1. business and industrial
2. advertising and marketing
3. brand management

BRAND CONCEPT AND BRAND REACH: A DUAL
PROCESSING APPROACH TO EXTENSION EVALUATION
by
Omer Topaloglu, BA, MBA,
Dissertation
In
MARKETING
Submitted to the Graduate Faculty
of Texas Tech University in
Partial Fulfillment of
the Requirements for
the Degree of
DOCTOR OF PHILOSOPHY
Approved
Co-Chair: Dr. Dennis B. Arnett
Co-Chair: Dr. Mayukh Dass
Committee Member: Dr. Steve Buchheit
Committee Member: Dr. Piyush Kumar (University of Georgia)
Dr. Dominick Casadonte
Interim Dean of the Graduate School
August, 2013
Copyright 2013, Omer Topaloglu
All rights reserved.
Dedicated to Him (PBUH)…
Texas Tech University, Omer Topaloglu, August 2013
ACKNOWLEDGMENTS
During the course of my PhD education I have been guided and supported by
many valuable people. Above all, I am indebted to my co-advisor and mentor, Professor
Mayukh Dass for his able guidance and sincere support. Dr. Dass has been fundamental
and irreplaceable in my journey and given me the peace of mind that there is someone I
can always call whether it is about my career or life in general. I would like to thank him
for that. Also, I would to thank my co-advisor Professor Dennis B. Arnett for all his
guidance, support, and always having time for my spontaneous door-knockings. Further, I
would like to express my gratitude to Professor Piyush Kumar of University of Georgia
who has provided me with his unique and invaluable expertise in branding research.
Next, I would like to thank Dr. Steve Buchheit for his time and contribution to my
research.
Aside from my dissertation committee, I have benefited immensely from the
distinguished faculty members of marketing area at the Rawls College of Business. First,
I would like to thank my area coordinators Dr. Debbie Laverie and Dr. Bob McDonald for
their endless support and valuable guidance. Also, I would like to thank Dr. Shelby D.
Hunt, Dr. Roy Howell, Dr. Jim Wilcox, Dr. Donna Davis, Dr. Dale Duhan, Dr. Shannon
Rinaldo, Dr. Gavin Fox, Jeffrey Harper, Dr. Tillmann Wagner, and Dr. Kelli Frias for all
their guidance and support during the past four years. In addition, I would like to thank
my colleagues Joseph M. Derby, Purvi Shah, Kyung-Ah Byun, Omer Gokalp, Bahtiyar
Babanazarov, Haktan Sarikaya and Andrew Dartt for going through fire with me. Last but
not the least, I would like to thank Ms. Sherry Fowler for her timely and meticulous
assistance.
Without a doubt, my family who has always been there for me deserves the
most special of thanks. I would like to extend my most sincere gratitude and appreciation
ii
Texas Tech University, Omer Topaloglu, August 2013
to my father, Professor Umit Topaloglu, my mother, Dr. Nezihe Topaloglu, my sister, Dr.
Zeynep Topaloglu, my brother, Etka Topaloglu, my dear wife Esranur Topaloglu, and my
dearest baby girl, Leyla Topaloglu. Without them, I could not have endured the hardship
of past four years. I am glad you are with me and thank you very much!
iii
Texas Tech University, Omer Topaloglu, August 2013
TABLE OF CONTENTS
ACKNOWLEDGMENTS ..................................................................................... ii
ABSTRACT ........................................................................................................... vi
LIST OF TABLES ................................................................................................. ix
LIST OF FIGURES ................................................................................................ x
CHAPTER 1: INTRODUCTION ......................................................................... 1
CHAPTER 2: THEORETICAL BACKGROUND ............................................. 6
2.1. Branding ............................................................................................................ 6
2.2. Theories of Concepts....................................................................................... 10
2.3. Schema Modification Theory.......................................................................... 12
CHAPTER 3: HYPOTHESES DEVELOPMENT ............................................ 16
3.1. Brand Extensions and Brand Concept ............................................................ 16
3.2. Line Extensions and Brand Concept ............................................................... 24
3.3. Competition and Brand Concept ..................................................................... 27
CHAPTER 4: THE ROLE OF BRAND CONCEPT IN BRAND
EXTENSIONS .................................................................................................................. 32
4.1. Pretests ............................................................................................................ 33
4.2. Method ............................................................................................................ 34
4.2.1. Study 1A ...................................................................................................... 34
4.2.2. Study 1B ....................................................................................................... 35
4.3. Results ............................................................................................................. 36
4.3.1. Study 1A ...................................................................................................... 36
4.3.2. Study 1B ....................................................................................................... 37
4.4. Discussion ....................................................................................................... 39
CHAPTER 5: THE ROLE OF BRAND CONCEPT IN LINE EXTENSIONS40
5.1. Pretest .............................................................................................................. 40
5.2. Method ............................................................................................................ 41
5.2.1. Study 2A ...................................................................................................... 41
5.2.2. Study 2B ....................................................................................................... 42
5.3. Results ............................................................................................................. 43
5.3.1. Study 2A ...................................................................................................... 44
5.3.2. Study 2B ....................................................................................................... 45
5.4. Discussion ....................................................................................................... 45
iv
Texas Tech University, Omer Topaloglu, August 2013
CHAPTER 6: INTRODUCING A COMPETITIVE MOVE ........................... 47
6.1. Method ............................................................................................................ 47
6.2. Results ............................................................................................................. 48
6.3. Discussion ....................................................................................................... 48
CHAPTER 7: GENERAL DISCUSSION .......................................................... 50
7.1. Theoretical Implications.................................................................................. 50
7.2. Managerial Implications.................................................................................. 52
7.3. Limitations and Future Directions .................................................................. 53
APPENDICES ...................................................................................................... 55
A. APPENDIX: LIST OF THE PRODUCT CATEGORIES USED IN
PRETEST 1 ....................................................................................................................... 55
B. APPENDIX: THE MANIPULATIONS USED IN STUDY 1B .................... 56
C. APPENDIX: QUESTIONNAIRE OF ONE OF THE LINE EXTENSION
STUDIES........................................................................................................................... 58
REFERENCES ..................................................................................................... 66
v
Texas Tech University, Omer Topaloglu, August 2013
ABSTRACT
Marketing a new product under an existing brand name has been a widely used
branding strategy. Rather than developing a new brand from the scratch, firms introduce
new products using current brands resulting in faster adoption and higher marketing
efficiency. Thus, major percentage of new product introductions comes as brand and line
extensions. Despite the documented advantages of brand extensions, not all such
endeavors prove their worth. Apple MacBook, Diet Coke, Tide Pen, Duracell Powermat
Wireless Charger, or Virgin Atlantic Airways are some of the well-received extension of
the recent decades. How about some of the underachievers? Zippo Woman Perfume,
Heinz All-Natural Cleaning Vinegar, Dr. Pepper Marinade, and Hooters Air have all
failed to impress their target market despite being backed up by a strong parent brand.
Extending into laptop computers might be an intuitive strategy for Apple, a desktop
computer brand at origin. That is a close reach. However, a music retailer into air travel?
Is it too much of a stretch? How about a lighter company extending into women perfume?
How far can a brand successfully reach?
Existing brand extension literature agrees upon the benefits of close category
extensions. However, the dynamics of far category extensions are still dubious.
Attempting to address this issue, this dissertation studies the underlying process of how
far a brand can stretch. Specifically, a novel, cognitive dual processing approach to
vi
Texas Tech University, Omer Topaloglu, August 2013
enhance the understanding of the role of brand concept in brand and line extension
success is introduced. It is suggested that the reach of a brand in terms of being able to
launch successful extensions depends on whether its concept is aligned with its core
product category or is a modified concept. A brand with a modified category concept
(MCC) is described as a brand whose core brand associations are aligned with a concept
(the modification) other than that of the core product category. In particular, drawing
upon categorization and conceptual combination literatures, this research presents two
cognitive processes for evaluating brand extensions, (1) a comparison of the brand’s core
category and the extension category, and (2) a comparison of the concept modification
within the brand’s original and new categories. Based on these processes, it is argued that
when the extension category is close to the core category and the parent brand has a core
category concept (CCC), the inter-category comparison process dominates the evaluation
of the extension. As a result, the extension of a core brand concept is better evaluated
than that of a modified brand concept. For instance, Campbell's Soup is a brand whose
concept is strongly associated with the core product category, soups. Therefore, it would
do better than a soup brand with MCC when extending into a close product category, say
broths. However, when the extension category is far, say cookies, the modificationmatching process dominates the evaluation of the extension, and therefore, the extension
of a modified concept yields better evaluations for far categories. To illustrate, Chipotle, a
restaurant brand, has a brand concept that is modified with the sustainability idea. Thus, it
should do better than a restaurant brand with CCC when extending into far product
vii
Texas Tech University, Omer Topaloglu, August 2013
categories. As an anecdotal evidence, Chipotle recently launched sustainable hoodies and
outwear successfully although hoodies should be considered as a long stretch for a
restaurant brand.
These results are posited by the schema modification theory purporting that
concepts (as a schema or a structured set of slots and fillers) may be modified as a result
of conceptual combinations. When a concept is modified by another concept, either some
of its slots will be filled out adjusting the salience of various attributes of the concept or its
schema will be modified resulting in emergent slots and attributes for the combination.
Based on these arguments, three hypotheses on (1) the role of brand concept in brand
extensions, (2) the role of brand concept in product line extensions, and (3) the role of
brand concept at the existence of a competitive environment are developed. The proposed
hypotheses are tested by five laboratory and online experiments and three pretests that are
conducted with 456 undergraduate students from a major US university. The results of the
experiments support the proposed effects and yield significant theoretical and managerial
implications for branding strategy.
viii
Texas Tech University, Omer Topaloglu, August 2013
LIST OF TABLES
Definitions .............................................................................................................. 23
Proposed Hypotheses ............................................................................................. 31
ix
Texas Tech University, Omer Topaloglu, August 2013
LIST OF FIGURES
Study 1A – Close versus Far Extension Evaluations ............................................. 38
Study 1B – Close versus Far Extension Evaluations ............................................. 38
Study 2A – Typical versus Atypical Line Extension Evaluations ......................... 46
Study 2B – Typical versus Atypical Line Extension Evaluations ......................... 46
x
Texas Tech University, Omer Topaloglu, August 2013
CHAPTER 1: INTRODUCTION
It is a psychological urge that, following an encounter, consumers construe a
portrayal about a brand in their minds regardless of the firm's marketing efforts. What
firms are tasked to do is to select, nurture, and manage an image, a concept that evokes the
desired portrayal that will lead to sustained competitive advantage. Defined as "firmselected brand meaning based on consumer needs," (Park, Jaworski, and MacInnis 1986)
brand concept is an integral part in branding and positioning strategies. The most
commonly studied brand concepts in branding research are symbolic, functional, and
experiential brand concepts. Further, some companies have brand concepts that carry
strong associations with their core product category; some companies, on the other hand,
have brand concepts that are combinations of their core product category concept and an
auxiliary concept, such as social responsibility, a usage situation, or a unique product
constituent. At the core of positioning and segmentation strategies, this conceptualization
helps companies be differentiated among their competitors and sustain competitive
advantage; thus brand concept is of great interest to marketing scholars as well as
marketing practitioners.
In broad terms, the current research studies the interaction between brand concept
and extension strategies. Brand and line extension strategies, in other words, the use of
established brand names in launching new products, have been widely exercised branding
strategies for firms. Rather than incurring the cumbersome cost of flourishing a new
1
Texas Tech University, Omer Topaloglu, August 2013
brand, firms introduce products in existing or new categories utilizing the synergies
associated with at hand brands (Aaker and Keller 1990; Broniarczyk and Alba 1994). As
a result, brand associations of the parent brand carry over to the extension product and
influence the consumer evaluations. Brand extensions are described as using an existing
brand name for a product launched in a new product category (e.g. Ralph Lauren Cologne,
Disney Theme Parks, FedEx TechConnect). Line extensions, however, refer to using an
existing brand name to launch a new product in the same product category with a small
change, such as color, flavor, or shape (e.g. Diet Coke, Campbell's Chicken Noodle Soup,
Tide ColdWater Detergent). Even though these two strategies draw upon different
theoretical backgrounds, they are conceptually related and both benefit from the leverage
of a successful brand concept.
Traditional view in the branding literature suggests that brand extension success
mostly depends on the perceived fit between the extension category and the parent brand
(Aaker and Keller 1990; Volckner and Sattler 2006). That is, consumers evaluate a brand
extension more favorably if the extension category is similar to the parent brand's
category (Boush and Loken 1991) and shares many common attributes or features with it
(Aaker and Keller 1990). For dissimilar brand extensions, brand concept becomes the
leverage point. According to the conventional view, parent brand needs a symbolic brand
concept carrying general and abstract brand associations, such as “prestige” or “luxury” as
opposed to a functional brand concept (e.g.: durability, value, etc.) in order to launch a
dissimilar brand extension (Batra, Lenk, and Wedel 2010; Broniarczyk and Alba 1994;
Park, Milberg, and Lawson 1991). Despite not receiving as much attention from
2
Texas Tech University, Omer Topaloglu, August 2013
marketing scholars, line extensions outnumber brand extensions in terms of
implementation as a branding strategy. Prior literature similarly suggests that parent
brand’s concept, when symbolic, has a significant effect on line extension success
(Kirmani, Sood, and Bridges 1999; Reddy, Holak, and Bhat 1994).
However, recent evidence calls the conventional understanding in the literature
into question. First, some researchers argue that there is more to the brand concept
discussion than just the symbolic versus functional dichotomy and these two concepts are
not merely two ends of the brand concept continuum (Bhat and Reddy 1998). Second,
prior studies show situations where dissimilar brand extensions could become successful
due to various effects, including consumer beliefs (Yorkston, Nunes, and Matta 2010),
consumer thinking styles (Monga and John 2010), or competitive environment (Milberg,
Sinn, and Goodstein 2010). Third, abstract brand associations do not necessarily lead to
successful incongruent brand extensions. For example, in their validation study on brandcategory fit and atypicality, Batra et al. (2010) do not find support for the assertion that
brands with generic and abstract associations extend into distant product categories more
easily. As a case example in favor of this argument, Walmart’s Great Value brand is
more functional then prestigious, yet it has great extendibility. Therefore, the interaction
between brand concept and extension strategies requires more scrutiny from scholars
aimed to uncover the underlying mechanism of extension evaluation. Following questions
ensue: What is the cognitive process that guides brand and line extension evaluation?
What are the key determinants of extension success, especially when extending into less
similar product categories? Specifically, what is the role of brand concept in enabling
3
Texas Tech University, Omer Topaloglu, August 2013
consumers to make cognitive associations with the extension category and thus generating
favorable extension evaluations?
This dissertation argues for a novel dual processing approach and proposes that a
brand’s ability to launch successful extensions depends on whether its concept reflects
associations with its core category or is a modified concept. For example, a brand may be
positioned as a soup brand (a core category concept – CCC) or as an organic soup brand (a
modified category concept – MCC). Drawing on the schema modification theory
(Murphy 1990), the current research argues that there are two cognitive processes that
underlie the evaluation of the extension of a brand concept. The first process is the
traditional inter-category comparison process that refers to the comparison of the brand’s
core category and the extension category. The second process is a comparison of the
concept modification within the brand’s original and new categories, which is here named
the modification-matching process. It is then argued that, when the extension category is
close to the core category, inter-category comparison (the first cognitive process)
dominates the evaluation of the extension. As a result, the extension of a brand with core
category concept into close product categories is better evaluated than that of a brand with
modified category concept. However, when the extension category is far, the
modification-matching process (the second cognitive process) dominates the cognition. As
a result, the extension of a brand with MCC is better evaluated in far extension categories
than that of a brand with CCC. In other words, category similarity effects interact with
brand concept effects. As will be explained in more detail in the following chapters, in
the case of line extensions, deprived of categorization effects, brand concept interacts with
4
Texas Tech University, Omer Topaloglu, August 2013
the effect of perceived typicality on line extensions success. Both situations are
influenced by a unique cognitive process triggered by the modification of the brand
concept.
The contribution of this dissertation is of threefold. First of all, the dual
processing approach provides an innovative perspective enhancing the explanation and
prediction power of the brand extension theory. Second, existing literature demonstrates a
limited role for brand concept in the extension strategy as one would expect to find more
underlying dynamics than just the prestigious versus functional dichotomy. This research
presents a detailed analysis on the role of brand concept in enabling firms to extend into
distant product categories successfully and designating the product category in which the
extension should take place. Third, as opposed to the previous studies on incongruent
brand extensions focusing on consumer-level differences or competitive factors that are
not fully under the control of the firm, the current research offers implementable strategic
insights in crafting the brand concept that allow firms launch successful brand extensions
into close and distant product categories.
The subsequent chapters of this dissertation include an overview of the theoretical
background of this research, a discussion of the hypotheses, data collection and analysis
method for hypothesis testing, a general discussion of the findings, and finally conclude
with a chapter on the theoretical and managerial implications of this research.
5
Texas Tech University, Omer Topaloglu, August 2013
CHAPTER 2: THEORETICAL BACKGROUND
2.1. Branding
Prior to gaining its contemporary connotation, brand, meaning “to burn” in old
German, referred to the mark made with hot iron onto cattle to identify the owner of the
animals. Today, a brand is defined as "name, term, design, symbol, or any other feature
that identifies one seller's good or service as distinct from those of other sellers" (AMA
Dictionary 2013). At the macro level, brands are vital societal institutions; at the micro
level, they are among the most significant assets of a company. Unfortunately, branding
research at the macro level is very limited and scholars have spent their major effort
researching branding phenomenon at the company level.
From a macromarketing perspective, brands are societal institutions that in some
cases ignite people to get together and act together as a distinctive subgroup of society
(Schouten and McAlexander 1995). They anchor brand communities marked by a shared
consciousness, rituals and traditions, and a sense of moral responsibility (Muniz and
O'Guinn 2000). The subgroups in society are based on variety of factors, such as
demographics, belief systems, ethnicity, or consumption behaviors. In most cases, they
become an important source of innovation and development because homogeneous
societies hardly advance. Further, brands function as (1) sources of information for
customers, (2) incentives for firms to maintain quality, and (3) means to hold
6
Texas Tech University, Omer Topaloglu, August 2013
manufacturer accountable if needed (Hunt 2006). In essence, since the market
information is imperfect, brands signal important information to the consumers.
Psychologically, human cognition works by creating associations between the new stimuli
and the context in which the stimuli were received, prior knowledge on related matters, or
extant state of the mind. Consumers would develop certain cognitive associations with a
product even if the producer did not craft a brand and attempt to influence these mental
connections (Keller and Lehmann 2006). In other words, brands engender associations
that facilitate the exchange of goods and services; consumers use them to identify the
products that best fit with their needs. Therefore, it is not only beneficial but also
necessary for the society that companies nurture and develop successful brands and
branding strategies.
From a micromarketing perspective, brands are important legal and organizational
resources that enable firms to gain competitive advantage (Shocker, Sirivastava, and
Ruekert 1994). Companies strive to gain brand equity, defined as the differential effect of
brand knowledge on consumer response to the marketing of the brand, to increase
marketing productivity and reach sustained competitive advantage (Keller 1993). Brand
equity has five dimensions: (1) price premium (how much more consumers are willing to
pay for a particular product), customer satisfaction, and brand loyalty, (2) perceived
quality and leadership, (3) perceived value, brand personality, and organizational
associations, (4) brand awareness, and (5) market share, price and distribution indices
(Aaker 1996). Brand equity strategy posits that companies acquire, develop, nurture, and
leverage an effectiveness-enhancing portfolio of high-equity brands to reach sustained
7
Texas Tech University, Omer Topaloglu, August 2013
competitive advantage (Hunt 2010). In the marketing literature, companies' involvement
with branding has been studied under five broad areas: (1) developing a brand, (2)
communicating the brand, (3) managing the brand, (4) assessing brand performance, and
(5) company growth leveraged by brands.
First of all, managers decide how to develop a brand. At the origin, a brand is no
different than the product it marks; in time, with marketing efforts of the company, brand
develops a series of associations and attachments and takes on a life of its own (Keller and
Lehmann 2006). Therefore, developing a brand is initiated with a brand positioning
strategy described as establishing key brand associations (whether they are related to
tangible product attributes, intangibles, or corporate image) in the minds of customers to
differentiate the brand and reach competitive superiority (Keller, Sternthal, and Tybout
2002). Since intangible associations are harder to imitate and thus advantageous in a
competitive environment, marketing managers strive to develop unique intangible
associations such as an aspirational or utilitarian usage imagery (Park et al. 1986),
personality traits including sincerity, excitement, competence, sophistication, and
ruggedness (Aaker 1997), or personal relationships (Fournier 1998) around the tangible
product attributes. Another significant part of developing a brand is flourishing brand
associations with corporate image and reputation of the entire organization whether it is
related to a corporate capability or a social responsibility (Keller and Lehmann 2006).
Second, companies need to communicate the brand that they develop and its
associations to the customers in an effective way in order to increase brand equity. Brand
8
Texas Tech University, Omer Topaloglu, August 2013
elements such as names, logos, symbols, or slogans can be communicated to the
customers through variety of communication means including variety of broadcasting
forms, print, direct response (online and offline), sales promotions, and public relations
(Keller 1993). Past research shows that integrating these marketing communications
proves beneficial for the company (Duncan 2002; Naik and Raman 2003). Third,
companies are tasked to manage the brands in their lifetime. Managing a brand comprises
marketing activities such as strategizing how to manage a customer's entire experience
with a brand, which is also known as brand experience management (Brakus, Schmitt, and
Zarantonello 2009; Schmitt 1999; Schmitt 2003), co-branding and brand alliances (Desai
and Keller 2002; Kumar 2005b; Park, Jun, and Shocker 1996; Simonin and Ruth 1998),
and global branding (Samiee and Roth 1992; Szymanski, Bharadwaj, and Varadarajan
1993).
Fourth, assessing a brand's performance is a significant part of branding strategy.
Perhaps, the most important approach for assessing brand performance is measuring brand
equity. Marketing scholars have investigated brand equity measurement under three main
research streams: customer based, company based, and financial valuation. Customer
based brand equity is measured by surveying target market on brand knowledge,
recognition, recall, or personal opinions (Keller 1993). Company based brand equity
measurement consists of subjective performance measures in a company such sales
performance, advertising, or promotional outcomes. Finally, brands are valued with a
financial market's perspective like any other asset in the company that is to be bought or
sold (Simon and Sullivan 1993). Fifth, branding strategy provides a growth platform in
9
Texas Tech University, Omer Topaloglu, August 2013
the company in the form of brand extensions (Keller and Lehmann 2006). This is one of
the widely studied branding areas in the literature (Czellar 2003) and also related to the
realm of this dissertation. Once the firms reach a desired level of brand equity, they look
for opportunities to leverage this competitive advantage to marketing of new products
(Aaker and Keller 1990). As an extension of brand equity strategy, brand extension and
line extension strategies are utilized to grow the company and its portfolio. Firms use
existing brands to stretch their product lines or extend into other product categories. In
the next chapter, more detailed discussion of these two strategies has been noted.
Currently, a discussion of the theories of concepts will be provided as leeway to the
theoretical underpinnings of this dissertation.
2.2. Theories of Concepts
Concepts are the most integral building blocks in theories of mind. Thus, various
aspects of concepts have attracted great interest from cross disciplinary scholars ranging
from philosophers, linguists, psychologists, cognitive scientists to consumer behaviorists
and marketers. Most of the theory development in this area includes a discussion of
conceptual structures. When concepts lack structure, they are called primitive concepts;
with a structure, concepts are called complex concepts. Two main models of conceptual
structures are containment and inferential models (Laurence and Margolis 1999). In the
former, a concept has a structured composition of other concepts whose occurrence
necessitates the occurrence of the main concept. In the latter, though there is still a
structured composition of other concepts, the constituent concepts do not need to occur;
10
Texas Tech University, Omer Topaloglu, August 2013
they may be inferred, for the main concept to occur. For example, concept "red" might
have a structure inferring to the concept "color", but on the inferential model, one could
use the concept "red" without having to token the concept "color".
The ontological nature of concepts has triggered much debate among philosophers
and linguists studying concepts. Some scholars adhere to the view that concepts are
abstract entities which implies that they cannot be mental entities that are objective across
individuals (Frege 1892/1966). From a more psychological point of view, some scholars
have argued that concepts are mental representations that are subjective in that their
tokens are uniquely possessed. However, this does not preclude sharing of a mental
representation; two people can have the same type of mental representation. Echoing the
latter view in this research, we define a concept as “a mental representation with a
prototype-like structure that signifies necessary conditions for something to be referred as
that concept” (Laurence and Margolis 1999).
The oldest and most widely accepted (until the 1970s) theory of concepts, the
classical theory of concepts holds that most concepts have a definitional structure (Locke
1690/1975). That is, the concepts are complex mental representations that denote
necessary and sufficient conditions for their application. For example, the definition of
the concept bachelor includes features such as "unmarried" and "man"; for a referent to be
a described with the concept bachelor, it must definitely carry these characteristics. This
empiricist theory, however, has been mostly abandoned in the recent years due to its
adherence to the law of the excluded middle. That is, the theory fails to explain typicality
11
Texas Tech University, Omer Topaloglu, August 2013
perceptions and concepts that can be members of multiple categories. Also, for some
concepts, it is very difficult to find these strict definitions. As a reaction to the classical
theory of concepts, the scholars have developed the prototype theory of concepts
(Wittgenstein 1953/1968). According to this theory, conceptual structures signify a
statistical analysis of the properties that the members of the concepts tend to have. We can
judge an object's membership to the referent class of a concept by comparing it to a
typical constituent. To address the deficiencies of previous theories, scholars have
developed many other notable theories such as theory-theory of concepts and neoclassical
theory of concepts; however the discussion of these theories is outside the scope of current
dissertation. Lastly, as a transition to the underlying theory of the current research, the
schema theory of concepts will be noted (Rumelhart 1980). The schema theory explores
how information is encoded, stored, interpreted, and retrieved in human cognition.
Cognitive schema is described as a set of slots and fillers, a mental structure of prior
knowledge; schemata help us make inferences about unobserved aspects of a situation.
According to the theory, a schema underlying a concept stored in memory corresponds to
the meaning of that concept. Thus, the schema theory of concepts has great potential
explaining and predicting phenomenon on brand concept, defined as firm-selected brand
meaning.
2.3. Schema Modification Theory
In the philosophy and cognitive science literatures, a concept is described as “a
mental representation with a prototype-like structure that signifies necessary conditions
12
Texas Tech University, Omer Topaloglu, August 2013
for something to be referred as that concept” (Laurence and Margolis 1999). Formed by a
set of known attributes and components, this prototype-like structure yields semantic
interpretations that may or may not be consistent with a specific referent (Putnam 1970).
According to the schema theory of concepts, not all attributes of a concept has to be
tangible or there is more to a concept than what is seen with bare eye as a referent
(Laurence and Margolis 1999; Sujan and Bettman 1989). This view parallels to the
conceptualization of the brand concept in marketing literature. In a qualitative prestudy
conducted for this research, 70 consumers were asked open-ended questions about the
brand meaning of Campbell’s Soup; they indicated tangible as well as intangible set of
attributes. For example, they mentioned statements such as “tomato soup”, “chicken
noodle soup”, or “mmm mmm good!!! tag line” as well as “a popular soup brand”, “a
family brand”, or “makes you feel good.” These associations have been instilled into the
consumers over the years via various marketing strategies and form conceptual schema of
Campbell’s brand. In a similar endeavor, John et al. (2006) use brand association
networks to uncover the brand concepts. Although networks and schemata are structurally
different, they are parallel in terms of mapping out the cognitive associations pertaining to
a concept.
Drawing on the schema theory of concepts (Rumelhart 1980), Murphy (1990)
introduces the schema modification theory postulating that concepts (as a schema or a
structured set of slots and fillers) may be modified as a result of conceptual combinations.
When a concept is modified by another concept, either some of its slots will be filled out
adjusting the salience of various attributes of the concept or its schema will be modified
13
Texas Tech University, Omer Topaloglu, August 2013
resulting in emergent slots and attributes for the combination. To illustrate, when the soup
concept is modified by the organic concept, the new conceptual schema of organic soup
will carry various associations and set of slots that the conceptual schema of soup does not
carry. Combining and modifying concepts are inherent in lexical development and start
triggering cognitive processes when children are about 36-month-old (Fernald, Thorpe,
and Marchman 2010). Depending on the modifier type, the conceptual modification
affects how the combination is interpreted and how the meaning is derived. For example,
a complex modifier alters the conceptual schema, requires more contextual knowledge,
and reveals emergent attributes (Estes and Ward 2002); yet a simple modifier (e.g. color)
just changes the strength and intensity of already existing slots and yields the combination
to inherit most of its constituents’ attributes (Murphy 1990). When the conceptual schema
is transformed, the new structure, in turn, commences new horizons and opens new
avenues for consecutive conceptual modifications.
The schema theory tradition is closely related to the dual processing approach
utilized in cognitive psychology. Most of the dual processing theories in the psychology
literature argue that there are two distinct cognitive processes in human cognition dealing
with persuasion, memory, judgment, or attitudes; one is a fast and associative informationprocessing based on low-effort heuristics, and the other one is a slow rule-based
processing based on high-effort systematic reasoning (Chaiken and Trope 1999). As
mentioned earlier, schema is a mental structure of prior knowledge that guides encoding,
storing, interpreting, and retrieving of information. Therefore, the former, fast and
associative information processing relies on the schema. However, when the schema is
14
Texas Tech University, Omer Topaloglu, August 2013
modified, a distinct cognitive process, parallel to the latter, slow and rule-based
processing, arises. That is, combining and/or modifying concepts and altering the
conceptual schema affect information interpretation.
In the marketing literature, some preliminary attempts have approached brand
extensions as conceptual combinations (Bristol 1996; Schmitt and Dube 1992).
According to the theory, extension category becomes “the modifier” and the existing
brand concept is called “the head noun” that is modified. Bristol (1996) finds that
consumers’ extension evaluations include some emergent inferences that neither the brand
concept nor the extension category concept entail. Subsequent studies used conceptual
combinations to explain the relationship between composite branding (also called cobranding, ingredient branding) and brand extensions (Desai and Keller 2002; Park et al.
1996). In this case, one of the brands becomes “the head brand” and the other one
becomes “the modifier brand”. Park et al. (1996) find that a composite brand extension
launched by two brands with complementary attributes (a modified extension) yields
better results than an extension by the head brand itself. In the case of line extensions, cobranded extension performs better than self-branded extensions if the alliance adds a new
attribute to the product rather than just filling a slot in the conceptual schema (Desai and
Keller 2002). However, these studies leave explaining the role of initial brand concept
(modified or not) in the extension strategy to future research endeavors and the current
research attempts to fill this gap.
15
Texas Tech University, Omer Topaloglu, August 2013
CHAPTER 3: HYPOTHESES DEVELOPMENT
3.1. Brand Extensions and Brand Concept
Brand extension success has been studied under three main categories. First,
scholars have investigated the phenomenon considering the contextual or situational
factors; that is, how competitive context (Milberg et al. 2010), comparison brands (Oakley
et al. 2008), retailer acceptance (Volckner and Sattler 2006), mating mind-set (Monga and
Gurhan-Canli 2012), or previous brand extensions (Keller and Aaker 1992; Shine, Park,
and Wyer 2007) affect a particular extension. Second, how consumer-level differences,
including motivation (Ahluwalia 2008; Gurhan-Canli and Maheswaran 1998), expertise
(Broniarczyk and Alba 1994), brand schematicity (Puligadda, Ross, and Grewal 2012), or
consumer innovativeness (Klink and Smith 2001) affect extension evaluation has been
studied. Third, the impact of firm-controlled strategic factors on brand extension success
has been the purpose of brand extension research. This latter stream of research looks into
the strategic maneuvers, such as marketing support provided for the extension (Lane
2000) or selection of the extension category based on perceived fit or category similarity
(Aaker and Keller 1990). The current research attempts to contribute to the final
perspective focusing on the role of brand concept in brand extension strategy, especially
when extending into dissimilar product categories.
16
Texas Tech University, Omer Topaloglu, August 2013
Defined as “firm-selected brand meaning derived from basic consumer needs”
(Park et al. 1986), brand concept serves as the foundation for shaping market boundaries
at the broad strategic level (Day, Shocker, and Srivastava 1979). It is essential to break
down this definition for further discussion. Brand concept is firm-selected and derived
from basic consumer needs, that is, it is a part of the branding strategy. Following the
market segmentation process, managers decide on the target markets and identify their
needs and characteristics. Based on these needs, firms offer products, around which they
develop a brand concept, a brand meaning, which will evoke some desired associations
when consumers encounter the brand. The brand concept is developed by means of
specific product characteristics, pricing, distribution choices, or promotional tools, such as
logos, slogans, advertisements etc. Two caveats are granted here. First, in their pioneering
study, Park et al. (1986) described their framework as "normative"; that is, firms should
have a certain brand concept, to get certain results. Yet, the formation of the concept at
consumers' cognition is "positive." Thus, consumers will have a brand concept about a
product as it is a psychological urge, even if the firm does not spend any effort to establish
a brand concept. Second, even though brand concept is developed by marketing
managers, it is materialized at consumers’ cognition. Researchers ask consumers openended questions such as “When you think of [brand], what comes to mind?” to elicit brand
concepts (John et al. 2006). Thus, we assume consistency between the firm’s strategic
endeavor and the consumers’ perception of the brand concept. As proposed by consumer
culture theory (Arnould and Thompson 2005), it is viable to think that consumers
contribute to the brand concept development process and take the concept to a place
17
Texas Tech University, Omer Topaloglu, August 2013
different than what was foreseen by the company. However, this situation cues a failed
strategic attempt by the company and is outside of the scope of the current dissertation.
Establishing a brand concept is fundamental to marketing activities as it primarily
draws on segmentation and positioning strategies and guides sustainable brand image that
leads to competitive advantage. Drawing on the product classification research, branding
scholars have initially approached brand concept under three subcategories, brands with
functional concepts, brands with symbolic concepts, and brands with experiential concepts
(Park et al. 1986; Park et al. 1991). Marketing managers design functional brand concepts
to solve externally generated consumer needs, symbolic brand concepts to associate
consumers with a desired group, role, or self image, and experiential brand concepts to
fulfill consumers’ internally generated needs for stimulation and/or variety (Park et al.
1986). Using a broader perspective, some of the ensuing studies approached brand
concepts as representations of human values (Torelli, Monga, and Kaikati 2012; Torelli et
al. 2012) or brand association networks (John et al. 2006). Yet, utilitarian (functional) vs.
symbolic (prestige) dichotomy introduced by Park et al. (1986) remains to be the mostly
used approach in brand concept research (Grohmann 2009; Kirmani et al. 1999; Monga
and John 2010; Monga and Gurhan-Canli 2012). Once the brand concept is developed and
subsequently the brand image is nurtured, firms introduce brand extensions to reinforce
the image, utilize positive associations, and benefit from the synergies.
As mentioned, brand extensions have been one of the highly utilized branding and
new product introduction strategies. Pioneering studies in the brand extension literature
18
Texas Tech University, Omer Topaloglu, August 2013
support the intuitive view that extending into a similar product category is one of the most
important indicators of brand extension success (Aaker and Keller 1990; Boush and
Loken 1991). If this rich research stream had an established theory, the relationship
between the extension success and the category similarity would be its fundamental
premise. Category similarity mainly refers to the common tangible attributes or features,
usage situations, and need satisfaction of the products in two different product categories.
Therefore, extending into dissimilar categories appears as an ineffective strategic decision.
Later contributions, however, looking beyond product-level attribute-based similarities,
argue that brand specific associations, the concept fit, or auxiliary marketing practices
may overpower category similarity effects (Broniarcsyk and Alba 1994; Lane 2000; Park
et al. 1991). That is, incongruent brand extensions are not doomed to fail. For instance,
Lane (2000) shows that managers hold a strategic option in launching repetitive
advertisements with tailor-made contents that enable consumers to bridge needed
cognitive associations to make the dissimilar category extensions favorable.
In addition, prior research suggests that brand concept moderates the relationship
between category similarity and brand extension success (Dacin and Smith 1994; Park et
al. 1991). Dacin and Smith (1994) argue that brands affiliated with many products and
linked with abstract brand associations, present better extension opportunities. Out of the
three previously mentioned brand concepts, functional brand concept and symbolic brand
concept are the two that have been extensively studied in the literature. The former refers
to functional aspects, such as durability, reliability, or value and the latter includes more
abstract aspects such as prestige, self-image, status, or luxury (Park et al. 1991). Brands
19
Texas Tech University, Omer Topaloglu, August 2013
with abstract concepts (e.g. prestige concept) are more extendable to distant product
categories than brands with concrete concepts (e.g. functional concepts) because the
abstract associations lend themselves to a variety of product categories (Monga and John
2010; Park et al. 1991). For instance, Park et al. (1991) find that Rolex as a prestigious
brand stretches further than Timex, which has a functional brand concept.
However, this verdict on the role of brand concept in incongruent brand extensions
is not fully convincing (Broniarcsyk and Alba 1994). First, the line between functional
and prestige brand concepts, the most commonly used dichotomy, is rather ambiguous.
Could a brand have both functional and prestige associations? Or could it have neither?
Is this dichotomy comprehensive enough? Do firms have brand concepts that fall in
neither territory? Second, the generalizability of the findings is uncertain. Are prestigious
brands always more extendable? Is the abstractness of brand concepts the only
characteristic that makes incongruent brand extensions work? Or else, are there cases
where the brand concept is very concrete yet still leads to successful incongruent brand
extensions? As mentioned previously, Walmart’s Great Value brand is more functional
then prestigious, yet it has great extendibility. Therefore, prestige versus functional
distinction seems incomprehensive; decision makers need a more clear understanding of
the role of brand concept guiding brand extension strategy. A more detailed discussion on
concepts was provided in the previous chapter.
As predicated by the schema modification theory, when a brand concept is
modified by a strong enough modifier that its conceptual schema is altered, then
20
Texas Tech University, Omer Topaloglu, August 2013
consumers’ evaluation of this modified concept will lead to more interpretation, emergent
attributes, and meaning derivation than the evaluation for a core (unmodified) concept
(Estes and Ward 2002; Murphy 1990; Wilkenfeld and Ward 2001). This new cognitive
process, which we call modification-matching process, entails a greater extendibility for
modified brand concepts because of the emerged associations and interacts with the effect
of category similarity on extension evaluation. Thus, there is a dual cognitive process
affecting extension evaluations. First, the categorization process results in close category
extensions to be evaluated more favorably. Second, as the category similarity goes from
low to high, modification-matching process starts dominating the categorization process
and results in better evaluations for far category extensions. We define modified brand
concept as a brand concept whose core brand associations are aligned with a concept (the
modification) other than that of the core product category (Table 1). This brand concept
dichotomy (a brand with a core category concept versus a brand with modified category
concept) seems to be more comprehensive than prestige versus functional dichotomy as
all brand concepts can find a place in this conceptual map. For instance, when consumers
think of TOM’s shoes brand, they think of the social responsibility characteristic of the
company. In other words, the cognitive association about social responsibility is stronger
than almost all other associations. The managers in the company spend a lot of effort to
develop this modified concept. On the other hand, when consumers think of Campbell’s
soup brand, the strongest cognitive associations are about soups, the core product
category. Therefore, Campbell’s soup has a core brand concept; however, TOM’s shoes
21
Texas Tech University, Omer Topaloglu, August 2013
has a modified brand concept, which will allow the brand to launch distant category
extensions more successfully. Therefore, it is proposed that:
H1: Brands with modified (core) category concepts will receive more favorable
evaluations, when extending into less (more) similar product categories, than brands with
core (modified) category concepts.
22
Texas Tech University, Omer Topaloglu, August 2013
Table 1: Definitions
Brand
Name, term, design, symbol, or any other feature that identifies
one seller's good or service as distinct from those of other sellers (AMA
Dictionary 2013)
Brand Extension
The use of an existing brand name for a product launched in a
new product category
Line Extension
The use of an established brand for a new offering in the same
product class or category (Reddy et al. 1994)
Concept
A mental representation with a prototype-like structure that
signifies necessary conditions for something to be referred as that
concept (Laurence and Margolis 1999)
Brand Concept
Firm-selected brand meaning based on consumer needs (Park et
al. 1986)
Newly defined concepts for the current research:
Brand with a core
A brand whose core brand associations are aligned with the core
category concept (CCC) product category.
Brand with a
modified category
concept (MCC)
A brand whose core brand associations are aligned with a
concept (a modification) other than that of the core product category.
23
Texas Tech University, Omer Topaloglu, August 2013
3.2. Line Extensions and Brand Concept
Although brand extension research receives more attention than product line
extension research from marketing scholars, the latter goes farther back and was initially
studied in the microeconomics literature along with competition models (Brander and
Eaton 1984; Dixit and Stiglitz 1977). Given that a major portion of new product
introductions (75%) comes as line extensions (Shapiro 1994), the role of brand concept in
line extensions is an intriguing subject. Line extensions may be launched with a new
brand name (Campbell’s Healthy Request soups), as a brand alliance (Ben and Jerry’s
Heath Bar Crunch ice cream), or under the existing brand name (Campbell’s tomato soup,
chicken noodle soup, etc.). The current research studies the latter type of product line
extensions. As a strategy, they include conducting relatively minor changes to the focal
product, such as changing flavors, colors, packages, or sizes. Higher-quality line
extensions even enhance the evaluation and perception of the parent brand (Heath,
DelVecchio, and McCarthy 2011). Previous studies find that parent brand’s concept along
with market share, firm size, marketing competences, and branding strategy has a
significant effect on line extension success (Kirmani et al. 1999; Reddy et al. 1994).
Specifically, brands with symbolic concepts carrying associations such as prestige, group
membership, self-identification, and image lead to more successful line extensions (Reddy
et al. 1994). Building on the existing line extension literature and schema modification
theory, we investigate the effects of parent brand concept, whether the brand has a core
category concept or a modified category concept, on line extension success.
24
Texas Tech University, Omer Topaloglu, August 2013
Though conceptually related, brand extensions and line extensions are essentially
two different strategies. Line extensions refer to “the use of an established brand for a new
offering in the same product class or category” (Reddy et al. 1994). Therefore, the
categorization effects observed in brand extensions are not expected in line extensions
(Lee, Lee, and Kamakura 1996). The categorization theory posits that close category
extensions are evaluated more favorably. If this sentiment stayed valid in line extensions,
they should have been all successful as all line extensions occur in the same product
category. Yet, in reality we observe many failed line extensions confirming that
consumers do not judge line extensions with the typical categorization process. Instead,
typicality judgments determined by family resemblance, attribute structure, or frequency
of instantiation (Loken and Ward 1990) play a more salient role predicting line extension
success. Lee et al. (1996) finds a negative relationship between perceived typicality,
defined as "the degree to which an item is perceived to represent a category"(Loken and
Ward 1990; Rosch and Mervis 1975), and line extension evaluations. That is, an atypical
line extension is evaluated more favorably than a typical line extension. These results are
also explained by the schema theory because an atypical line extension working as
incongruent information to the category schema affects people’s memory and evaluative
judgments (Lee et al. 1996; Sujan and Bettman 1989). Then, the question becomes how
the marketing managers may influence these judgments by developing brands with
modified category concepts.
As per the schema modification theory perspective, a modifier may either alter the
conceptual schema of a head noun by adding new dimensions to it or simply affect the
25
Texas Tech University, Omer Topaloglu, August 2013
salience or the intensity of an existing dimension (Murphy 1990). For instance, since car
already has a color dimension in its conceptual schema, modifying it with red (red car)
would not trigger as much cognitive associations as modifying it with horse (horse car),
yet it increases the intensity of the way color dimension is perceived. Therefore, different
than a brand extension, a line extension is, in a way, a conceptual modification eliciting a
subtle change in the conceptual schema of the head noun. In other words, there are two
specified consecutive conceptual modifications here. First, firms introduce brands with
modified category concepts rather than core category concepts; then, extension itself is a
conceptual modification (Schmitt and Dube 1992), which causes more subtle changes to
the schema in the case of line extensions than it does in brand extensions. When a brand
has a modified category concept and its conceptual schema has already been altered; this
situation causes a bearing on its possible line extensions. Especially for a schemacongruent atypical line extension, the modifier will help form the cognitive associations,
which lacks when a brand with core category concept launches such extensions. On the
other hand, for typical line extension, brands with core category concepts will receive
better evaluations because of the congruence effects of typicality on line extension
evaluations. Therefore, it is proposed that:
H2: Brands with modified (core) category concepts will receive more favorable
evaluations, when launching atypical (typical) line extensions, than brands with core
(modified) category concepts.
26
Texas Tech University, Omer Topaloglu, August 2013
3.3. Competition and Brand Concept
Dynamics of competition have been heavily researched in multiple disciplines
ranging from biology (Whittaker 1965), sociology (Burt 1992), economics (Stigler 1957;
Schumpeter 1934), and strategic management (Barney 1991; Porter 1980; Prahalad and
Hamel 1990) to marketing (Hunt and Morgan 1995; Hunt 2000). Not surprisingly, the
basic principle of competition is consistent across different disciplines; competitors need
to achieve some sort of sustained competitive advantage to survive extinction (Henderson
1983). Likewise, in a competitive business environment, the role of management is to
recognize, understand, create, select, implement, and modify strategies in order to gain
comparative advantage in firm resources which then lead to better market position and
competitive advantage (Hunt 2010). Brands, as expressed earlier, are among these firm
resources and a source of competitive advantage when they present higher equity than
those of the competition.
Firms acquire, develop, nurture, and leverage effectiveness-enhancing portfolio of
high-equity brands (Hunt 2010). Once a desired level of brand equity is reached, firms, as
a growth strategy, launch brand and line extensions to leverage their comparative
advantage of brand equity in different market segments. Competition essentially takes
place in these relatively demand-homogeneous market segments. The market segment
into which the brand is extended is a new battle ground for the firm, a competitor that now
has something that a new competitor in that market segment does not have, the leverage of
27
Texas Tech University, Omer Topaloglu, August 2013
the brand equity carried over as a result of the extension. The known dynamics of a
competitive environment apply to this market segment and the firms adjust accordingly.
According to the neoclassical economics, perfect competition in a market based
economy results in a general equilibrium state where none of the competitors/firms are
able to make any changes to affect the optimum, Walrasian equilibrium point unless an
environmental factor disequilibrates it (Schumpeter 1954). In other words, once the
market reaches the equilibrium state, firms are not able to innovate and/or change prices,
quantity of their products, or any other strategy. It is considered that even in dynamic,
noncooperative game theoretic situations that involve sequential multi-person decision
making and conflict of interest, one particular uniformly perfect equilibrium point can be
selected (Harsanyi and Selten 1988). In reality, this ‘ideal’ state, a Pareto optimum point,
can never be reached as competition is a dynamic and a never-ending process.
Competition is a constant struggle among firms, including counter-maneuvers for a better
market position and strategic decision making involves managing the trade-offs that result
from this process.
In the marketing literature, some scholars have investigated the extension strategy
in a competitive domain. For instance, Milberg et al. (2010) study the role of competition
in brand extensions and find that the effect of category fit on extension evaluations is
attenuated at the presence of familiar competitive brands. Further, Kumar (2005a; 2005b)
also looks into the competitive aspect of brand extensions and studies brand
counterextensions, defined as “a brand extension that is launched into Category A by
28
Texas Tech University, Omer Topaloglu, August 2013
Brand 2 that belongs to Category B in a reciprocal direction to a launch of a previous
extension into Category B by Brand 1 that belongs to Category A.” The results of these
studies show that a successful brand extension may result in a loss by enhancing the
evaluation of brand counterextensions, a competitive reaction. In more general terms,
existing research on brand extension sequence suggests that whether they are from the
parent company or a competitor, previous extension outcomes affect how consecutive
extensions in same product categories are perceived (Keller and Aaker 1992; Kumar
2005a).
This dissertation looks into the relationship between brand concept and extension
strategy. Brand concept signals how a market offering matches the needs of a specific
market segment better than those of the competition. As argued in the previous sections,
it might be beneficial in the case of certain brand and line extensions. In other words,
developing a brand with a modified category concept that increases the success rate of
incongruent brand extension may be a novel and successful strategy when competing
against brands with core category concepts. However, competition is a constant struggle
and competitors always try to advance their market positions. The brand with a core
category concept may feasibly launch a product line extension to nullify the advantages of
the brand with a modified category concept has.
For instance, assume that an organic soup brand X is more successful in launching
incongruent brand extensions (e.g. cookies) than, say Campbell’s Soup, a soup brand with
a core category concept. As a competitive reaction, Campbell’s Soup may launch an
29
Texas Tech University, Omer Topaloglu, August 2013
organic soup product line extension first, and then potentially launch the incongruent
brand extension (i.e.: Campbell’s Cookies) as successfully as the organic soup brand X
with the modified category concept. Although this is a plausible strategic move and
probably provides better results than not launching the in-between line extension at all,
developing a brand concept is a matter of process in which the necessary associations
need time and effort to form (Park et al. 1986). Therefore, a brand with modified category
concept should still provide a better base in terms of launching incongruent brand
extensions (Table 2). It is proposed that:
H3: When extending into less similar product categories, brands with core
category concepts will receive less favorable evaluations than brands with modified
category concepts, even if they launch a congruent product line extension first.
30
Texas Tech University, Omer Topaloglu, August 2013
Table 2: Proposed Hypotheses
Brands with modified (core) category concepts will receive more
H 1:
favorable evaluations, when extending into less (more) similar product
categories, than brands with core (modified) category concepts.
Brands with modified (core) category concepts will receive more
H 2:
favorable evaluations, when launching atypical (typical) line extensions, than
brands with core (modified) category concepts.
When extending into less similar product categories, brands with core
category concepts will receive less favorable evaluations than brands with
H 3:
modified category concepts, even if they launch a congruent product line
extension first.
31
Texas Tech University, Omer Topaloglu, August 2013
CHAPTER 4: THE ROLE OF BRAND CONCEPT IN BRAND
EXTENSIONS
This chapter investigates the focal proposed effect, the interaction between the
category similarity and brand concept, with two consecutive experiments preceded by two
pretests. These two experiments are conducted with two different base product categories,
soups and shoes, different controls variables, and administration modes in order to boost
the validity of the findings. The study 1A was administered online and the study 1B was a
paper-pencil survey administered in a laboratory environment. These administration
modes complement each other. Paper-pencil surveys present some administration burden,
yet higher control; online surveys are more functional, but suffer from lower response
rates. Also, the experiments differed in terms of modifier relevance to find out whether the
proposed cognitive process is only observed when the modification is relevant to the
extension categories. The theory suggests that as long as the modification is strong enough
to cause a schema alteration, the proposed effect should be apparent, regardless of the
modifier relevance. Finally, the experiments had different dependent variables. The two
most commonly used dependent variables in the brand extension literature are extension
evaluation and purchase intention. In the study 1A, the former is used; in the study 1B, the
latter is used.
32
Texas Tech University, Omer Topaloglu, August 2013
4.1. Pretests
In the first pretest, we identified the close and far extension categories for soups
and shoes. We chose 34 product categories (for the entire list, see Appendix A) to reflect
the goods purchased by our sample, 42 college students at a major U.S. university. The
subjects were asked to rate category similarity of soups and shoes with 21 other product
categories on a 7-point scale (1 = “not at all similar,” and 7 = “very similar”). As a result,
broths and cookies were chosen as the similar and dissimilar extension categories for
soups respectively (Mbroths = 5.16, Mcookies = 2.38); likewise boots and bed linens were
chosen as similar and dissimilar extension categories for shoes (Mboots = 6.07, Mlinens =
1.31). In the second pretest, the modifier relevance for the proposed brand extensions is
idetified. 18 graduate students were given the instructions, in part, read:
“Some brand characteristics are more “relevant” to the product categories than others. For
example, speed is very relevant to race cars, but not at all to baby strollers. One can imagine a
stroller that goes faster than others, yet it is not a relevant characteristic of strollers.”
The subjects were then asked to rate the relevance of six modifiers across six
product categories (soups, broths, cookies and shoes, boots, bed linens). As a result, we
chose one relevant and one irrelevant modifier for both product categories; “Chinese”
was picked as the relevant category modifier for soups (Msoups = 5.1, Mbroths = 4.8, Mcookies
= 4.1) and “bio-degradable” was picked as the irrelevant category modifier for shoes
(Mshoes = 1.8, Mboots = 1.6, Mlinens = 2.3; 1 = “not relevant at all,” and 7 = “very relevant”).
33
Texas Tech University, Omer Topaloglu, August 2013
4.2. Method
4.2.1. Study 1A
In the first experiment, 98 college students were randomly assigned to
experimental conditions in return for bonus class credit. The experiment included a 2
(brand concept: core versus modified category concept) × 2 (extension category: similar
versus dissimilar) between-subjects design. The subjects were provided with a scenario
inquiring them to share their opinions on the extension plans of a fictitious Asian
company, TANG. In the control group, TANG was presented as a successful soup brand
that has plans to extend into broths and cookies. In the treatment group, TANG was
introduced as a Chinese soup company that plans on launching broths and cookies.
Fictitious brand names are preferred for this study because the nature of the study requires
testing specific conceptual modifications that lend themselves in various product
categories. Isolating these effects with real brand names seems quite challenging. The
questionnaire included 7-point semantic differential scale items used previously in the
brand extension literature. The dependent variable was extension evaluation including
three items (1 = “bad,” and 7 = “good”; 1 = “unfavorable” and 7 = “favorable”; 1 =
“negative attitude” and 7 = “positive attitude”) that were collapsed (α = 0.85). Seven
surveys had to be discarded because of the missing values; final sample has 91
respondents. The questionnaire also included possible covariate variables, such as
knowledge of the product categories, gender, and familiarity with and attitude towards the
34
Texas Tech University, Omer Topaloglu, August 2013
products, modifiers, and brand names. All factors in both experiments were
counterbalanced and rotated when appropriate.
4.2.2. Study 1B
In the second experiment, 50 college students were randomly assigned to
experimental conditions with a 2 (brand concept: core versus modified category concept)
× 2 (extension category: similar versus dissimilar) mixed design. The brand concept is
manipulated between-subjects and extension category within-subjects. The subjects were
provided with a similar scenario on the extension plans of a fictitious European company,
PODKOWA. PODKOWA was presented as a successful shoe brand (versus biodegradable shoe brand) that has plans to extend into boots and bed linens. In order to
strengthen the manipulation, the subjects were provided with a PODKOWA logo and
generic pictures of shoes, boots, and linens, which can be found in Appendix B. The
questionnaire included 7-point semantic differential scale items used previously in the
brand extension literature. The dependent variable was purchase intentions including two
items: (1) "If you are in the market for a (bio-degradable) boot, how likely are you to
consider buying a PODKOWA (bio-degradable) boot?", 1 = “very unlikely,” and 7 =
“very likely”; (2) "A typical customer who buys (bio-degradable) boots in the market,
how likely is he or she to consider buying PODKOWA (bio-degradable) boot?", 1 = “very
unlikely” and 7 = “very likely”) that were collapsed (αboots = 0.77; αlinens = 0.79). The
questionnaire also included possible covariate variables, such as knowledge of the product
categories, gender, and familiarity with and attitude towards the products, modifiers, and
35
Texas Tech University, Omer Topaloglu, August 2013
brand names. All factors in both experiments were counterbalanced and rotated when
appropriate.
4.3. Results
Hypothesis 1 predicted that a brand with a modified category concept receives
more favorable evaluations than a brand with core category concept when extending into
far product categories. H1 also predicted that a brand with a core category concept
receives more favorable evaluations than a brand with modified category concept when
extending into close product categories. Consistent with these predictions, close category
extensions were rated significantly higher than far category extensions for brands with
core category concepts (Mbroths = 4.45, Mcookies: 3.8; Mboots = 4.28, Mlinens: 3.62) but vice
verse for brands with modified category concepts (Mbroths = 3.91, Mcookies: 4.43; Mboots =
3.27, Mlinens: 3.89) in both experiments. Figure 1 and figure 2 present these results.
4.3.1. Study 1A
The manipulation checks showed that neither fictitious brand name (F (0.01), p =
0.941) nor gender (F (1.81), p = 0.182) has a significant effect on the extension
evaluations. Further, category similarity perceptions were consistent with the first pretest
(Mbroths = 4.66, Mcookies = 2.76, p < .0001; 1 = “not at all similar,” and 7 = “very similar”).
A basic ANCOVA model is used to test the interaction between extension category
similarity and brand concept. The interaction term was significant (F (5.97), p = 0.0167).
That is, when the brand has a modified category concept (i.e. Chinese soups), the far
36
Texas Tech University, Omer Topaloglu, August 2013
category extension yielded better results than close category extension. On the other hand,
when the parent brand has a core category concept, the close category extension yielded
better results than far category extension. This result supports H1.
4.3.2. Study 1B
The manipulation checks showed that fictitious brand name (Fshoes (0.51), p =
0.479) did not have a significant effect on the extension evaluations (F (0.21), p = 0.647).
The effect of familiarity with bio-degradable products was also insignificant (F (2.01), p
= 0.16). Further, category similarity perceptions were consistent with the first pretest
(Mboots = 5.48, Mlinens = 2.00; 1 = “not at all similar,” and 7 = “very similar”). A
MANOVA model is used to test the interaction between extension category similarity and
brand concept. The interaction term was significant (F = 5.95, p = 0.0186). That is, when
the brand has a modified category concept (i.e. Bio-degradable shoes), the far category
extension yielded better results than close category extension. On the other hand, when the
parent brand has a core category concept, the close category extension yielded better
results than far category extension. This result also supports H1. In addition, confirming
the previous findings in the literature, the main effect of category similarity was
significant (F = 5.15, p = 0.0280). That is, close category extensions results in better
extension evaluations than far category extensions.
37
Texas Tech University, Omer Topaloglu, August 2013
Soups
Extension Evaluation
4.6
4.3
CCC: Soups
MCC: Chinese Soups
4
3.7
Close: Broths
Far: Cookies
Extension Category
Figure 1: Study 1A – Close versus Far Extension Evaluations
Extension Evaluation
4.5
Shoes
4
CCC: Shoes
MCC: Bio-degradable
Shoes
3.5
3
Close: Boots
Far: Bed Linens
Extension Category
Figure 2: Study 1B – Close versus Far Extension Evaluations
38
Texas Tech University, Omer Topaloglu, August 2013
4.4. Discussion
The results suggest that the effect of category similarity on extension evaluation is
moderated by brand concept. When a brand has a core category concept, close category
extensions yield better results; when a brand has a modified category concept, far category
extensions yield better results. The effect is robust to different product categories and
modifier relevance. Two competing cognitive processes are evident in evaluating brand
extensions. That is, traditional categorization process is dominated by the modification
matching process when a brand with a modified category concept extends into far product
categories.
39
Texas Tech University, Omer Topaloglu, August 2013
CHAPTER 5: THE ROLE OF BRAND CONCEPT IN LINE
EXTENSIONS
Since line extensions are launched into the same product category, consumer
perceptions are influenced by typicality judgments rather than categorization effects. In
this section, the interaction between the perceived typicality of the line extension and
brand concept in various contexts is investigated. Reminiscent of the previous chapter,
two consecutive experiments are conducted. These two experiments differ in terms of the
medium of the experiment, type of the modifier, and type of the proposed line extensions.
The first experiment was a paper-pencil survey on the line extension plans of a soup
company. For the brand concept modifier, organic was picked as it is one of the most
popular modifiers in today's retail business. As far as the extension product lines, two
ingredient based products that differ in terms of typicality were picked. The second
experiment was an online study, again, on the line extension plans of a fictitious soup
company. This time, the modifier and the line extensions were based on country of origins
concepts.
5.1. Pretest
The third pretest was conducted to determine the typicality perceptions of the
extension product lines. 70 undergraduate students from a major US university
participated in the pretest. The subjects were asked to rate the typicality of possible line
40
Texas Tech University, Omer Topaloglu, August 2013
extension in the soup product category. The typicality scale was adopted from Loken and
Ward (1990) and included three items, exemplar goodness, typicality, and
representativeness on 7-point scales (1 = “extremely poor example,” and 7 = “extremely
good example”; 1 = “very bad representative” and 7 = “very good representative”; and 1 =
"very atypical" and 7 = "very typical"). Based on the results of the pretest, for ingredient
based line extensions, tomato soups and curried beef soups were chosen (Mtomato = 5.06;
Mcurried beef = 3.01); for country of origin based line extensions, Mexican soups and Thai
soups were chosen (MMexican = 4.84; MThai = 3.08) as the typical and atypical line
extensions.
5.2. Method
5.2.1. Study 2A
79 undergraduate students participated in the first experiment in return for bonus
class credit. They were randomly assigned to the experimental conditions. The laboratory
experiment included 2 (brand concept: core or modified) × 2 (line extension typicality:
typical or atypical) mixed design. Brand concept was manipulated between-subjects and
line extension typicality was manipulated within-subject. All factors were
counterbalanced where appropriate. The subjects were provided with a scenario inquiring
them to share their opinions on the extension plans of a fictitious European soup company,
TEFRA. In the control group, TEFRA was presented as a successful soup brand that has
plans to introduce two new product lines, tomato and curried beef soups. In the treatment
41
Texas Tech University, Omer Topaloglu, August 2013
group, TEFRA was introduced as an organic soup company that plans on introducing the
same product lines. Following the scenarios, the subjects were asked to provide their
evaluations on the possible extensions. 12 surveys were discarded from the analysis
because the respondent indicated that s/he would never eat soups. The final sample had 67
respondents. The questionnaire included 7-point Likert-scale items used previously in the
brand extension literature. The dependent variable was extension evaluation including two
items: (1) You think the product will be evaluated, 1 = “very badly,” and 7 = “very well”;
(2) You think the product will be well received, 1 = “strongly disagree” and 7 = “strongly
agree”) that were collapsed (αtomato = 0.76; αcurried beef = 0.70). The questionnaire also
included possible covariate variables, such as attitude towards the fictitious brand name,
gender, perceived typicality of, consumer knowledge of, and consumer attitude towards
soups, organic foods, tomato soups, and curried beef soups (The questionnaire can be
found in Appendix C).
5.2.2. Study 2B
To validate the results of the first experiment, the same hypothesis was tested in a
different experiment with small changes. 77 undergraduate students participated in this
online experiment in return for bonus class credit. They were randomly assigned to the
experimental conditions. The experiment included 2 (brand concept: core or modified) × 2
(line extension typicality: typical or atypical) mixed design. Brand concept was
manipulated between-subjects and line extension typicality was manipulated withinsubject. All factors were counterbalanced where appropriate. Seven surveys were
42
Texas Tech University, Omer Topaloglu, August 2013
excluded from the analysis due to the missing values and four surveys were discarded
because the respondent indicated that s/he would never eat soups. The final sample had 66
respondents. The subjects were provided with a scenario inquiring them to share their
opinions on the extension plans of a fictitious Asian soup company, TANG. In the control
group, TANG was presented as a successful soup brand that has plans to introduce two
new lines Mexican and Thai soups. In the treatment group, TANG was introduced as a
Chinese soup company that plans on introducing the same product lines. Following the
scenarios, the subjects were asked to provide their evaluations on the possible extensions.
The questionnaire included 7-point Likert-scale items used previously in the brand
extension literature. The dependent variable was purchase intentions including two items:
(1) "If you are in the market for a Mexican soup, how likely are you to consider buying a
TANG Mexican soup?", 1 = “very unlikely,” and 7 = “very likely”; (2) "A typical
customer who buys Mexican soups in the market, how likely is he or she to consider
buying TANG Mexican soup?", 1 = “very unlikely” and 7 = “very likely”) that were
collapsed (αMexican = 0.81; αThai = 0.78). The questionnaire also included possible covariate
variables, such as attitude towards the fictitious brand name, gender, consumer knowledge
of, and consumer attitude towards soups. The Appendix C includes the listing of the
measures and the scenario used in the experiments.
5.3. Results
Hypothesis 2 predicted that a brand with a modified category concept receives
more favorable evaluations than a brand with core category concept when launching
43
Texas Tech University, Omer Topaloglu, August 2013
atypical line extensions. H2 also predicted that a brand with a core category concept
receives more favorable evaluations than a brand with modified category concept when
extending into typical product categories. Consistent with these predictions, typical
extensions were rated significantly higher than atypical extensions for brands with core
category concepts (Mtomato = 4.85, Mcurriedbeef: 3.69; MMexican = 4.05, MThai: 4.78) but vice
verse for brands with modified category concepts (Mtomato = 4.58, Mcurriedbeef: 4.24;
MMexican = 3.87, MThai: 4.90) in both experiments. Figure 3 and figure 4 present these
results.
5.3.1. Study 2A
The manipulation checks showed that neither fictitious brand name (F (0.44), p =
0.511) nor gender (F (1.18), p = 0.2833) has a significant effect on the extension
evaluations. The effect of attitude towards tomato soups (F (0.45), p = 0.505), curried
beef soups (F (0.58), p = 0.449), and organic products (F (0.07), p = 0.792) were also
insignificant. A MANOVA model is used to test the interaction between extension
category similarity and brand concept. The interaction term was significant (F (4.04), p =
0.049). That is, when the brand has a modified category concept (i.e. organic soups), the
atypical extension yielded better results than typical extension. On the other hand, when
the parent brand has a core category concept, the typical extension yielded better results
than atypical extension. This result supports H2.
44
Texas Tech University, Omer Topaloglu, August 2013
5.3.2. Study 2B
A MANOVA model is used to test the interaction between extension category
similarity and brand concept. The interaction term was significant (F (11.54), p =
0.0012). That is, when the brand has a modified category concept (i.e. Chinese soups), the
atypical extension yielded better results than typical extension. On the other hand, when
the parent brand has a core category concept, the typical extension yielded better results
than atypical extension. This result supports H2. In addition, confirming the previous
findings in the literature, the main effect of typicality was significant (F = 10.47, p =
0.002). That is, typical line extensions result in better extension evaluations than atypical
line extensions.
5.4. Discussion
The results suggest that the effect of typicality on line extension evaluation is
moderated by brand concept. When a brand has a core category concept, typical line
extensions yield better results; when a brand has a modified category concept, atypical
line extensions yield better results. The effect is robust to different line extensions and
modifier relevance. Similar to the brand extensions, two competing cognitive processes
are evident in evaluating line extensions. That is, traditional typicality process is
dominated by the modification matching process when a brand with a modified category
concept launches atypical line extensions.
45
Texas Tech University, Omer Topaloglu, August 2013
Extension Evaluation
5
4.5
CCC: Soups
MCC: Organic Soups
4
3.5
Typical: Tomato
Atypical: Curried Beef
Extension Category
Figure 3: Study 2A – Typical versus Atypical Line Extension
Evaluations
Extension Evaluation
5
4.5
CCC: Soups
MCC: Chinese Soups
4
3.5
Typical: Mexican
Atypical: Thai
Extension Category
Figure 4: Study 2B – Typical versus Atypical Line Extension
Evaluations
46
Texas Tech University, Omer Topaloglu, August 2013
CHAPTER 6: INTRODUCING A COMPETITIVE MOVE
6.1. Method
The purpose of the third study was to introduce a competitive move in the context
of dissimilar brand extensions. 103 college students were randomly assigned to three
experimental conditions (core category concept, core category concept launching a
congruent in-between line extension, and modified category concept). The brand concept
was manipulated using a scenario on the dissimilar brand extension plans (i.e. bed linens)
of a fictitious European shoe company, PODKOWA. In the control group (1),
PODKOWA shoe company launched bed linens; in the first treatment group (2), the
company initially launched stain-resistant shoes and then planned on marketing stainresistant bed linens; and finally in the second treatment group (3), the stain-resistant shoe
company launched stain-resistant bed linens. Stain-resistant is picked as a modifier,
which was relevant to both product categories according to the second pretest (Mshoes =
4.8; Mlinens = 5.2). The dependent variable, extension evaluation, contained two items (1 =
"bad" and 7 = "good"; 1 = "unfavorable" and 7 = "favorable"; that were collapsed (α =
0.81). The questionnaire included covariate variables similar to previous experiments.
47
Texas Tech University, Omer Topaloglu, August 2013
6.2. Results
H3 predicted that if brands with core category concepts launch a congruent line
extension before launching a dissimilar brand extension, they should receive better results
than a brand with core category concept launching a dissimilar brand extension; but they
should receive results not as good as those received by a brand with modified category
concept launching a dissimilar brand extension. The mean values of the three mentioned
levels of the brand concept factor were consistent with the hypothesis (M1 = 4.26, M2 =
4.74, and M3 = 5.08). First an ANCOVA model is ran with the three levels and H0 was
rejected (F (2,100) = 7.45, p < 0.001). Then, the individual levels are paired and
compared separately. The dissimilar brand extensions in the first treatment group were
evaluated more favorably than those in the control group (F (1,59) = 4.12, p = 0.046), yet
not as good as those in the second treatment group (F(1,71) = 2.92, p = 0.091). Therefore,
H3 was supported.
6.3. Discussion
The results support the initial notion that a distinct cognitive process is triggered
when brands with modified category concepts launches category extensions. Consumers
perceive distant category extensions more favorably when they are initiated by brands
with modified category concepts. And, firms develop these concepts spending a great deal
of time and money. The competing brands with core category concepts may counter with
48
Texas Tech University, Omer Topaloglu, August 2013
a congruent line extension. Yet, this strategic maneuver does not offset the advantages of
having a modified category concept in the short run.
49
Texas Tech University, Omer Topaloglu, August 2013
CHAPTER 7: GENERAL DISCUSSION
7.1. Theoretical Implications
Most of the dual processing theories in the psychology literature including
elaboration likelihood model (Petty and Cacioppo 1986) or heuristic systematic model
(Chaiken and Maheswaran 1994) argue that there are two distinct cognitive processes in
the human cognition dealing with persuasion, memory, judgment, or attitudes; one is a
fast and associative information-processing based on low-effort heuristics, and the other is
a slow rule-based processing based on high-effort systematic reasoning (Chaiken and
Trope 1999). In essence, what all these dual-process theories so passionately argue is not
the number of processes that take place in human psyche; it is a way of stating that there
are more than just one cognitive process that become active evaluating new information
(Gilbert 1999). The focal argument of this dissertation lines up with this tradition of
research and extends it into a novel domain, brand and line extensions. The results provide
strong evidence that brand and line extension evaluations occur as a result two different
cognitive processes. This process is triggered by the structure of the parent brand’s
conceptual schema. When a brand has a core category concept, that is, its brand
associations are aligned with the core product category, the traditional categorization
process takes effect and the close category extensions yield better results than far category
extensions. This path is reminiscent of the fast, associative information-processing based
50
Texas Tech University, Omer Topaloglu, August 2013
on low-effort heuristics that has been featured in the psychology literature (Smith and
DeCoster 1999, p.324). On the other hand, when a brand has a modified category concept,
that is, its brand associations are aligned with a specific modification, the modificationmatching process takes over and the far category extensions yield better results than close
category extensions. Similarly, this path is reminiscent of the slow, rule-based
information-processing based on high-effort systematic reasoning that has also been
featured in the psychology literature.
Furthermore, in their highly influential paper, Park et al. (1986) define brand
concept as “a firm-selected brand meaning derived from basic consumer needs.” That is,
firms develop a pre-specified brand concept around a specific product, a product category,
a service, or an idea using various resources and marketing promotion tools. In time,
these strategic efforts blossom into a concept that triggers certain cognitive associations in
consumers’ mind. In cognitive psychology terms, these strategic initiatives yield a
cognitive schema of the brand in consumer’s minds. Therefore, when a brand has a
modified category concept (an organic soup brand), it embodies a schema structure that
inherits the attributes of the initial core concept (a soup brand) as well as carries emergent
attributes. These emergent attributes allow the previously mentioned modificationmatching process yield to extension judgments when the extension category is far. On the
other hand, when the extension category is close, modification-matching process is
dominated by the categorization process and extension evaluation is based on intercategory comparison.
51
Texas Tech University, Omer Topaloglu, August 2013
7.2. Managerial Implications
In an environment where companies are compelled to innovate, brand and line
extensions form a major portion of new product innovation and introduction strategies.
Despite the two decades’ long scrutiny by marketing scholars and practitioners, there are
still some questions; research in this area remains to be of high importance. This
dissertation attempts enhance the understanding of the phenomenon by investigating the
role of human cognition during the evaluation of brand and line extensions. The results
provide guidance for marketing and brand managers planning on developing new brands
and brand concepts as well as launching new product and line extensions and choosing the
appropriate product category to extend. Once a brand concept is developed, it is extremely
difficult to alter. Thus, insights from this research shed light onto how to develop a brand
concept from scratch as certain types of brand concepts allow certain types of brand and
line extensions to be successful.
Put differently, if firms develop a brand with a modified category concept, they
will have more success extending into dissimilar product categories. For instance, starting
a business, a manager decides to market soups and develops a brand concept around the
product through various marketing promotion tools. The theoretical argument suggests
that the manager would be able to launch incongruent brand extensions more successfully
had s/he chosen to flourish a brand concept around organic soups because the concept,
organic, modifies the initial schema of soups creating new slots along the way, which
allows unique cognitive associations for some far stretch brand extensions that are not
52
Texas Tech University, Omer Topaloglu, August 2013
available if the initial soup concept is not modified by organic. In other words, it is better
to launch organic cookies than organic broths if the original brand concept is centered on
organic products. However, when the extension category is very similar to initial product
category, conventional categorization process becomes effective; the proposed
modification effect disappears as the emergent attributes revealed by the conceptual
combination stay unutilized.
7.3. Limitations and Future Directions
This dissertation has some limitations that may be opportunities for future
research. First of all, the analysis is affected by all the caveats related to experimental
methodology. That is, external validity of the findings may be improved. Especially,
future research should study the proposed effects in a retail setting where there is an
abundance of brands with modified category concepts and extensions. During our daily
grocery shopping, we are exposed to many brands with modified category concepts
(organic, gluten-free, vegan etc.). Future studies may benefit from using scanner data.
Another avenue for future research is to develop a modifier typology in the branding
context. Although similar typologies for conceptual modifiers exist in the cognitive
psychology and linguistics literature, branding scholars should undertake a similar
endeavor that would contribute to the theory of brand extensions. For example, scholars
can identify relevance, typicality, abstractness, objectiveness, and complexity of various
modifiers.
53
Texas Tech University, Omer Topaloglu, August 2013
In conclusion, the purpose of this dissertation is to introduce a new perspective to
the brand extension literature and practice. As pointed out by the previous literature,
when marketing managers extend brands into a similar product category, consumers
utilize the typical categorization process and favor the brands with core category concepts.
However, the current research argues that when the extension category is dissimilar, a
different cognitive process, namely modification-matching process, becomes dominant
and consumers utilize the modified category concept associations. Thus, extensions of
brands with modified category concepts appear to be more successful. This study seems
especially beneficial for brand managers in the process of developing a new brand
concept. If the long-term strategy of the firm requires brand to be extendable to various
product categories in the future, firms seem better off developing a brand with a modified
category concept. For example, managers may utilize this strategy when there is a
dominant player in the initial product category and it is extremely hard to gain a large
market share in that category. Finally, this research attempts to inspire future studies that
can benefit from the theory of concepts and the role of brand concept in brand extension
strategy.
54
Texas Tech University, Omer Topaloglu, August 2013
APPENDICES
A. APPENDIX: LIST OF THE PRODUCT CATEGORIES USED
IN PRETEST 1

































Air fresheners
Backpacks
Beer
Belts
Boots
Bracelets
Burgers
Cereals
Chapsticks
Chocolates
Cookies
Deodorants
Flash drives
Jackets
Jeans
Jellies
Ketchups
55
Lamps
Bed linens
Milk
Noodles
Pants
Peanut
Shampoo
Shirts
Shorts
Soap
Socks
Soya patties
Sunglasses
Towels
Watch
Yogurt
Texas Tech University, Omer Topaloglu, August 2013
B. APPENDIX: THE MANIPULATIONS USED IN STUDY 1B
56
Texas Tech University, Omer Topaloglu, August 2013
57
Texas Tech University, Omer Topaloglu, August 2013
C. APPENDIX: QUESTIONNAIRE OF ONE OF THE LINE
EXTENSION STUDIES
Name: ________________________
At the outset, we would like to thank you for agreeing to
participate in this study.
This study is organized by Rawls College of Business, Texas Tech
University in collaboration with TEFRA ® Soup Company and designed to
understand consumer response to certain existing and new products. There
are no right or wrong answers; we are only interested in your opinion.
The study should take about 10 minutes to complete.
(The fictitious logo and the slogan of the company to enforce the
manipulation effect is provided below)
The best for you®
58
Texas Tech University, Omer Topaloglu, August 2013
Please read the following information and answer the set of
questions that follow:
TEFRA® is a European company that produces and markets organic
soups. TEFRA® soups are sold in major grocery stores throughout the
region. For its consumers, TEFRA ® brand name evokes very close
associations with organic foods.
Currently, TEFRA® plans to launch various product line extensions
such as curried beef soups, tomato soups, and chicken soups under the
same brand name. Based on this information, we would like to know your
responses to the following questions regarding the proposed TEFRA ®
products.
Even if you have never tried these products, please provide your
hypothetical judgments. You are not geographically located in the area
but you represent TEFRA®'s target market demographically. That's why
your responses are very important to us.
59
Texas Tech University, Omer Topaloglu, August 2013
1. Are you familiar with the TEFRA ® brand?
No
Yes
If yes, please name some of their products _____________________________
2. Even though you have never tried TEFRA ® curried beef soup,
3. Please rate curried beef soups using the following scales with
respect to the soup product category. For example, for the first
question, if you believe curried beef soup is an extremely good example
of soups, you can circle 7; if you believe curried beef soup is an
extremely poor example of soups, you can circle 1. Use other numbers of
the scale to indicate intermediate judgments.
60
Texas Tech University, Omer Topaloglu, August 2013
4. Please rate curried beef soups on the following scales based on
what you personally think in general.
5. Please answer following questions based on your personal
knowledge.
6. Even though you have never tried TEFRA ® tomato soup,
61
Texas Tech University, Omer Topaloglu, August 2013
7. Please rate tomato soups using the following scales with
respect to the soup product category. For example, for the first
question, if you believe tomato soup is an extremely good example of
soups, you can circle 7; if you believe tomato soup is an extremely poor
example of soups, you can circle 1. Use other numbers of the scale to
indicate intermediate judgments.
8. Please rate tomato soups on the following scales based on what
you personally think in general.
9. Please answer following questions based on your personal
knowledge.
62
Texas Tech University, Omer Topaloglu, August 2013
10. Even though you have never tried TEFRA ® chicken soup,
11. Please rate chicken soups using the following scales with
respect to the soup product category. For example, for the first
question, if you believe chicken soup is an extremely good example of
soups, you can circle 7; if you believe chicken soup is an extremely
poor example of soups, you can circle 1. Use other numbers of the scale
to indicate intermediate judgments.
12. Please rate chicken soups on the following scales based on
what you personally think in general.
63
Texas Tech University, Omer Topaloglu, August 2013
13. Please answer following questions based on your personal
knowledge.
14. Please rate organic foods on the following scales based on
what you personally think.
15. Please answer following questions based on your personal
knowledge.
64
Texas Tech University, Omer Topaloglu, August 2013
16. Please rate soups on the following scales based on what you
personally think.
17. Please answer following questions based on your personal
knowledge.
18. Please answer following questions based on your personal
knowledge.
19. Think about your answers to the 2 nd question. Tell us your
thought process selecting those options.
Thank you for your participation
65
Texas Tech University, Omer Topaloglu, August 2013
REFERENCES
Aaker, A. David and Kevin L. Keller (1990), “Consumer Evaluations of Brand
Extensions,” Journal of Marketing 54, 27-41.
____________ (1996), "Measuring Brand Equity Across Products and Markets,"
California Management Review, Vol. 38, No.3, 102-120.
Aaker, Jennifer L. (1997), "Dimensions of Brand Personality," Journal of
Marketing Research, 34 (August), 347-356.
Ahluwalia, Rohini (2008), “How Far Can a Brand Stretch? Understanding the Role
of Self-Construal,” Journal of Marketing Research 45: 337-350.
AMA Dictionary (2013), "The MASB Common Language Project," (accessed
March 13, 2013), [available at http://www.marketingpower.com].
Arnould, Eric J. and Craig J. Thompson (2005), "Consumer Culture Theory
(CCT): Twenty Years of Research," Journal of Consumer Research, Vol.31, No.4
(March), 868-882.
Barney, Jay (1991), “Firm Resources and Sustained Competitive Advantage,”
Journal of Management, 17 (1), 99-120.
Barsalou, Lawrence W. (1983), “Ad Hoc Categories,” Memory and Cognition
11(3),: 211-227.
66
Texas Tech University, Omer Topaloglu, August 2013
Batra, Rajeev, Peter Lenk, and Michel Wedel (2010), “Brand Extension Strategy
Planning: Empirical Estimation of Brand–Category Personality Fit and Atypicality,"
Journal of Marketing Research, 47, 335-347.
Bhat, Subodh and Srinivas K. Reddy (1998), "Symbolic and Functional
Positioning of Brands," Journal of Consumer Marketing, Vol. 15, No.1, 32.43.
Boush, David A. and Barbara Loken (1991), “A Process-Tracing Study of Brand
Extension Evaluation,” Journal of Marketing Research, 28, 16-28.
Brakus, Josko J., Bernd H. Schmitt, and Lia Zarantonello (2009), "Brand
Experience: What Is It? How Is It Measured? Does It Affect Loyalty?" Journal of
Marketing, Vol. 73 (May), 52-68.
Brander, James A. and Jonathan Eaton (1984), "Product Line Rivalry," American
Economic Review, Vol. 74, No. 3, 323-334
Bristol, Terry (1996), “Consumers' Beliefs Resulting from Conceptual
Combinations: Conjunctive Inferences about Brand Extensions,” Psychology and
Marketing, 13, 571-589.
Broniarczyk, Susan M. and Joseph W. Alba (1994), “The Importance of the Brand
in Brand Extension,” Journal of Marketing Research, 31, 214-228.
Burt, Ronald S. (1992), Structural Holes: The Social Structure of Competition.
First Harvard University Press.
67
Texas Tech University, Omer Topaloglu, August 2013
Chaiken, Shelly and Durairaj Maheswaran (1994), “Heuristic Processing Can Bias
Systematic Processing: Effects of Source Credibility, Argument Ambiguity, and Task
Importance on Attitude Change,” Journal of Personality and Social Psychology, Vol 66.
No.3, 460-473.
____________ and Yaacov Trope (1999), Dual-Process Theories in Social
Psychology. New York: The Guilford Press.
Czellar, S. (2003), “Consumer Attitude toward Brand Extensions: An Integrative
Model and Research Propositions,” International Journal of Research in Marketing, Vol.
20 (March), 97-115.
Dacin, Peter A. and Daniel C. Smith (1994), “The Effect of Brand Portfolio
Characteristics on Consumer Evaluations of Brand Extensions,” Journal of Marketing
Research 31,: 229-242.
Day, George S., Allan D. Shocker, and Rajendra K. Srivastava (1979), “CustomerOriented Approaches to Identifying Product-Markets,” Journal of Marketing, Vol. 43, No.
4, pp. 8-19.
Desai, Kalpesh Kaushik and Kevin Lane Keller (2002), "The Effects of Ingredient
Branding Strategies on Host Brand Extendibility," Journal of Marketing, Vol. 66, No. 1
(Jan.), 73-93.
Dixit, Avinash and Joseph Stiglitz (1977), "Monopolistic Competition and
Optimum Product Diversity," American Economic Review, June, 67, 297-308.
68
Texas Tech University, Omer Topaloglu, August 2013
Duncan, T., (2002), IMC: Using Advertising & Promotion to Build Brands.
McGraw-Hill, New York.
Estes, Zachary and Thomas B. Ward (2002), “The Emergence of Novel Attributes
in Concept Modification,” Creativity Research Journal 14: 149-156).
Fernald, Anne, Kirsten Thorpe, and Virginia A. Marchman (2010), “Blue Car, Red
Car: Developing Efficiency in Online Interpretation of Adjective–Noun Phrases,”
Cognitive Psychology 60,: 190-217.
Frege, G. (1892/1966) On Sense and Reference. M. Black (Tr.). In P. Geach and
M. Black (Eds.), Translations from the Philosophical Writings of Gottlob Frege (pp. 5678). Oxford: Blackwell.
Fournier, Susan M. (1998), "Consumers and Their Brands: Developing
Relationship Theory in Consumer Research," Journal of Consumer Research, 24 (March)
343-373.
Gilbert, Daniel T. (1999), “What the Mind’s Not,” in Dual-Process Theories in
Social Psychology, Shelly Chaiken and Yaacov Trope (eds), New York, NY: The Guilford
Press, 3-11.
Grohmann, Bianca (2009), "Gender Dimensions of Brand Personality," Journal of
Marketing Research, Vol. 46, No. 1, 105-119.
69
Texas Tech University, Omer Topaloglu, August 2013
Gurhan-Canli, Zeynep and Durairaj Maheswaran (1998), “The Effects of
Extensions on Brand Name Dilution and Enhancement,” Journal of Marketing Research,
35: 464-473.
Harsanyi, John C. and Reinhard Selten (1988), A General Theory of Equilibrium
Selection in Games, Vol. 1, MIT Press: Cambridge, MA.
Heath, Timothy B., Devon DelVecchio, and Michael S. McCarthy (2011), “The
Asymmetric Effects of Extending Brands to Lower and Higher Quality,” Journal of
Marketing 75,: 3-20.
Henderson, Bruce D. (1983), “The Anatomy of Competition,” Journal of
Marketing, 47, (Spring), 7-11.
Hunt, Shelby D. (2000), A General Theory of Competition: Resources,
Competences, Productivity, Economic Growth. Thousand Oaks, CA: Sage Publications.
Hunt, Shelby D. (2006), “On Reforming Marketing: For Marketing Systems and
Brand Equity Strategy,” in Does Marketing Need Reform? Jagdish N. Sheth and Rajendra
S. Sisodia, eds., Armonk, NY: M.E. Sharpe, 69-77.
Hunt, Shelby D. (2010), Marketing Theory: Foundations, Controversy, Strategy,
Resource-Advantage Theory. New York: M. E. Sharpe.
Hunt, Shelby D. and Robert M. Morgan (1995), “The Comparative Advantage
Theory of Competition,” Journal of Marketing, Vol. 59,(April), 1-15.
70
Texas Tech University, Omer Topaloglu, August 2013
John, Deborah Roedder, Barbara Loken, Kyeongheui Kim, and Alokparna Basu
Monga (2006), "Brand Concept Maps: A Methodology for Identifying Brand Association
Networks," Journal of Marketing Research, Vol. 43, No. 4 (Nov.), 549-563.
Keller, Kevin L. (1993), "Conceptualizing, Measuring, and Managing CustomerBased Brand Equity," Journal of Marketing, Vol.57, No.1, 1-22.
Keller, Kevin L. and David A. Aaker (1992), “The Effects of Sequential
Introduction of Brand Extensions,” Journal of Marketing Research 29,: 35-50.
Keller, Kevin L., B. Sternthal, and Alice Tybout (2002), "Three Questions You
Need to Ask About Your Brand," Harvard Business Review, 80 (September), 80-89.
Keller, Kevin L. and Donald R. Lehmann (2006), “Brands and Branding: Research
Findings and Future Priorities,” Marketing Science, Vol. 25, 6, 740-759.
Kirmani, Amna, Sanjay Sood, and Sheri Bridges (1999), “The Ownership Effect in
Consumer Responses to Brand Line Stretches,” Journal of Marketing, Vol. 63, No. 1
(Jan., 1999), pp. 88-101.
Klink, Richard R. and Daniel C. Smith (2001), “Threats to the External Validity of
Brand Extension Research,” Journal of Marketing Research 38: 326-335.
Kumar, Piyush (2005a), “Brand Counterextensions: The Impact of Brand
Extension Success versus Failure,” Journal of Marketing Research, Vol. 42 (May), 183194.
71
Texas Tech University, Omer Topaloglu, August 2013
Kumar, Piyush (2005b), “The Impact of Cobranding on Customer Evaluation of
Brand Counterextensions,” Journal of Marketing, Vol. 69 (July), 1-18.
Lane, Vicki R. (2000), “The Impact of Ad Repetition and Ad Content on
Consumer Perceptions of Incongruent Extensions,” Journal of Marketing 64,: 80-91.
Laurence, Stephen and Eric Margolis (1999), “Concepts and Cognitive Science,”
in E. Margolis & S. Laurence (eds.) Concepts: Core Readings, Cambridge, Mass.: MIT
Press..
Lee, Moonkyu, Jonathan Lee, and Wagner A. Kamakura (1996) ,"Consumer
Evaluations of Line Extensions: a Conjoint Approach", in NA - Advances in Consumer
Research, Volume 23, eds. Kim P. Corfman and John G. Lynch Jr., Provo, UT :
Association for Consumer Research, Pages: 289-295.
Locke, J. (1690/1975), An Essay Concerning Human Understanding, New York:
Oxford University Press.
Loken, Barbara and James Ward (1990), "Alternative Approaches to
Understanding the Determinants of Typicality," Journal of Consumer Research, Vol.17,
111-125.
Milberg, Sandra J., Francisca Sinn, and Ronald C. Goodstein (2010), “Consumer
Reactions to Brand Extensions in a Competitive Context: Does Fit Still Matter?,” Journal
of Consumer Research 37,: 543.
72
Texas Tech University, Omer Topaloglu, August 2013
Monga, Alokparna B. and Deborah R. John (2010), “What Makes Brands Elastic?
The Influence of Brand Concept and Styles of Thinking on Brand Extension Evaluation,”
Journal of Marketing 74,: 80-92.
Monga, Alokparna B. and Zeynep Gürhan-Canli (2012), "The Influence of Mating
Mind-Sets on Brand Extension Evaluation," Journal of Marketing Research, Vol. 49, No.
4, pp. 581-593.
Muniz, A. and T. C. O'Guinn, (2000), "Brand Community," Journal of Consumer
Research, 27 (March) 412-432.
Murphy, Gregory L. (1990), “Noun Phrase Interpretation and Conceptual
Combination,” Journal of Memory and Language 29,: 259-288.
Naik, P. A. and K. Raman (2003), "Understanding the Impact of Synergy in
Multimedia Communications,” Journal of Marketing Research, 40 (November), 375-388.
Oakley, James L., Adam Duhachek, Subramanian Balachander, and S. Sriram
(2008), “Order of Entry and the Moderating Role of Comparison Brands in Brand
Extension Evaluation,” Journal of Consumer Research 34,: 706.
Park, Whan C., Bernard J. Jaworski, and Deborah J. MacInnis (1986), “Strategic
Brand Concept-Image Management,” Journal of Marketing 50,: 135-145.
Park, Whan C., Sandra Milberg, and Robert Lawson (1991), “Evaluation of Brand
Extensions: The Role of Product Feature Similarity and Brand Concept Consistency,”
Journal of Consumer Research 18,: 185-193.
73
Texas Tech University, Omer Topaloglu, August 2013
Park, Whan C., Sung Youl Jun and Allan D. Shocker (1996), "Composite
Branding Alliances: An Investigation of Extension and Feedback Effects," Journal of
Marketing Research, Vol. 33, No. 4 (Nov.), 453-466.
Petty, E. Richard and John T. Cacioppo (1986), “The Elaboration Likelihood
Model of Persuasion,” in Richard E. Petty and John T. Cacioppo (eds), Communication
and Persuasion: Central and Peripheral Routes to Attitude Change. New York: Springer.
Porter, Michael (1980), Competitive Advantage. New York: Free Press.
Prahalad, C. K. and Gary Hamel (1990), “The Core Competence of the
Cooperation,” Harvard Business Review, (May-June), 79-91.
Putnam, Hilary. (1970). “Is Semantics Possible?” In H. Kiefer and M. Munitz
(Eds.), Language, Belief and Metaphysics. (pp. 50-63). New York: State University of
New York Press.
Puligadda, Sanjay, William T. Ross, Jr., and Rajdeep Grewal (2012), "Individual
Differences in Brand Schematicity," Journal of Marketing Research, Vol. 49, No. 1, pp.
115-130.
Reddy, Sirinivas K., Susan L. Holak, and Subodh Bhat (1994), “To Extend or not
to Extend: Success Determinants of Line Extensions,” Journal of Marketing Research 31,:
243-262.
Rosch, Eleanor and Carolyn Mervis (1975), "Family Resemblances: Studies in the
Internal Structure of Categories," Cognitive Psychology, 7 (October), 573-605.
74
Texas Tech University, Omer Topaloglu, August 2013
Rumelhart, E. (1980), “Schemata: The Building Blocks of Cognition,” In R. J.
Spiro, B. C. Bruce, and W. F. Brewer (Eds.), Theoretical Issues in Reading
Comprehension. Hillsdale, NJ: Erlbaum.
Samieee, S. and K. Roth (1992), “The Influence of Global Marketing
Standardization on Performance,” Journal of Marketing, Vol. 56 (April), 1-17.
Schmitt, Bernd H. and Laurette Dube (1992), “Contextualized Representations of
Brand Extensions: Are Feature Lists or Frames the Basic Components of Consumer
Cognition?,” Marketing Letters 3,: 115-126.
Schmitt, Bernd H. (1999), Experiential Marketing: How to Get Customers to
Sense Feel, Think, Act and Relate to Your Company and Brands. Free Press, New York.
Schmitt, Bernd H. (2003), Experience Management: A Revolutionary Approach to
Connecting with Your Customers. John Wiley & Sons, Hoboken, NJ.
Schouten, J. W. and J. H. McAlexander (1995), "Subcultures of Consumption: An
Ethnography of the New Bikers," Journal of Consumer Research, 22 (June) 43-61.
Schumpeter, Joseph A. (1934), The Theory of Economic Development. Cambridge,
MA: Harvard University Press.
Schumpeter, Joseph A. (1954), History of Economic Analysis. New York: Oxford
University Press.
75
Texas Tech University, Omer Topaloglu, August 2013
Shapiro, Eben (1994), "MarketScan: Consumers Leaving New Twists on Old
Products on the Shelves," The Wall Street Journal, (February 1), B I.
Shine, Byung C., Jongwon Park, and Robert S. Wyer Jr. (2007), “Brand Synergy
Effects in Multiple Brand Extensions,” Journal of Marketing Research, 44, 663-670.
Shocker, Allan D., Rajendra K. Srivastava and Robert W. Ruekert (1994), "
Challenges and Opportunities Facing Brand Management: An Introduction to the Special
Issue," Journal of Marketing Research, Vol. 31, No. 2, 149-158.
Simon, C. J. and M. W. Sullivan (1993), “The Measurement and Determinants of
Brand Equity: A Financial Approach,” Marketing Science, Vol. 12 (Winter), 28-52.
Simonin, B. L. and J. A. Ruth (1998), “Is A Company Known by the Company It
Keeps? Assessing the Spillover Effects of Brand Alliances on Consumer Brand
Attitudes,” Journal of Marketing, Vol. 35 (2), 30-42.
Smith, Eliot R. and Jamie DeCoster (1999), “Associative and Rule-Based
Processing: A Connectionist Interpretation of Dual-Process Models,” in Dual-Process
Theories in Social Psychology, Shelly Chaiken and Yaacov Trope (eds), New York, NY:
The Guilford Press, 3-11.
Stigler, George J. (1957), “Perfect Competition, Historically Contemplated,”
Journal of Political Economy, 65 (1), 1-17.
76
Texas Tech University, Omer Topaloglu, August 2013
Sujan, Mita and James R. Bettman (1989), "The Effects of Brand Positioning
Strategies on Consumers' Brand and Category Perceptions: Some Insights from Schema
Research," Journal of Marketing Research, Vol. 26, No. 4 (Nov.), 454-467.
Szymanski, David M., Sundar G. Bharadwaj, and P. R. Varadarajan (1993),
“Standardization versus Adaption of International Marketing Strategy: An Empirical
Investigation,” Journal of Marketing, Vol. 57 (October), 1-17.
Torelli, Carlos J., Alokparna Basu Monga, and Andrew M. Kaikati (2012), "Doing
Poorly by Doing Good: Corporate Social Responsibility and Brand Concepts," Journal of
Consumer Research, Vol. 38, No. 5 (February 2012), pp. 948-963.
Torelli, Carlos J., Ayşegül Özsomer, Sergio W. Carvalho, Hean Tat Keh, and
Natalia Maehle (2012), "Brand Concepts as Representations of Human Values: Do
Cultural Congruity and Compatibility Between Values Matter?" Journal of Marketing,
Vol. 76, No. 4, pp. 92-108.
Whittaker, R.H. (1965), "Dominance and Diversity in Land Plant Communities:
Numerical Relations of Species Express the Importance of Competition in Community
Function and Evolution," Science, Vol. 147, 3655, 250-260.
Wilkenfeld, Merryl J. and Thomas B. Ward (2001), "Similarity and Emergence in
Conceptual Combination," Journal of Memory and Language, 45, 21-38.
Wittgenstein, L. (1953/1958). Philosophical Investigations. 3d edition. Anscombe
(Tr.). Oxford: Blackwell.
77
Texas Tech University, Omer Topaloglu, August 2013
Volckner, Franziska and Henrik Sattler (2006), “Drivers of Brand Extension
Success,” Journal of Marketing 70,: 18-34.
Yorkston, Eric A., Joseph C. Nunes, and Shashi Matta (2010), “The Malleable
Brand: The Role of Implicit Theories in Evaluating Brand Extensions,” Journal of
Marketing 74,: 80-93.
78