Consumer evaluation of brand extension: Pakistani Context

Brand extension strategy, based on the idea that the built-in value of the familiar brand name is transferable to new products. The major aim of this research paper was to find out that how consumer evaluate brand Extension. Authors have used four variables to establish the relationship with the dependent variable “consumer evaluation” of brand extension. The variables used in the study were listed as (1) Innovativeness (2) Multiple Brand extensions (3) Brand concept and consistency (4) Brand extension fit. In addition, four real life brands have been used as stimulus in this study. Questionnaire was developed and through Convenience sampling; it was administrated among sample population of 110. Regression analysis was used as statistical tool to analyze the relationship among dependent and independent variables. The findings showed that Consumer evaluation would be positive for those brand extensions that have a strong reputation for introducing multiple brands. Likewise, there was a positive relationship between consumer level of innovativeness and how consumer evaluates brand extension. Innovative consumers were more positive and favorably inclined towards brand extensions.


INTRODUCTION
As current reviews of the literature indicated (Czellar, 2003;Grime et al., 2002), there has been a plethora of research on consumer attitudes to and evaluation of brand extensions and on their impact on the 'equity' of the parent brand. Particularly much of this research has been of generalization and replication kind, particularly of Aaker and Keller's (1990) paper (Sunde and Brodie 1993;Bottomley and Doyle 1996). Aaker and Keller (1990) in the paper "Consumer Evaluations of Brand Extensions" conducted an exploratory research in the consumer product setting to gain knowledge on how consumers form attitudes toward brand extensions strategy by testing 4 hypotheses based on 6 deep-rooted successful brands, 20 products along one of three dimensions and a high quality perception for the original brand. However, the validity of the original brand extension study in the FMCG setting conducted in North America has not been tested in the service and Pakistan's context. However, quite a small amount of researchers have examined how managers choose whether to launch a new product as a line extension or as a second brand or the planning and decision process underlying such Marketing decisions (Amber and Styles, 1997). In last few decades researchers have made noteworthy contributions and aid for explaining how consumers evaluate brand extension. (Riley et al., 2004) A well-established and successful brand name can be used to launch new products since it decreases the chances of failure and the risk of introducing a product into a new territory by equipping consumers with the familiarity of and knowledge about an established brand (Aaker and Keller, 1990). Even, a well-known brand name will capture the consumer's awareness and may direct or guide to new product trial intention.
The tactic of launching new products can be successful but it still possesses some threats. Undeniably, the launching from 30 to 35 % of new products mostly fails and performs disastrously. Reason being few factors like the high cost of advertisement and marketing and the intense competition; therefore it becomes extremely difficult and tuff to launch new products in the market.
Brand extension strategy was extremely important decision. Primarily reason as it has some threat as well as opportunities associated with the strategy (Ries and Trout, 1981). The wrong decision and extension in wrong category could create damaging image that may be costly to change. The failure of launch affects the extension strategy and even disrepute existing brand name may be through brand dilution and this has been cited by authors like Ambler and Styles (1997) and also by Martinez and Chernatony (2004). Overall, if the judgement was wrong, one can lose substantial time and resources and other market opportunities lost (Aaker and Kelller, 1990). Therefore, in order to be on familiar terms with the factors that most affect the brand extension success was important matter for the scholastic researchers and the marketing practitioners. If marketers know the phenomena regarding how and which factors are considered by the consumers and that lead to positive and favourable attitude/perception towards "the extension" this secrete will steer companies to develop successful growth strategies in an blue oceans and untapped emerging market while keeping all pros and cons of extending.
Against this background, this research study seeks to make a number of important contributions to brand extension research by offering a large-scale empirical study that overcomes the discussed limitations of past research at least to a certain extent.

Problem statement
Over the last few decades failure rates of new product have increased tremendously; therefore, firms have reverted back to brand extension strategy to launch new brand, because of in-built advantages including its high acceptability, low promotion cost and comparatively less chances of failures. Despite these advantages still companies were facing trouble launching new brands through Brand extension. Therefore, various marketing researchers have been focusing in finding the factors that consumers use for "evaluating the brand extension", or the factors that invariably contributes towards the failure or success of brand extension strategy. The focus of this study was to identify the variables that consumers uses for evaluating brand extension. The variables used in this study were (1) Innovativeness, (2) multiple brand extensions (3) Brand Concept Consistency (4) brand extension fit. The relationships of these independent variables, with the dependent variable "consumer evaluation" of brand extension will help and assist marketers to use brand extension strategy more effectively and successfully in the planning process.

Previous Research
The roots and traces of Branding go way back in ancient history. In ancient Egypt, brick makers used to stamp symbols on bricks for identification and distinction purposes (Farghuhar, 1990). On the other hand ancient farmers even used burning method to put symbols on cattle with the help of hot iron (Nilson, 1998).
In real meaning, a brand identifies the seller or maker. Brand can be name or noun, trademark, logo, or other symbol. Under the registered trademark or patent law, exclusive rights were given to the seller to use brand name in perpetuity. Branding should be used for creating brand awareness and developing associations in accordance with the firm's strategic goals. (Keller, 1998) Significance of brand equity, stress a need for a more realistic experience and relative research to asses and validate the usefulness of brand evaluation methods (Farquhar, 1990). The recent events of merger and acquisition trends have also inevitably improved the importance of measuring brand equity (Tauber, 1988). The task of brands was so far beyond product differentiation or competing for market share. They were gathered annuities which the firm can obtain from its balance sheet. (Tauber, 1998) Through Brand equity organization can create a strong competitive edge over competitors, 'through building awareness, image, and linking associations' (Keller 1998). A well-established brand would always have enhanced insight of needs, wants, and preferences of consumers than the brands that were not competitive at all in the market. Consequently strong and renowned brands would assist in creating effective marketing programs that could go past consumer expectations from the product offering. (Keller, 1998) Brand equity was one of the most important resources that a firm can have, and brand equity measurement/ calculations and management continue to be important fields of research in both academics and industry. Most of the research studies on brand equity have looked at the problem from the point of view of either the consumer or the company. Brand equity research from a consumer's viewpoint usually involves accumulating data on consumer frame of mind measures of brand equity from the consumer through assessment or experiments, and using the data to assess the consumer's perceptions, feelings, and attitudes towards the brand. It may also involve gathering data on the consumer's exposed liking behavior, using self-reported or actual purchase data, and using it to assess the increasing value that the brand name has on the consumer's value and the consequential choice behavior. To increase the equity of the brand, a common and most obviously practiced strategy was to extend brands. This Brand extension strategy allows companies to reduce financial risks, risk of losing market, failure and costs of launching new products (Tauber 1981(Tauber , 1985; hence, forth increasing sales/profit (Roedder et al. 1998) and market share of the company (Smith and Park, 1992); and be able to charge a premium price (Swait et al., 1993).
Brand Extension strategy may also enhance and facilitate a brand's awareness, widen a brand's attributes and add value to a brand (Levy, 1997;Milberg et al., 1997) and increase the consumer perceived value too (Aaker, 1990;Keller, 2003). For successful brand extensions, consumers have to be able to expand the scope of the brands image and information signal to other part; suppliers have to be clever enough to increase the number of consumers that will accept the improved image and information function of the extension .
Brand Development strategy includes decisions related to brand extension, line extension, multi branding, developing new brands and brand rationalization (Kotler and Armstrong, 2005).
Line extension: Line extension was extending the existing brand names to new forms, sizes and flavors of an existing product category under the same brand name For example, Colgate has extended its brand name in the toothpaste category from Colgate to Colgate gel, Colgate herbal, Colgate sensitive, Colgate Multi brands: It involves introduction of additional brands in the same product category. For example, PNG in Pakistan markets many different brands in each of its product categories. (Kotler and Armstrong, 2005) New brands: It involves creation of new brand names especially when entering a new product category.
For example, Coca Cola entered the mineral water bottle segment with a new band name Kinely and Honda created the Acura brand to differentiate its luxury car from its established Honda line (Kotler and Armstrong, 2005).
Brand extension: A brand Extension involves extending a successful brand name to launch another new product, either in the same or a different product category. As the cost of establishing a new brand was high, brand extension can be a useful tool for the cost effective launch of a new product. Familiarity with an existing brand also helps both customers and marketers. Customers extend the qualities associated with the existing brand to the new brand. Market acceptance of the new product becomes faster. Maggi has been extended from noodles to product lines in related categories like Maggi ketchup, Maggi soup, etc (Kotler and Armstrong, 2005).
Quite a lot of methods were available for "accomplishing" brand extensions, including horizontal extension, distance extension, and vertical extension (Pitta and Katsanis, 1995). When organization uses the existing brand name for extending into a new product in the same product class or to a product category new to the firm product grid, termed as horizontal extension (Pitta and Katsanis). Horizontal extension further can be extended into two categories. First was line extension and second was franchise extension. According to Aaker and Keller (1990), the focus of these brand categories like line and franchise was diverse (Aaker and Keller, 1990). Using an existing brand name and same product class for entering a new market segment falls in the category of line extension. Examples of line extensions were Pepsi and Diet Pepsi. Another such example of line extensions were shampoos for different customers such as dry hair, oily hair, and dandruff hairs, etc. This line extension strategy was normally successful in the same category for extensions as the core product. In contrast, Franchise extension was a strategy of using current brand name for entering a product category that was new to the company. (Tauber, 1981) If the core brand was extended into related or similar category it was termed as "close extension".
Extending to unrelated product category was called "Distance extension". In this scenario and circumstances overall quality association of core brand was vital for success of the extended brand.
Distancing was a purposeful attempt to raise and improve the perception of the core brand and extension product (Kamal, 2003). Whereas using umbrella branding; same brand name was used for a number of products the firm must make sure and take care of that the quality perception of the core products has also been transmitted to all extensions of the firm (Erdem, 1998).
Similarly when organizations launch "related brands" in the same product category with visible differences in price and quality levels; this kind of extension was called vertical extension. The vertical extension has 2 directions. If the new product; was highly priced and of higher quality level, it will be termed as up-scaling.
On the other hand, if the extended brand quality was low and was also of lower pricing it will be called as down scaling (Kamal, 2003).
It was stated that perception was crucial in the decision-making process. In a market where branding was used, products were no longer only purchased for the functional characteristics, but primarily for the social or in some cases, psychological identity product expressed (Foxall, 1980). Building on these concepts, one can elaborate on these concepts by outlining two determinants that influence a consumer's perception of brands. These two factors were stimulus discrimination and stimulus generalization (Erdem, 1998).
Positioning was vital with brand extensions as it may alter the fit with their two relevant knowledge sources -the parent brand and extension's category. As brand extension knowledge can stem from the parent brand and category, its formation should be an inference process. Inferencing was the mixture of multiple sources of knowledge into one judgment formation (Sheinin, 1998).

HYPOTHESES
The problem discussed in this paper is how consumers evaluate Brand Extension. In order to address the concerned problem the following four hypotheses were formed and tested: H1: Consumers' level of innovativeness has a positive impact on their evaluation of brand extension.
H2: Consumer evaluation is positive for those brand extensions that have a strong reputation for introducing multiple brands.

H3:
The "consumer's brand evaluation" is positive for those brands that have more "concept consistency" H4: The "consumer perception fit" between the core brand and extended brand has a positive impact on the "consumer evaluation of the brand"

RESEARCH METHODS
This research paper tried to find out that how Consumers evaluate Brand Extensions. The research has been designed such that it fulfills the entire requirement and also does justice to the cause. In Pakistan there were more than 30 to 35 brand extensions associated to FMCGs .Thus from all the extensions so far; following four brand extensions were finalized each representing different level of synergy amongst them: 1) "Tapal Danedar namely, Tapal Family mixture" 2) "Lifebuoy Soap namely, Shampoo" 3) " Gillette shaving cream namely, Gillette cream for women" 4) "Dettol Antiseptic namely, Dettol hand washing Liquid" In this study, primary and secondary sources were used. For data collection instrument used for this research study consist of questionnaire and SPSS 17.0 statistical analysis as a tool. In analyzing the data in SPSS, authors have used the technique of regression model. Multiple regression was carried out keeping in view the nature of the hypothesis and the data. Exploring linear relationship between Criterion (dependent variable) and Predictor (independent variables). Multiple regression analysis was a general statistical technique applied to examine the relationship among a single dependent variable and several independent variables. Questionnaire was developed based on model of Keller and Aaker (1992).
Questionnaire was utilized to collect the socio-economic information of sample respondents. Even respondents were asked to rate their perception regarding four independent variables having four different brand extensions. The Cronbach's Alpha was .702, which showed very good level of reliability of data. The target sample was the regular grocery shoppers. Research questionnaire was filled out by 110 respondents. Respondent did not have equal chance to be part of this research study and the sample respondents were drawn on the basis of convenience. Henceforth Convenience Sampling method was used. The dependent variables and independent variables of this study were presented below along with discussions on how they were measured:

Consumer evaluation of brand
"Consumer evaluation" of brand extension was the dependent variable for this study. This variable was used by Keller and Aaker (1992) and they have used the following statement for measuring overall evaluation: "I am very positive to the extension of the "XYZ." In this study, the same was used for measuring "Consumer Evaluation" of brand extension. Reference may be made to question No. 8 of the questionnaire attached as Appendix -1.

Innovativeness
In this research study the five statements have been used for measuring innovativeness (i-e) (1) "I am continuously seeking new ideas" (2) "When things get boring, I like to find some new experiences" and three other questions were developed. These questions were measure on 1 to 5 likert scale rating, 1 being "totally disagree" and 5 being "totally agree" with the statement. Aaker (1992) has found a relationship between the brand extension history and the consumer evaluation of the brand. Respondents in this study were asked to rate the history of introducing multiple brand extensions.

Parent brand consistency
The independent variable parent brand consistency has been defined by (Park.et.al, 1991) in terms of "price perception" and "product design perception". The respondents in this study were asked to rate the four selected core brands in terms of "price perception" and "design perception".

Brand extensions fit
The independent variable has been defined by Aaker and Keller (1990) and Keller, (1992), in terms of (1) Complimentary, (2) Substitutability (3) Transferability and (4) Difficulty. In this context, the respondents were asked to rate the four brands in terms of these four sub dimensions.

Results of testing H1
H1: Consumers' level of innovativeness has a positive impact on their evaluation of brand extension.
Following methods tested the above hypothesis: The impact of independent variable consumer level of "Innovativeness" was, also, measured with the dependent variable consumer evaluation of brand extensions that is "Tapal Danedar namely. Tapal Family mixture", "Lifebuoy Soap viz. Shampoo"," Gillette shaving cream Viz Gillette cream for women" and "Dettol Antiseptic Viz Dettol hand washing Liquid" The multiple estimating regression equation for the above variables, See Equation 1: (1) Where "Y" in the above Equation 1 was an average of consumer evaluation of Brand Extension, (1) "Tapal Danedar namely, Tapal Family mixture", (2) "Lifebuoy Soap namely, Shampoo", (3)" Gillette shaving cream namely, Gillette cream for women" and (4)"Dettol Antiseptic namely ,Dettol hand washing Liquid" The summarized multiple regression results were presented below:   Firms that were extending their brands should target consumers that have high level of "innovativeness".

Results of testing H2
H2: Consumer evaluation would be positive for those brand extensions that have strong reputation for introducing multiple brands.
Following methods tested the above hypothesis: The independent variable "Multiple brand extension" was measured through stimuli "Tapal Danedar namely, Tapal Family mixture", "Lifebuoy Soap namely, Shampoo"," Gillette shaving cream namely, Gillette cream for women" and "Dettol Antiseptic namely, Dettol hand washing Liquid". The multiple estimating regression equation for the above variables, See Equation 2: The summarized multiple regression results were presented below:  The hypothesis that at least one of the independent variables will have the relationship with the dependent variable "consumer evaluation" of the brand was accepted. The ANOVA Table shows  The R2 was .116, which indicated and revealed that the combined and collective effect of the independent variables caused dependent variable to move by 11.6%, which was a very weak relationship.
Firms must not go for all kind of extensions, as it would have adverse effect on parent brand and would also adversely affect reputation of the parent brand.

Results of testing H3
H3: The "consumer's brand evaluation" would be positive for those brands that have more "concept consistency" Following methods tested the above hypothesis: The brands "Tapal Danedar namely, Tapal Family mixture", "Lifebuoy Soap namely, Shampoo"," Gillette shaving cream namely, Gillette cream for women" and "Dettol Antiseptic namely, Dettol hand washing Liquid" .The combined relationships of these stimuli in terms of: (1) design, and (2)  Summarized multiple regression results were presented below:  The hypothesis that at least one of the independent variables will have the relationship with the dependent variable "consumer evaluation" of brand was rejected. The ANOVA Table shows

Results of testing H4
H4: The "consumer perception fit" between the parent brand and extended brand would have a positive impact on the "consumer evaluation of the brand".
Following methods tested the hypothesis H4: The independent variable "perceived fit" comprised of three sub-variables, which were, (1) complimentary (2) substitute, and (3)    The hypothesis that at least one of the independent variables will have the relationship with the dependent variable "consumer evaluation" of the brand extension was rejected. The ANOVA Table shows  was .114, which indicated that the collective effect of the independent variables causes dependent variable to move by 11%, which was an indication of very weak relationship.

Accepted hypotheses
H1: Consumers' level of innovativeness has a positive impact on their evaluation of brand extension.
H2: Consumer evaluation is positive for those brand extensions that have a strong reputation for introducing multiple brands.

H3:
The "consumer's brand evaluation" is positive for those brands that have more "concept consistency"

H4:
The "consumer perception fit" between the core brand and extended brand has a positive impact on the "consumer evaluation of the brand" 2. The R2 was .116, which indicated and showed that the combined effect of the independent variables causes dependent variable to move by 11.6%, which was a very weak relationship. Firms must not go for all kind of extensions, as it would have adverse effect on parent brand and would also adversely affect reputation of the parent brand.

SUMMARY AND CONCLUSION
3. Company must not extend their brands to the category that consumer would hate to assume it as substitute or complement.
4. The firms must go for extensions (multi-branding) as it would have favorable effect on the parent brand and would also favorably affect the reputation of the parent brand.

LIMITATION OF RESEARCH STUDY
The limitations included other possible variables apart from the selected, and any issues related to statistical analysis assumptions.
The first limitation was the failure to include other potentially relevant variables in this study. The Data Collection instrument was adapted from replication of Aaker and Keller researches. The previous instrument had demonstrated reliability and validity, but it was not specifically developed for use in Pakistani context. It was possible that factors specific to the Pakistani consumer were omitted from this study. Other factors could have an influence on consumer evaluation and should be taken into consideration when reviewing this study. These omissions also provide opportunity for further research.
The final limitation was related to statistical analysis.
According to Alreck and Settle (1995), the statistical analysis was the process of calculation and manipulation of sample data in order to suppress the details and makes the relevant facts and the most visible and significant relationships, and generate statistics to make inferences about the population as a whole (Boeve, 2007).
In the conduction of statistical analysis, certain assumptions have valid results on only quantitative data.
Significant information can be gained from qualitative data as well. This study statistically evaluated only quantitative data and assumed full response to all questions by all participants. However, the statistical analysis did not account for a responder's decision to skip questions.

FUTURE RESEARCH
In the world of brand extension, Brand Equity and brand personality were one of the most abstract attributes and it was quite difficult to get the general answer for the intangible quality of research topic.
While writing this research, authors believed that there were many creative ways through one can get to gain imminent understanding about the art and laws of branding. In future research, it would be inspiring to pose the question, "Could one product extend its brand personality so that it creates the differentiation as an alternative of going for brand extension strategy?" The focus of this research was on the B2C consumers and only four brands were taken into account. Moreover, impacts of consumer brand extensions on brand equity can be calculated with respect to both B2C and B2B consumers. To allow a broader generalization, future research needs to be undertaken with a greater variety of brands and Variables.