The impact of brand extensions on parent brand relationship equity

Abstract

The emergence of a relational paradigm necessitates an analysis of brand extensions from the standpoint of their impact on potential consumer relationships with a parent brand. The current study adds a novel perspective to the brand extension feedback literature by explaining the effect of brand extensions on the relationship equity of a parent brand. This extends the scope of feedback effect consequences from the previous concentration on simply parent brand equity effects. Further, parent brand trust is introduced as a key antecedent of consumers ’ reciprocal evaluations of parent brand relationship equity given its established role in consumer – brand relationships. A conceptual model of brand extension feedback is developed and tested on a sample of 888 Australian consumers. All the hypotheses of the model are supported. Brand extension attitude has the strongest impact on change in parent brand relationship equity, followed by initial relationship equity. The impact of parent brand trust is also signifi cant. The study supports the role of brand extensions as relationship facilitators within a supermarket retailing scenario. Practitioners are advised to conduct an objective audit of existing relationship equity and trust before launching brand extensions.