0,60 or even higher is considered as adequate. In the
appendix is showed that the variables have a coefficient of 0,87, 0,63 and 0,83. The tests which are
carried out are reliable conform this statistic. Therefore there is no factor analysis been done.
The Kmo measures the sampling adequacy, the value in this research is 0,706 which is greater than the
critical value of 0,6. So this indicates that the variables are measuring a common factor. The Bartlett’s test
shows that the variables are significant correlated. The P-value is 0,000 this value is smaller than the
alpha 0,05, this means that the variables are significant correlaterd. The Kmo/Bartlett table is included in
the appendix, table 4.2.

The dependent variable in this research is image after extension and the independent variables are image
before extension and fit. The multiple regression analysis is chosen. The multiple regression model is Y=
B0+B1X1+B2X2+e. The outliers are removed before conducting the regression analysis, because that had
significant influence on the results. This analysis is done with a confidence interval of 95%.

To analyse the variables with the regression analyse, the variables should met to four assumptions:
normality of the residues, linearity, independency of the residues and equal variance of the residues. The
Kolmogorov-Smirnov test shows that there is significant evidence of normality of the residues. The other
three assumptions can be tested with the scatter plot. The assumption of linearity is not met. It shows a
pattern around the zero. The assumption of constant variance is met because the dots are scattered equally
around the zero line. The independence of the errors is not necessarily to evaluate because the data in this
research is not collected over period of time. Most of the times the regression model could not met all
assumptions at once.




                                                                                                            26
Brand extension


Multi-collinearity could give a problem by conducting a multiple regression. This occurs when one or
more of the independent variables are highly correlated with each other. They do not provide exclusive
information and it becomes difficult to separate the effect of the independent variables on the dependent
variables. The VIF must be lower than 10, in this study the VIF value is 1,023 (table 4.11 in the
appendix). This is far under the critical value. It can be stated that there is no inconvenient multi-
collinearity.

The regression analyse has been carried out with control variables and without these control variables.
The control variables did not have significant influence. The data with and without the control variables
and with and without the outliers are included in the appendix.




                                                                                                          27
Brand extension


5        Results

In this section the obtained data will be analysed. The multiple regression is used to analyse the data. The
assumptions of the multiple regression are met so it is allowed to use this analysis. The dependent
variable in this research is image after extension and the independent variables are image before extension
and fit. The SPSS output without the controlling variables are included in the appendix.

                                  B          SE B    Beta

Constant                          0,757      0,223

Image before extension            0,811      0,041   0,922

Fit                               -0,015     0,032   -0,021

Note 1: R²= 0,844, adjusted R²= 0,840, *p<0,05
     2: significance F test= 0,000


In the table above, the coefficients of the multiple regression are given. This value the R square measures
the variation in the dependent variable that is explained by the set of independent variables. The R square
can also be calculated by dividing the regression sum of squares by the total sum of squares.
Concluding from the output above, 84,40% of the variation in the image of Nike after the extension is
explained by the variation in fit and the image of Nike before extension. This is a high value what makes
it possible to state that there is lot explained by the variation in the independent variables.
If you are dealing with multiple regression models, the theory suggests using the adjusted R square. This
reflects the number of independent variables in the model and the sample size. The adjusted R square is
0,840. Forty-eight percent of the variation in the image of Nike after extension is explained by the
multiple regression model adjusted for the numbers of independent variables in the model and the sample
size.
To test the significance of the overall multiple regression the overall F test is used. This test finds out if
there is a significant relationship between the dependent variable and the independent variables. In the
table above it can be read out that the significance 0,000 is. This value is lower than the alpha of 0,05 and
that is the reason why at least one independent variable is related to the image of Nike after extension.
Therefore we can take a look at which coefficients significant are. This is done through a T-test for each
coefficient.




                                                                                                                 28
Brand extension


The predicted model is: Image after extension= 0,757 + 0,811 * X1 – 0,015 * X2


H1: The brand image before the extension will positively influence the perceived image after extension


The first hypothesis forecasts that brand image before the extension will positively influence the image
after extension. The t-test in table 4.11 in the appendix shows a p-value of 0,000, which is smaller than
the alpha of 0,05. The variable image before extension is significant for the model. Therefore the
hypothesis 1 will not be rejected at a confidence interval of 95% and a alpha of 0,05. There is evidence
that the brand image before the extension will influence the image after the extension.


H2: A higher score on the fit with the extension perceived by the consumer will positively influence the
score on brand image

The second hypothesis forecasts that a higher score on the fit with the extension perceived by the
consumer will positively influence the score on brand image. The significance is 0,650 (table 4.11 in the
appendix), this is larger than the alpha of 0,05, so it is not significant for the model. Therefore this
hypothesis will be rejected with a confidence interval of 95% and a alpha of 0,05. There is evidence that a
higher score on fit will not influence the score on brand image.

From the SPSS output it can be concluded that the variable image before extension has a positive
influence on the image after extension and the variable fit has a no influence on the image after extension.
To examine which of the variables have the most influence on the model, there can be looked to the value
of the Beta. In this research the variable image before extension has a great influence on the image after
extension, this can be concluded by the Beta value of 0,922
After studying these models it is the question if the controlling variables influence the model. The model
with the controlling variables included can be find in the appendix. It can be concluded that these
variables hardly influence the model.




                                                                                                            29
Brand extension


Discussion and future research

6.1 Conclusion and discussion

Research has been carried out about the impact of the use of brand extension strategies on the brand
image. Through the results of this research the research question: “Is there an effect of the perceived fit
and the image of the parent brand before extension on the parent brand image after extension”, could be
answered. The image of the parent brand image after extension has a positive effect on the parent brand
image after extension. This in contrast to the perceived fit by the consumers has no significant influence
on the parent brand image after extension.

In the table mentioned below the conclusion of the hypotheses are given.

Hypothesis                                         Conclusion

                                                   Supported
H1: The brand image before the extension will
positively influence the perceived image after
extension



                                                   Rejected
H2: A higher score on the fit with the extension
perceived by the consumer will positively
influence the score on brand image




This research lead to results which make it possible to argue that there is a relation between the image
before extension and the image after extension. With these results there is no evidence to reject
hypothesis 1. The associative network theory, a theory about the way of storing information in the
memory, makes clear that the brand image after extension depends to a great extent on the initial
associations of the consumer about the brand. Pina, Martinez, de Chernatony and Drury (2006) agree with
this theory. According to these researchers the original image forecasts the image after extension. Prior
expectations influence the brand interpretations from consumers. Further literature shows that companies
that start with a positive image have more chance to have success with a brand extension strategy than
companies which have a lower positive imago.
                                                                                                              30
Brand extension


The study of Martinez and Pina (2003) shows similar results. The brand image before extension will
influence the perceived image of the brand after extension. They argue that the higher the consumer will
value the image before extension the higher it will get after extension. In conformity with the expectations
the initial image has a positive and direct influence on the eventual brand image.

There is insufficient proof to support a relation between both variables Fit and image after extension.
Therefore hypothesis 2 is rejected. There is no relation between the fit and image after extension. A
higher score on fit will not positively influence the score on brand image. Earlier research of Aaker
(1990) shows that an introduced extension with a good fit will strengthen the core brand.

The results from the pre-test showed the highest score for the fit between Nike and the energy drink (table
3.1 in the appendix). The outcomes from the pre-test and the results from earlier research awake the
expectation that the fit will positively influence the image after extension. The results of this research are
in contrast with the expectations.

Aaker and Keller (1990) propose that if the fit is low it can dilute the image of the brand but in the case of
Nike Martinez and de Chernatony (2004) argue that if the brand name is strong enough the brand image
would not be damaged by extensions with a low fit. The outcomes of their study show that the fit
perceived by the consumer will not have a positive effect on the general brand image after extension.

It could be the case that moderating variables influences the relation between fit and image after
extension. This can be investigated in further research. From the results of this research can be concluded
that there is no direct effect of fit on the image of Nike after extension.




                                                                                                            31
Brand extension


6.2      Implications

This study is a new input to the literature about the effect of the use of a brand extensions strategy on
brand image. Most of the earlier research is done with brands in other product categories, where the
consumers have cognitive purchase decisions. This research is done with a brand in a market where
consumers make purchase decisions based on affective motives. The brand used in this study is Nike. The
results of this research could be extremely useful for companies in this market. It showed that the brand
image before extension will positively influence the perceived image after extension and that a higher
score on the fit perceived by the consumer not automatically leads to a positive influence on the brand
image.

When doing business the results of this research can be important to take into account. If a company
considers making use of a brand extension strategy it is of vital importance to recognize the facts that
influence the image of the company after the brand extension strategy. Andrews and Kim (2007) argue
that brand image is such a key concept that it should never be ignored at any stage of the brand’s life
cycle by marketers. The same authors state that any brand at any time could be affected by a product
crisis. Companies spent a lot of money to build their image and are not careful with the risks that a brand
extension strategy brings along. Managers are advised to make use of the results of this research in
developing brand extension strategies. An attention point is the fact that the original image has influence
on the brand image after extension. With a poor image it is almost impossible to use a brand extension
strategy and end up with a positive brand image after extension.

The recommendation through the results is that before thinking about a brand extension, the brand should
have a good image.

On the other hand the results from the variable fit leave question open. The results of this research are in
contrast with earlier research. The results show that a good fit is not a guarantee for a positive effect on
the image of a company after using a brand extension strategy.

The majority of the earlier researches argue that the larger the fit between the brand and the extension the
higher the influence will be on the score on brand image after extension. The lesser the fit, the greater the
negative consequences were to the image. Managers should consider the fit between the extension and the
brand and look at the risks and the possible benefits. The most important for a manager is to know is own
goals for proceeding with an extension and to weigh of these goals are reasonable to accomplish.



                                                                                                               32
Brand extension


6.3     Further research and limitations

The results suggest directions for further research. Further research is necessary to get more
comprehension of what is influencing the brand image after a brand extension. It would be an option to
test the model with more independent and moderating variables. The significance of the independent
variable perceived fit by the consumer could change if moderating variables will be added to the model.
Volckner and Sattler (2006) argue that more exposure to extension advertisements help consumers to
understand the fit between the extension and the parent-brand attributes. The questions to measure the
variable fit are used frequently in earlier research so changing these question would probably not lead to a
positive change in the significance. Fit should become a subject of further research, this to get to know the
variables which positively influence the perceived fit by the consumer. This is especially important for
managers, if they know how to manipulate the consumers perceived fit they could have more influence in
the success of a brand extension.

In follow-up study the hypotheses; “More exposure to extension advertisements will positively influence
the relationship between the perceived fit by the consumer and the brand image after extension” or “The
communication strategy will positively influence the relationship between the perceived fit by the
consumer and the brand image after extension” can be investigated. A possible improved version of the
model is given below.




        Product
      image before
          t  i
                                                             Parent brand
                                                              image after
                                                               extension
      Perceived Fit


                                             More exposure
                      Communicati             to extension
                       onstrategy            advertisements




                                                                                                 `




                                                                                                           33
Brand extension


Another point of attention is the fact that in this research a fictional extension is used to measure the
effect on brand image after extension. Further research with a real extension to investigate the effect on
image would be more helpful for managers. Follow-up studies can combine the criticism on the fictional
extensions in the researches and the lack of moderators in this research. They can research a real
extension and investigate the effect of moderators on the relationship between the perceived fit and the
image after extension. It could be interesting for a manager to know if different products that were the
result of a brand extension strategy, will differently influence the brand image after extension. Because of
lack of time there is only investigated one product in this research. Further research could examine 5
different products and compare the results.

The sample size in this research is 80. How larger the sample size the more significant the outcomes will
be. So it could be interesting to conduct this research with a greater sample size, maybe it will positively
influence the results. Furthermore the questionnaires in this research are only filled in by students from
different universities in Amsterdam. It would be interesting to get a more randomly selected sample size
and see if the results will differ from the sample size with only students.

Further research can be held in the field of cultural differences within the market of a multinational that
makes use of a brand-extension strategy. The work of Hofstede (in Yalcinkaya 2008) is useful to
investigate the cultural differences. Hofstedes cultural dimensions are interesting because they have been
frequently used in international business research. They are used the most often in research focused on the
adoption and diffusion of international new products. Earlier research about the cultural differences
between west and central Europe shows that there are substantial differences between the two regions.
Yalcinkaya (2008) argues that Hofstede’s framework can give an insight in how differences can affect
social interactions that eventually influence the adoption behavior of consumers. This research is held in
Amsterdam, new research in countries like Russia, China, India, Saudi Arabia or even South Africa will
give new insights to understand the effect of a brand extension strategy on the image in different cultures.
The expectation will be that the outcomes will vary concerning to the brand and the culture. The results
will show if individuals from different cultures react differently on a brand-extension strategy and it will
be helpful to understand the variables used in this research within the international context.

Future research should be done in a wider variety of industries to increase the generalizability of the
results. This research is done in a market where consumers have affective feelings toward the brands; the
effect of the brand-extension strategy on the image can also be investigated in the services market or in
the market of fast moving consumer goods, where cognition will possibly play a more important role for
consumers.
                                                                                                              34
Brand extension


Acknowledgements

During this paper I have learned a lot. This period taught me how a study must be executed. It was an
learn full period, were writing a proposal, searching through literature, creating a conceptual framework
with relevant hypotheses and working with SPSS get a lot of attention. I would like to thank my fellow-
students for their feedback, the people who filled in the questionnaire and made this research possible and
especially Drs. Leijen for his time, support and good advice when required.




                                                                                                        35
Brand extension


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                                                                                                         38
Brand extension


Appendix

1       Interview

Company information:

Tommy Hilfiger is a premium global lifestyle brand, covering a range of major product lines and
categories organized by various divisions: Menswear, Womenswear, Childrenswear, Denim, Sport, body
wear and other various licensed products such as fragrance, accessories and home furnishings. The
Tommy Hilfiger brand combines quintessential American style with unique details to give time-honored
classics an updated look for customers who desire high quality, designer apparel at competitive prices
under the following labels or collections: Tommy (flag) Hilfiger, Hilfiger Denim, and Hilfiger Sport
(www.tommy.com).

Dit interview heeft plaats gevonden om de praktische relevantie van dit onderzoek te kunnen bespreken
met de heer Aykaz.

Praktische relevantie:

Dhr. Aykaz benadrukte dat hij het absoluut relevant vindt wat er uit dit onderzoek naar voren komt. De
uitkomsten dragen bij of creëren een toegevoegde waarde voor het nemen van toekomstige beslissingen.
Hij stelt dat het tegenwoordig zeker speelt of een bedrijf een hogere omzet wil genereren enkel met
bestaande producten of diensten (core business) of daarbuiten treedt door middel van brand extension.

Dhr. Aykaz stelt dat het van het imago van het bedrijf afhangt of een brand extension verwarring creëert
bij de consument, waardoor de klant niet meer weet waar het bedrijf nou precies voor staat. Dhr Aykaz
gaf hier een voorbeeld van, hij stelde dat een afwasmiddel merk als Dupro geen water zal kunnen
verkopen. Echter zal een luxe merk als Louis Vuitton met gemak duizenden liters water kunnen verkopen
op basis van de naam en het imago. Na dit antwoord gegeven te hebben benadrukte dhr Aykaz dat een
compleet en gerechtvaardigd antwoord een stuk complexer ligt. Daarbij moet gedacht worden aan de
volgende aspecten:
-       Communicatie richting de consument, gebeurt dit op dezelfde manier of totaal anders.
-       Welke naam gebruik je, dezelfde of breng je het onder een andere naam op de markt
-       Is de behoefte er wel bij de consument, of moet die nog gecreëerd worden en is dit wel mogelijk?
-       Concurrentie: kun je concurreren met bestaande merken van andere bedrijven.



                                                                                                         39
Brand extension


Verder is er nog gesproken over eventuele brand extensions voor het bedrijf Tommy Hilfiger en of dit het
imago zou schaden. Dhr. Aykaz stelde dat dit natuurlijk afhangt van het product dat op de markt gebracht
wordt. Er werden enkele voorbeelden gegeven, dhr. Aykaz stelde dat een energy drink totaal geen optie is
voor Tommy Hilfiger. Dit omdat de gedachte binnen het bedrijf leeft dat energy drink de potentie heeft
om te geassocieerd te worden met agressief. Een ander voorbeeld dat werd gegeven is een mobiele
telefoon, dhr. Aykaz stelde dat dit hedendaags een onderdeel is van je totale presentatie en absoluut een
optie is voor Tommy. Als laatste is er gesproken over hoe belangrijk het imago van Tommy is voor het
bedrijf. Volgens dhr. Aykaz leeft Tommy op imago. Een behoorlijk percentage van de omzet wordt
gereserveerd voor de afdeling Marketing & Communicatie.
Voorbeelden waar dit voor gebruikt wordt zijn:
-       Media (magazines)
-       Research
-       Internet
-       Events (Hilfiger Sessions, Iconic America, X40)
-       Sponsorships (Thierry Henry, Nick Dougherty)

Dhr. Aykaz eindigde met Think Global, act local!

Contact gegevens:

Naam: Pedro Aykaz

Functie: Business Analyst Marketing Europe

Bedrijf: Tommy Hilfiger Europe BV

Emailadres: pedro.aykaz@tommy.com

Telefoonnummer: 06-22809561




                                                                                                         40
Brand extension


2           Questionnaire

    Onderzoek naar het gevolg van een Brand-extension op het imago van Nike

    Ik ben als student Marketing aan de Vrije Universiteit te Amsterdam bezig met een onderzoek naar
    het gevolg van brand extensions (het lanceren van een product op een voor het bedrijf nieuwe markt
    onder dezelfde merknaam) op het imago van het merk. Ik hoop dat u tijd wilt vrij maken om mee te
    werken aan dit onderzoek.

    De gegevens worden anoniem verwerkt en alleen voor dit onderzoek gebruikt. Het invullen van de
    enquête duurt hooguit enkele minuten.

    Alvast bedankt voor de medewerking aan dit onderzoek.

       1.         Geslacht


                       Man

                       Vrouw


       2.         Leeftijd


                       0-17

                       18-25

                       26-35

                       36-45

                       46-55

                       56 of ouder


       3.         Hoogst genoten opleiding


                       Lagere school

                       Middelbare school

                       MBO

                       HBO

                       WO



                                                                                                         41
Brand extension



   4.        Inkomen bruto




                    €0 – €250

                    €251 – €500

                    €501 – €1000

                    €1001 – €2000

                    €2001 of meer


    5.       Imago van Nike:


                                                     zeer mee oneens   zeer mee eens

             De prijs/kwaliteit verhouding van
             Nike is goed


             Er zijn genoeg redenen om voor dit
             merk te kiezen in plaats van voor een
             ander merk


             Nike straalt persoonlijkheid uit


             Bij het merk Nike wordt mijn
             interesse gewekt


             Het is voor mij duidelijk wat voor
             soort mensen Nike producten
             gebruiken


             Nike is anders dan de concurrerende
             merken


             Nike is geloofwaardig




                                                                                       42
Brand extension




                                              Energy drink van Nike




    6.     De overeenstemming tussen Nike en het nieuwe product:



                                                    Lage gelijkenis   Hoge gelijkenis

           De gelijkenis tussen Nike en het
           nieuwe product



    7.


                                                    Niet behulpzaam   Wel behulpzaam

           Is de organisatie van Nike een
           toegevoegde waarde voor het
           produceren van een Energy-drink




                                                                                        43
Brand extension



    8.     Imago van Nike na de extentie


                                                      Onveranderd          Veranderd

           Verandert uw opvatting ten opzichte
           van Nike na het zien van de extension



    9.


                                                      zeer mee oneens   zeer mee eens

           De prijs/kwaliteit verhouding van Nike
           is goed


           Er zijn genoeg redenen om voor dit
           merk te kiezen in plaats van voor een
           ander merk


           Nike straalt persoonlijkheid uit


           Bij het merk Nike wordt mijn interesse
           gewekt


           Het is voor mij duidelijk wat voor soort
           mensen Nike producten gebruiken


           Nike is anders dan de concurrerende
           merken


           Nike is geloofwaardig




                                                                                        44
Brand extension


3       Pre-test

Table 3.1

Type of product      Perceived fit on a scale of 1 till 7
Camera                       2,66
Laptop                          2
Jeans                        4,37
Television                   2,06
Gsm                          2,68
Energydrink                  5,31
N=50,
1= no fit at all
7= very high fit


4       SPSS output

Table 4.1

                                              Tests of Normality
                                                       a
                                Kolmogorov-Smirnov                           Shapiro-Wilk
                         Statistic      df         Sig.            Statistic     df         Sig.
    Newimagebefore            ,089         80        ,187               ,961         80       ,016
    Newfit                    ,154         80        ,000               ,964         80       ,024
    Newimageafter             ,072         80        ,200*              ,993         80       ,942
      *. This is a lower bound of the true significance.
      a. Lilliefors Significance Correction




                                                                                                     45
Brand extension


Table 4.2

                   KMO and Bartlett's Test
  Kaiser-Meyer-Olkin Measure of Sampling
  Adequacy.                                            ,706

  Bartlett's Test of        Approx. Chi-Square     1161,467
  Sphericity                df                          210
                            Sig.                       ,000


Table 4.3

Image before extension:

             Reliability Statistics

                    Cronbach's
                   Alpha Based
                        on
   Cronbach's      Standardized
     Alpha            Items           N of Items
         ,871              ,872                7



Table 4.4

Fit:

             Reliability Statistics

                    Cronbach's
                   Alpha Based
                        on
   Cronbach's      Standardized
     Alpha            Items           N of Items
         ,626              ,627                2




Table 4.5

Image after extension:

             Reliability Statistics

                    Cronbach's
                   Alpha Based
                        on
   Cronbach's      Standardized
     Alpha            Items           N of Items
         ,803              ,826                8




                                                              46
Brand extension


Regression:

Whole model:

Table 4.6
                                Model Summary

                                                Adjusted             Std. Error of
  Model            R      R Square              R Square             the Estimate
  1                 ,874a     ,764                   ,757                  ,41249
     a. Predictors: (Constant), IMB, FIT

Table 4.7
                                                ANOVAb


                           Sum of
  Model                    Squares              df         Mean Square            F           Sig.
  1        Regression        42,326                   2         21,163          124,380         ,000a
           Residual          13,101                  77           ,170
           Total             55,428                  79
    a. Predictors: (Constant), IMB, FIT
    b. Dependent Variable: IMA



Table 4.8
                                                     Coefficientsa

                         Unstandardized          Standardized
                           Coefficients          Coefficients                                Collinearity Statistics
 Model                   B         Std. Error        Beta               t         Sig.      Tolerance        VIF
 1        (Constant)       ,840          ,286                           2,942        ,004
          FIT             -,013          ,040              -,018        -,327        ,744         ,989         1,011
          IMB              ,792          ,050               ,876       15,719        ,000         ,989         1,011
   a. Dependent Variable: IMA




                                                                                                                       47
Brand extension


Whole model without outliers:

Table 4.9

                          Model Summary

                                          Adjusted      Std. Error of
  Model         R         R Square        R Square      the Estimate
  1              ,919a        ,844             ,840           ,32110
    a. Predictors: (Constant), FIT, IMB

Table 4.10

                                          ANOVAb

                          Sum of
  Model                   Squares          df        Mean Square         F           Sig.
  1       Regression        41,877               2        20,939       203,082         ,000a
          Residual           7,733              75          ,103
          Total             49,610              77
    a. Predictors: (Constant), FIT, IMB
    b. Dependent Variable: IMA



Table 4.11

                                                         Coefficientsa

                              Unstandardized           Standardized
                                Coefficients            Coefficients                                Collinearity Statistics
  Model                       B         Std. Error         Beta              t            Sig.     Tolerance        VIF
  1        (Constant)           ,757          ,223                           3,391          ,001
           IMB                  ,811          ,041              ,922        19,992          ,000         ,978         1,023
           FIT                 -,015          ,032             -,021         -,455          ,650         ,978         1,023
    a. Dependent Variable: IMA




                                                                                                                              48
Brand extension


Regressive output with control variables:

Table 4.12
                          Model Summaryb


                                         Adjusted         Std. Error of
  Model         R      R Square          R Square         the Estimate
  1              ,925a     ,856               ,844              ,31737
     a. Predictors: (Constant), Inkomen Bruto, IMB, FIT,
        Opleiding, Geslacht, Leeftijd
     b. Dependent Variable: IMA



Table 4.13
                                           ANOVAb

                          Sum of
  Model                   Squares           df         Mean Square           F          Sig.
  1       Regression        42,459                6          7,076          70,258        ,000a
          Residual           7,151               71           ,101
          Total             49,610               77
    a. Predictors: (Constant), Inkomen Bruto, IMB, FIT, Opleiding, Geslacht, Leeftijd
    b. Dependent Variable: IMA



Table 4.14

                                                      Coefficientsa


                             Unstandardized           Standardized
                               Coefficients           Coefficients                             Collinearity Statistics
  Model                      B         Std. Error         Beta             t         Sig.     Tolerance        VIF
  1       (Constant)           ,771          ,340                          2,269       ,026
          IMB                  ,797          ,042              ,905       19,103       ,000         ,904        1,106
          FIT                 -,018          ,032             -,027        -,575       ,567         ,947        1,055
          Geslacht             ,163          ,075              ,102        2,172       ,033         ,922        1,085
          Leeftijd            -,076          ,089             -,041        -,852       ,397         ,872        1,147
          Opleiding           -,007          ,034             -,009        -,203       ,840         ,927        1,078
          Inkomen Bruto        ,001          ,035              ,002          ,035      ,972         ,854        1,171
    a. Dependent Variable: IMA




                                                                                                                         49

				
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