DOI: 10.4018/IJABIM.2020100106

International Journal of Asian Business and Information ManagementVolume 11 • Issue 4 • October-December 2020

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Attributes Ensuring Positive Consumer Evaluation in Brand Extension of PakistanMalik Shahzad Shabbir, University of Lahore, Pakistan

ABSTRACT

Brandextensionisanimportantcost-effectivemarketingmethodtooffernewproducts.However,ordinaryLeastSquareregressionwithcontrolvariableshasbeenappliedforestimationofvariablecoefficients. In the study, consumer evaluation of brand extension in Pakistan is dependent onqualityoftheoriginalbrand,substitutabilityoftheextensionwiththeoriginalbrandincertainusagesituationandhelpfulnessofpeople,facilitiesandskillsusedindeveloping,refiningandmakingtheoriginalbrandforconstructing itsextension.Furthermore,other independentvariables includingcomplementarity,difficultyandmoderatingtheroleofqualityoftheoriginalbrandwithfitattributeshasbeenfoundirrelevantfordeterminingconsumerevaluationofbrandextensioninPakistan.Theauthorhasfoundanexpectedsignificantoutcomeontheidealpointeffectofsubstitutabilityat15%.

KEywoRdSBrand Extension, Brand Management, Consumer Evaluation, Consumer Preference, Marketing

1. INTRodUCTIoN

Brandextensionisanimportantmarketingmethodtooffernewproducts.ThemethodhasachievedbothsuccessesandfailuresinPakistan:Jang,acategoryleaderinUrdunewspapershadextendeditsspin-off,Geo News,inelectronicmediacategory.Overaperiodoftime,Geo Newsalsobecameacategoryleader.However,Waqt,anewschannelofNawai Waqt,2ndbestUrdunewspaper,hasfailedtopositionitselfinelectronicmediacategory.Similarly,Dawlance,leaderinrefrigeratorcategorycouldnotpositionitselfintelevisionandmicrowavecategories.Whysomefailed,butotherssucceed?Subsequently,anumberofsimilarstudieswereconductedinvariouscountries.

Purchaseintentionistheimpliedpromisetoone’sselftobuytheproductagainwheneveronemakesnexttriptothemarket(Fandos&Flavian,2006;Halim&Hameed,2005).Ithasasubstantialimportancebecausethecompanieswanttoincreasethesaleofspecificproductforthepurposetomaximizetheirprofit.Purchaseintentiondepictstheimpressionofcustomerretention.Therearecertainfunctionsofthebrandwhichhaveastronginfluenceonthepurchaseintentionofthecustomer’si.e.brandimage,productquality,productknowledge,productinvolvement,productattributesandbrandloyalty.

Firms are considered good and bad not only on the basis of their behaviors in the ethicaldomainbutalsofromthewaystheirproductsperform.Previousresearchsupportsthenotionthatnegativeinformationaboutproductattributesinfluencesconsumers’attitudestowardbrandsmorethandoespositive information about product attributes (Herr, Kardes,&Kim,1991).Althoughattributeperformancesuggestshowtoclassifytheproduct(Herretal.,1991),suchinformationmaybemuchlessdiagnosticofafirm’sunderlyingcharacteristics.Firmsmayhavereasonsforoffering

Thisarticle,originallypublishedunderIGIGlobal’scopyrightonOctober1,2020willproceedwithpublicationasanOpenAccessarticlestartingonFebruary1,2021inthegoldOpenAccessjournal,InternationalJournalofAsianBusinessandInformationManagement(con-vertedtogoldOpenAccessJanuary1,2021),andwillbedistributedunderthetermsoftheCreativeCommonsAttributionLicense(http://creativecommons.org/licenses/by/4.0/)whichpermitsunrestricteduse,distribution,andproductioninanymedium,providedtheauthorof

theoriginalworkandoriginalpublicationsourceareproperlycredited.

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low-qualityproductsthatdonotsuggestbadcharacteralow-qualityproductisdesignedtoserveasegments’needforalow-pricedproduct.Ifso,consumerattitudesshoulddifferdependingonfirmethicsregardlessofproductattributeinferiority.Shabbiretal.(2016)atsomeextent,someofthesocialmediaapplicationsinthepresenttimehavebecomemostefficientandeffectivetoolforsmallbusinessentrepreneursandnormallyallsmallbusinessusesocialmediaplatformfortheadvertisingandpublicityoftheirproductsandservices,theymakefanpagesforthefollowersandtheywarmlywelcomethesuggestionsandopinionswhichhelpinimprovingtheirbusiness.

TomaximizetheacceptanceandrecognitionofnewproductsinPakistan,itisappropriatetotestthetheorybyhypothesizingthatfavorableconsumerevaluationofbrandextensioninPakistanisdependentonattributesofcomplementarity,substitutability,transferabilityanddifficulty,andtheindirecteffectofparentbrandqualitythroughmoderatingroleofqualityonthecomplementarityandsubstitutability.TomaximizetheacceptanceandrecognitionofnewproductsinPakistan,itisappropriatetotestthetheoryforPakistan.Wehaveusedsurveymethod(Likertscale1-7)todetermineattributesofconsumerevaluationofbrandextensioninPakistan.

Theconceptofbrandequityhasbeendiscussedandexplainedbyseveralstudies.Brandequityisbeenexplainedthroughtwomajorperspectivesfinancialaspectandmarketingaspect.Brandsusedtobeassociatedwithproducts,butithasbeenaconsiderationoncorporatebrands(Mottram,1998).Brandequityreferstotheendowedvalueinthemindofthecustomer.Brandimageandbrandawarenessarethefactorswhichcreatesperceptioninthemindofthecustomerandthesefactorseventuallyaddvalueinbrandequity(Pina2003).Theimportantconcepthereisconsumermemory.Associativemodelconveysthatmemoryisthesetofinterlinkednodesandlinks(Wryer&Srull,1989;Keller,1993).Brandextensionistheextendedoradditionalproductwithinthesameordifferentcategoryofthesamebrand.Brandextensionsstrategiesareassumedtoincreasetheefficiencyofthefirm’sinvestmentinadvertisementandcreatingawarenessthroughadvertisement(Aaker,1990;Simon&Sullivan,1991;Tauber,1988).

Brandextensionusuallyconsideredasprofitablebothways,horizontallyandvertically,butthereisapossibilityofbearingextraexpenseofbringingonthenewproductinthemarketforexampleproductintroductionandadvertisementwouldneedcertainamountofexpansesonit(Collin-Dodd&Louver,1999;Tamber,1988).Thebrandextensionstrategiesinconsumergoodsarenotmoreprofitable than other markets for example automobile industry. Automobile industry observedsuccessfulbrandextensionsasnewmodelofanybrandcomes,itautomaticallygetnoticedbyitscustomers.Successfulbrandspentlessonadvertisingrathernewproductdevelopment.Investmentondevelopingestablishedbrands,companiescutthecostoflaunchingbrandextension(Xie,2008).

Thisstudyaddressestwoobjectivessuchas,atwhatextentoriginalbrandquality,substitutability,complementarity,transferanddifficultyarepositivelyrelatedwithconsumerevaluationofbrandextension. Whereas, original brand quality moderating with the three fit attributes, namely,substitutability,complementarityandtransferarepositivelyrelatedwithconsumerevaluationofbrandextension.TheobjectiveofthisstudyistoexaminetheimpactofpositiveconsumerevaluationinbrandextensionofPakistan.Forthispurpose,thisstudyhastakenseveralbrandsasacasestudiesfortheirsecondbrandsorextensionofexistingbrandsinvariousways.

BrandExtensioncategoryisanewconceptinPakistanibrandindustryaswellasincorporatesector.Thisisanemergingcombinationofbrandtobrandextensionthatprovidesabrandrealchancetogaincompetitiveadvantagesratherthanotherbrands.ThroughitsspiritualapplicationindifferentbrandsectorsofPakistanibrandsectorwecanenjoyarealincreasingtrendregardingabrandextension.ThisresearchinvestigationindicatessomeusefulimplicationsforPakistanibrandsaswefoundaverystrangerelation.Thisresearchtriedtoprovideabetterunderstandingofconsumers’evaluationofafashionbrandextendingintofashioncategories,bycomprehensivelyreviewingpreviousresearchrelatingtothissubject,anddevelopingaresearchrationale.

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2. LITERATURE REVIEw

Basedontwosetsofsocialpsychologytheoryincludingassociativememorynetworkmodelandcategorization theory, brand extension theory has been evolving since 1990. In terms of brandextensiontheory,higherqualityperceptionsabouttheoriginalbrandareassociatedwithfavorableattitudesfortheextension.Further,congruencebetweentheoriginalbrandassociationsandthenewcategoryconcepts isreflectedthroughthethreefitattributes.Thisparticularattribute isperhapsmorehelpfullyconceivedastheoppositeoftriviality,inthesensethatsubjectsmightevaluatetrivialextensionspoorly,likeEngroFoodismarketingballpointpen.

HalimandHameed(2005)explainpurchaseintentionasthenumberofpatronsthathasaproposaltobuytheproductsinfutureandmakerepetitionpurchasesandcontactagaintothespecificproduct.InandKang(2011)explainspurchaseintentionrelatingfourbehaviorsofconsumersincludingtheundoubtedplantobuytheproduct,thinkingunequivocallytopurchasetheproduct,whensomeonecontemplatetobuytheproductinthefuture,andtobuythespecificproductutterly.FandosandFlavian(2006)explainthephenomenonofpurchaseintentionastheprojectedbehaviorofconsumersonshortbasisabouttherepetitionpurchaseofspecificproducti.e.whensomeonedecidedtobuytheproductwheneverhe/shewillcomeagaintothemarket.

ArslanandAltuna(2010)definedbrandimageasthepositiveandnegativefeelingaboutthebrandwhenitcomestothemindoftheconsumersabruptlyorwhentheyrecalltheirmemories.Theyhavetheviewthattherearethreeaspectsofbrandimagewhichmakethewholeimageofthebrandwhichare;favorability,strength,anddistinctiveness.Meenaghan(1995)explainsbrandimageintermsoftheattitudesoftheconsumersabouttheparticularbrandwhichhelpstopointitandthinkingofthebuyersinthesignificantwaytomaketheproductdifferentfromothers.BianandMoutinho(2011)describedthephenomenonbyusingmarketingsensetoexplainitasthesetofstatementsgiventothetargetmarkettocapturethepurchaseintentionsofthetargetedconsumers.Lee,LeeandWu(2011)explainthebrandimageastheoverallmindreflectionandbeliefsabouttheparticularbrandbykeepinginminditsuniquequalitieswhichmakeitdifferentfromtheothers.SebastianelliandTamimi(2002)explainedproductqualityassomethingwhichresembleswiththeinnateexcellence,whichmean,itcomesfromtheproductionlevelanditshouldberecognizable.Theyemphasizedthatqualityshouldconsistofmeasurablefeaturesinsteadofpreferences.

Shabbir(2016)analyzedtheeffectofmediaonbuyingbehaviorofchildreninPakistan.However,comparativelywehaveanalyzedhowtheparentsandpeersplaytheirrolesinmakingbuyingdecisionoftheirchildren.Wehaveusedprimarydatatofindoutconsumersocializationandfactorsthataffectchildreninfluencingandfinaldecisionmakingindoinganypurchase.Inthecontemporarybusinessworld,thecompetitionamongfirmsisdifferentfromthepastasthisisunderstatedwhichislittlebutverycrucial.Thefirmsareattemptingforcompetitivenessthathelpthemtoholdmorestableplaceinthemarket.Theidealrouteforfirmstoattainitiswiththeinnovation(ShabbirMS2015).

Inlastfewdecadesresearchershavemadenoteworthycontributionsandaidforexplaininghowconsumersevaluatebrandextension.(Rileyetal.,2004).Ascurrentreviewsoftheliteratureindicated(Czellar,2003;Grimeetal.,2002),therehasbeenaplethoraofresearchonconsumerattitudestoandevaluationofbrandextensionsandontheirimpactonthe‘equity’oftheparentbrand.Particularlymuchof this researchhasbeenofgeneralizationand replicationkind,particularlyofAakerandKeller’s(1990)paper(Sunde&Brodie,1993;Bottomley&Doyle,1996).AakerandKeller(1990)inthepaper“ConsumerEvaluationsofBrandExtensions”conductedanexploratoryresearchintheconsumerproductsettingtogainknowledgeonhowconsumersformattitudestowardbrandextensionsstrategybytesting4hypothesesbasedon6deep-rootedsuccessfulbrands,20hypotheticalbrandextensions(e.g.HeinekenbeertoHeinekenwineandHeinekenpopcorn)andhavingsamplesizeof107respondents.

Newbrandinvolvescreationofnamesespeciallywhenenteringanewproductcategory.Forexample,CocaColaenteredthemineralwaterbottlesegmentwithanewbandnameKinelyand

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HondacreatedtheAcurabrandtodifferentiateitsluxurycarfromitsestablishedHondaline(Kotler&Armstrong,2005).Lineextensionwasextendingtheexistingbrandnamestonewforms,sizesandflavorsofanexistingproductcategoryunderthesamebrandname.Forexample,Colgatehasextendeditsbrandnamein the toothpastecategoryfromColgate toColgategel,Colgateherbal,Colgatesensitive,ColgatecalciguardandColgatetotal.Itinvolvesintroductionofadditionalbrandsinthesameproductcategory.Forexample,PNGinPakistanmarketsmanydifferentbrandsineachofitsproductcategories.(Kotler&Armstrong,2005).

AbrandExtensioninvolvesextendingasuccessfulbrandnametolaunchanothernewproduct,eitherinthesameoradifferentproductcategory.Asthecostofestablishinganewbrandwashigh,brandextensioncanbeausefultoolforthecost-effectivelaunchofanewproduct.FamiliaritywithanexistingbrandalsohelpsbothcustomersandmarketersHummeraetal.(2019).Customersextendthequalitiesassociatedwiththeexistingbrandtothenewbrand.Marketacceptanceofthenewproductbecomesfaster.MaggihasbeenextendedfromnoodlestoproductlinesinrelatedcategorieslikeMaggiketchup,Maggisoup,etc.(Kotler&Armstrong,2005).

Whereas,ShabbirandZaman(2016)exploreandpinpointsomeofmarketingstrategiesissueswhichcanbehelpful fornew investorsandold stakeholders in the sectorof Islamicbanking inPakistan,Inordertopenetratesuccessfullyinthemarket.Furthermore,thisstudinvestigatesthatwhatcanbesuitableandeffectivemarketingstrategiesforIslamicBankinginPakistan?TheirtargetgroupsarethoseIslamicbanksandstandaloneIslamicbankbranchesthatarecurrentlyworkinginPakistanimarketandthosewhoareinterestedinexploringthePakistanimarket.

3. METHodoLoGy

Asinassociativememorymodel,itisdiscussedthatcustomerrememberexperiencesandonthebasisoftheirexperiencestheirloyaltyincreases.Manager’seffortsinthisregardareveryessentialaswithoutmanager’smarketsenseandforecastingcompanycannotpredictsuccessandfailureofchildproduct.Whenconsideringtherelationshipofparentandchildbranditisrevealedthatwhenapplyingbrandextensionstrategiestwopossibilitiesareobvious.Eitherchildbrandcarryingtheparentnamewithitsownnameandotheroneischildbrandislaunchedindependentapartfromparentnamewithitsownname.Multipleeffectshaveobservedforthisphenomenon.Firstly,thoseproductswhicharecarryingparentbrandwiththeirownnamearetakingriskoftheirreputationandimageincustomer’smind.Ifchildproductdoesnotbuilditsreputationasitsparentcompanyhasalreadyestablished,thenitwillbethreatforparentcompanybecauseitsnameisonstake.Andpeoplecanalwaysshowtheirdissonancebyswitchingtoanotherbrandofdifferentcompany.Ontheotherhand,whennewbrandislaunchedindependently(withoutcarryingitsparentbrand)thenitmaybeapossibilitythatcustomergetunawareoftheparentbrandnameandbrandequitywillnottransferredtoparentbrandaccount.InPakistanimarketperspective,marketisstagnantandboundedinboundaries.

Basedonourhypothesis,thefollowingregressionmodelhasbeendeveloped:

Y=α+β1x1+β2x2+β3x3+β4x4+β5x5+β6x1x2+β7x1x3+β8x1x4+εY=brandextensionpreference(averageoftryandqualityofbrandextension)α=constantinterceptX1=originalbrandpreferenceX2=levelofsubstitutabilityX3=levelofcomplementarityX4=leveloftransferX5=levelofdifficulty

β6toβ8=interactionoffitattributeswithoriginalbrandqualityincaseofOLStechniqueandresidualsincaseofRCtechniqueε=homoscedastic&independenterrorterm

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Totestthehypothesisofthisstudy,thedataonrelevantattributesiscollectedthroughsamplesurveymethod.TheordinaryleastsquareregressionmethodwithRCtechniquehasbeenappliedonthesurveydataforestimationofthecoefficientsandsignoftherelationship.However,Pakistanisconsistingoffiveprovincesandotherareaswith175millionpopulationsspreadingover1,046kmarea.Karachiisabusinesshubofthecountryhavingpopulationrepresentingalltheprovinces.Assuch,theprobabilitythatKarachiisrepresentativeofPakistan’spopulationismuchhigherthanothercities.Intermsofjudgmentsampling,147universitystudentsandworkingprofessionalsparticipatedinthestudy(Assuch,totalobservationsare438).Itwasensuredthatallareactualusersoftheselectedbrands.ThesixoriginalbrandsandtheextensionswereselectedaspercriteriaprescribedbyAakerandKeller(1990)discussedinthispaperelsewhere.Further,itwasalsoensuredthattheextensionshouldbelogicalandheterogeneousonthethreefitmeasures.Thefollowingisthelistoforiginalbrandsandtheirextensions(Table4).

4. RESULTS

BrandextensiontheorywasfirsttestedbyAakerandKeller(1990),whotheorizedoriginalbrandquality(OBQ),togetherwiththree‘fit’attributesofsubstitutability(Subst),complementarity(Compl),transferability(Trans)andnon-fitattribute,difficulty(Diffi)hasadirecteffectonthepreferenceforthenewbrandextension(BEPrefrnc).Theyalsohypothesizedthatthereisaninteractiveeffectbetweenqualityandthethreefitattributes.

Withthistheory,theydevelopedthefollowingmodeltotestthetheory:

BEPrefrnc=OBQ+Subst+Compl+Trans+Diffi+OBQ*Subst+OBQ*Compl+OBQ*Trans

Inordertoestimatetheabovemodel,theyemployedsixactualbrands(priortoselectionoftheactualbrand,itwasensuredthatthesebrandsmeetthethreecriteriaofhighquality,strongbrandimageandnopriorsignificantextension)and20hypotheticalbrandextensionsforasampleof107undergraduatebusinessstudentsofBerkleyUniversityinUSA.Theseattitudesweremeasuredon7-pointLikertscaleswhere1wassemanticallyanchoredasalowleveland7asahighlevel.TheyrunOLSregressiononthedataandfoundthefollowingresults(Table1):

BasedonthetheoryandtheempiricalfindingsofAakerandKeller(1990),anumberofauthorsrunsimilarmodelfortheirrespectivecountries.Subsequently,itwasarguedthatduetoexistenceofmulti-collinearity,itisappropriatetorunresidualcentering(RC)techniqueforestimationofthecoefficients(Echambadietal.,2004).TheresultsofsignificanceofthesestudiesincludingAakerandKelleraregiveninthefollowingTable2.

Mather(2011)hascommentedthatresidualcenteringwasusedinmanyofthereplicationstudiesinordertoeliminatethemulticollinearity.Inviewofhisobservations,Mather(2011)collectedthedatasetsfrompreviousempiricalstudies(someofthemarenotedinTable2)andrunGeneralLinearMixedModel(GLMM).Basedonwhich,heconcludedthatcomplementarity,substitutabilityandtransferabilityandtheindirecteffectoforiginalbrandqualityviaquality’smoderatingroleonthe

Table 1. Regression results of the model (1) of Aaker & Keller (1990)

OBQ Trans Compl Subst OBQ*Trans OBQ*Compl OBQ*Subst Diffi

Regressioncoefficient

-0.01 0.12 -0.02 -0.06 0.02 0.03 0.02 0.12

t-value -0.1 2.0 -0.4 -1.0 1.4 3.2 2.1 6.2

Samplesize=2140andAdjustedR2=0.26

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intrinsiceffectofcomplementarityandsubstitutabilityaffectconsumerevaluationofbrandextensionpositivelyandfoundthefollowingresults(Table3):

WithrespecttobrandextensionresearchcarriedoutinPakistan,wehavefoundthreestudies.Durrani and Hussain (2009) evaluated successful brand extension based on survey method oftelephoneinterviewswithbrandmanagersofZ-Jans(healthcare),ChenOne(retail),Haleeb(dairy)andfacetofaceinterviewswithLakson(media/fastfood/consumergoods)andServesGroups(shoes/pharma/tires&tubes).HeconcludedthatbrandmanagementinPakistanisatrudimentarystageofdevelopmentandthatbrandextensionwithlowpriceandvalueforcustomerislikelytoperformwellforPakistanimarket.Ahmad,Abrar,RehmanandKashifetal(2009)studiedtherelationshipbetweenbrandloyaltyandbrandextensionandfoundeffectiverelation,loyaltybehavior,self-imageandsimilarityassignificantvariablestoexplainpositivebrandextensionevaluation.JaleesandAli(2008)examinedandempiricallytestedhowconsumersinPakistanevaluateclosebrandextensionin reference to variables including, similarly, reputation, multiple brand extension, parent brandcharacteristicsandbrandconceptcharacteristicswithasampleof700personsinKarachifollowingOrdinaryLeastSquaremethod,theyfoundsimilarityandreputationassignificantvariable.However,noneofthemhasfollowedAakerandKeller’smodelanditssubsequentdevelopment.

Consumerattributesweregatheredonseven-pointLikertscales(1beinglow,7beinghigh).Theconsumer’soverallattitudetowardstheextensionwastakenasdependentvariable.Asperpracticeintheliterature,thedependentvariablewasanaverageoftwodimensionsincluding(a)overallperceivedqualityoftheextensionbrandandthepurchasingprobabilityofbuyingtheextensionproduct.Theindependent variables measured as (a) quality and (b) difficult. The fit attributes including (c)substitutability,(d)complementarityand(e)transferwerealsomeasuredontheseven-pointLikertscales(ThequestionnaireisgivenonAnnexure-I).Everyprintedquestionnairecontainedquestionstoobtainresponsesononeoriginalbrandandthreeextensions.Inordertofacilitaterespondents,

Table 2. Regression results of other important studies

Author CountryFit attributes

DInteraction terms

Q C S T Q x C Q x S Q x T

Aaker&Keller USA N N N Y Y Y Y N

Sunde&Brodie NewZealand Y N Y N N N Y N

NijssenandHartman Netherlands Y N Y Y N N Y Y

Alexandre-Bourhis France N Y Y Y N N N N

BottomleyandDoyle U.K. N N Y N N Y N Y

Barrat,Lye&Venkateswarlu

NewZealand Y Y Y Y N N N Y

HoldenandBarwise U.K. Y Y Y Y Y N N Y

FuandSaunders China N N N Y Y Y N N

PatroandJaiswal India Y Y Y Y N N N Y

Note: Y denotes ‘significant’ and N ‘not significant’ at 95% C.L. Source: (Mather, 2011)

Table 3. GLMM Results of Mather (2011)

Fit attributesD

Interaction terms Ideal point

Q C S T Q x C Q x S Q x T C^2 S^2 T^2

Mather(2011) N Y Y Y N Y Y Y Y N Y

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briefexplanation,examplesandinstructionsweregivenwhereverappropriate.Wefollowedindirectquestionadministration.Apretestofthequestionnairewasconductedwith51respondents.Theserespondentswerenotincludedinthefinalsurvey.

• The Data Characteristics

ThestatisticofSkewnessandkurtosisofthedependentvariableshowednormaldistribution.Notonlythis,distributionofalltheindependentvariablesisalsofollowingnormalityassumption(Table5)—althoughkurtosisstatisticforindependentvariables,havereachedashighas1.24.

• Correlation Matrix

However,Linearityofindependentvariableswithdependentvariableshowthatalltheindependentvariablesaresatisfyingtheassumptionoflinearitywithrespecttothedependentvariablebyshowingsignificantcorrelationat the0.01 level (Table6).Thecorrelationmatrixshowshighcorrelationbetweenthethreefitattributesandtheirinteractionwithqualityterms.Itisnotedthatcorrelationbetweentransferabilityanddifficultyshowsahigherside.

• OLS Regression Estimates

Table 4. Original brands and their hypothetical extensions

# Original Brands Extensions

1 TapalDanedarChai Coffee Milk Mouthwash

2 K&NChicken Redmeat Masala Floortiles

3 Qurshi’sJamSheeren Fruitjuice Mithai(sweet) Bicycle

4 MobilinkMobileNetwork LandlineNetwork Mobilehandset Ballpoint/inkpen

5 Olper’sMilk Milkpowder Teabag Chewinggum

6 StudentBiryani Burger Softdrink Chewinggum

Table 5. Data characteristics

Mean Std. Deviation

Skewness KurtosisMode

Statistic Std. Error Statistic Std.

Error

Dependent variable:

BrandExtensionPreference 3.76 1.43 -0.23 0.12 -0.67 0.23 4.00

Independent variables:

OriginalBrandQuality 4.94 1.10 -0.42 0.12 -0.01 0.23 5.00

Substitutability 3.57 1.86 0.02 0.12 -1.21 0.23 1.00

Complementarity 3.47 1.87 0.06 0.12 -1.24 0.23 1.00

Transferability 3.88 1.88 -0.27 0.12 -1.05 0.23 5.00

Difficulty 3.79 1.72 -0.22 0.12 -0.99 0.23 5.00

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RunningtheOLSregressionforequationproducesthefollowingestimates(Table7):Asevidentfromtheaboveregressionestimates,noneof theindependentvariableshasbeen

foundsignificantduetohighcollinearityasindicatedinverylowlevelsfortolerances.Thismaybeduetohighlycollinearindependentvariablesasdiscussedelsewhereinthepaper.Whenthereishighmulticollinearitybetweentheindependentvariables,relationshipbetweentheindependentvariablesand thedependentvariables is likely tobeambiguous.Avoidingmulticollinearity isparticularlyimportant for us in this paper because various authors have questioned the OLS estimation andresidualcentering techniqueas inadequatemeasures toeliminatemulticollinearity(Bottomley&Doyle,1996,Lance,1988;Mather,2011).

Inordertoresolvetheissueofmulticollinearitywithoutcompromisingonobjectiveoffindingbest, linear,unbiasedestimates,wedividethecollinearindependentvariablesintotwofollowingcategoriesandrunregressionseparately:

Category-ADifficultyOBQxSubstOBQxCompleOBQxTrnsfrSqrSubstiSqrComp

SqrTrnsfr

Category-BSubstitutabilityComplementarityOriginalBrandQualityTransferability

◦ OLS Regression Estimation with Category-A

RegressionestimateswithindependentvariablesunderCategory-AaregiveninTable8:

Table 6. Correlation matrix

BEPrefrnc OBQ Subst Compl Trans Diffi OBQxSubst OBQxCompl OBQxTrans

BEPrefrnc 1 0.17** 0.73** 0.53** 0.67** 0.62** 0.71** 0.52** 0.66**

OBQ 0.17** 1 0.08* 0.12** 0.04 0.11** 0.42** 0.44** 0.44**

Subst 0.73** 0.08* 1 0.55** 0.57** 0.56** 0.92** 0.51** 0.53**

Compl 0.53** 0.12** 0.55** 1 0.42** 0.45** 0.53** 0.92** 0.42**

Trans 0.67** 0.04 0.57** 0.42** 1 0.79** 0.52** 0.39** 0.89**

Diffi 0.62** 0.11** 0.56** 0.45** 0.79** 1 0.54** 0.44** 0.74**

OBQxSubst 0.71** 0.42** 0.92** 0.53** 0.52** 0.54** 1 0.62** 0.65**

OBQxCompl 0.52** 0.44** 0.51** 0.92** 0.39** 0.44** 0.62** 1 0.54**

OBQxTrans 0.66** 0.44** 0.53** 0.42** 0.89** 0.74** 0.65** 0.54** 1

** Correlation is significant at the 0.01 level (1-tailed)* Correlation is significant at the 0.05 level (1-tailed)

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Wefound interactionoforiginalbrandqualityandsubstitutabilitysignificantat0.05 levels.Butwecannotinterprettherelationshipofthisvariablewithdependentvariableas‘true’becausetolerancelevelofthisvariableisbelow10%.

• OLS Regression Estimation with Category-B

RegressionestimateswithindependentvariablesunderCategory-BaregiveninTable9:The category-B results show substitutability, original brand quality and transferability as

contributingtowardspositiveconsumerevaluationofbrandextensiontoaverysignificantextent.Wedidnotfindcomplementarityattributesassignificant.Further,theissueofmulticollinearityinthealltheindependentvariableshasalsobeenresolvedcompletely.ThevalueofD-Wstatisticsof1.55iswithintheprescribedrangeforrejectionofpresenceofserialcorrelationamongtheresiduals.Further,thisborderlinevalueoftheD-Wstatisticisofverylittleconcernbecausewearedealingwithcross-sectionaldata.ThesamelevelofR2andadjustedR2indicatetowardsnodiscrepancyinincluding/excludingofthevariablesinthemodel.Regardingmodelfit,regressionsumofsquaresare371,muchhigherthanresidualsumofsquareof206.Assuch,thetruemodelforconsumerevaluationofbrandextensioninPakistanisasfollows;

Positiveextensionevaluation=α+OriginalBrandQuality+Substitutability+Transfer+ε

Withcategory-Bindependentvariables,weincludedindependentvariablesundercategory-Aone-by-one.Afterobtainingthecoefficientoftheincludedvariable,wereplacedtheoldvariablewiththenewtillallthefollowingcoefficientswereestimated.Non-significanceofthesevariablesindicatesthatcategory-AvariablearenotrelevantinconsumerevaluationmodelingofbrandextensioninPakistan(Table10).

Table 7. OLS Regression for the Model as per Equation

ModelStandardized Coefficients T-test Sig.

Collinearity Statistics

Beta Tolerance VIF

1

(Constant) 1.046 0.297

Substitutability 0.332 1.162 0.246 0.018 56.720

Complementarity 0.129 0.449 0.654 0.017 57.912

OriginalBrandQuality 0.068 0.667 0.506 0.139 7.170

Transferability 0.260 0.964 0.336 0.020 50.789

Difficulty 0.055 0.835 0.405 0.329 3.037

OBQxSubst 0.245 0.930 0.353 0.021 48.368

OBQxComple -0.155 -0.649 0.517 0.025 39.903

OBQxTrnsfr 0.093 0.394 0.694 0.026 39.061

SqrSubsti -0.118 -0.558 0.578 0.032 31.261

SqrComp 0.066 0.318 0.751 0.034 29.796

SqrTrnsfr 0.002 0.012 0.990 0.036 27.536

R square 65% Adjusted R square 63% D-W

statistic 1.537Regression

sum of squares

373.040 Residual sum of squares 203.935

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5. CoNCLUSIoN

Asperourstudy,consumerevaluationofbrandextensioninPakistanisdependentonqualityoftheoriginalbrand,incertainusagesituationandhelpfulnessofpeople,formakingitsextension.Further,otherindependentvariablesincludingcomplementarity,difficultyandmoderatingroleofqualitywithfitattributeshavebeenfoundasirrelevantfordeterminingconsumerevaluationofbrandextensioninPakistan.Wehavehoweverfoundanexpectedsignonidealpointeffectofsubstitutabilitybutsignificantat15%C.L.

BasedonourresultsandtheresultsofauthorsasreportedinTable2,weareoftheviewthatgeneralizationofconsumerevaluationofbrandextensionattheworldlevelisinappropriate.Theresultswillvaryfromcountrytocountry.NowitisclearthatwhyDawlance,leaderinrefrigeratorcategorycouldnotpositionitselfintelevisionandmicrowavecategoriesduetoincongruentnatureoftheextensionswiththeoriginalbrandandevidenthelplessnessofDawlancepeople,facilities

Table 8. OLS Regression with independent variables given in the Category-A

ModelStandardized Coefficients T-test Sig.

Collinearity Statistics

Beta Tolerance VIF

(Constant) 11.317 0.000

Difficulty 0.100 1.564 0.119 0.358 2.793

OBQxSubst 0.388 1.938 0.054 0.036 27.600

OBQxComple -0.113 -0.647 0.518 0.047 21.171

OBQxTrnsfr 0.118 0.738 0.461 0.056 17.713

SqrSubsti 0.078 0.460 0.646 0.050 19.859

SqrComp 0.166 1.111 0.267 0.065 15.394

SqrTrnsfr 0.205 1.506 0.133 0.078 12.772

Table 9. OLS Regression with independent variables given in the Category-B

Model Standardized Coefficients T-test Sig. Collinearity Statistics

Beta Tolerance VIF

(Constant) 1.175 0.241

Substitutability 0.440 8.500 0.000 0.527 1.897

OriginalBrandQuality 0.139 3.672 0.000 0.979 1.021

Transferability 0.382 7.829 0.000 0.593 1.686

Complementarity 0.064 1.449 0.149 0.714 1.400

R square 0.643 Adjusted R square

0.638 D-W statistic

1.546 Regression sum of squares

371.242 Residual sum of squares

205.734

Table 10. Combined results of both categories

Test Difficulty OBQxSubst OBQxComp OBQxTrsfr Subs^2 Comp^2 Trnsfr^2

T-statistic 0.735 0.170 0.015 0.136 -0.048 0.027 0.054

Significance 0.463 0.850 0.988 0.690 -0.269 0.150 0.957

Tolerance 0.332 0.035 0.037 0.036 0.044 0.043 0.046

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andskills inmakingTV/microwave.Similar to thisJang,acategory leader inUrdunewspapershadsuccessfullyextendeditsspin-offGeo News,inelectronicmediacategoryduetoqualityoftheoriginalbrandandsubstitutabilityofGeo NewswiththatofJang,newspaper.ButfailureofWaqt,anelectronicnewschannelwasduetolowqualityofitspeople,facilitiesandskills,whichwasveryusefulincaseofGeo News.Successofthistransferisevidentfromafactthatanumberofreporters/journalistsofJang NewshaveearnednameasTVanchors.

Brandextensionstrategiescanbeacauseofsuccessorfailuresforanextendedproductaswellasthesestrategiesarepowerfulenoughtodistorttheimageofacompany.Throughliteratureandinterviewsthephenomenonthatisobservedisconsumermemory.Consumeralwaysrememberstheirfirstinteractionwiththechildbrandandcomparesthiswithwhentheyfirsttimeuseparentbrand.Consumerrecalltheirgoodandbadexperiencewithaproducteitheritcouldbeaparentbrandorchildbrand.Oncegoodorbadimageisdevelopeditisverydifficulttochangepeople’sperception.Similaristhecasewhenlaunchingproductindifferentcategory,itmayeitheraddvalueormaydistorttheimageofthecompany.Whencustomerloyaltywithonebrandisdevelopedandrelationshipoftrustistheretheneverytimewheneveranextendedproductislaunchedtheychecktheconsistencyamongthefeaturesofparentbrandandchildbrandandonthebasisofpreviousknowledgeandexperiencewiththeparentbrandcustomersevaluatechildbrand.Strongadvertisementisatoolwhendeveloployaltyincustomer,forexamplesequelsofparentandchildproductsareeffectiveinthisregardandmanymoreotherthingsdependsonproducttoproductcanputpositiveimpact.

5.1 Recommendation and ImplicationBrandManagersmayutilizeconsumers’perceptionofqualityoftheiroriginalbrandformarketingextensionbrands.Theyshouldrealizethat‘perceptionofquality’isthemajoreffectinPakistan.Brandmanagersshouldnevercompromiseonquality.Further,investmenttobuildbrandequityistherightapproach.Perceptionofqualityoftheoriginalbrandisthemostimportantfactorforsuccessfulbrandextension.Brandmanagerscangoforsimilarbrandextensionwheretransferofcompanyresourcesandskillsetissignificant.

Brandmanagementresearchcanbuildonresultsofthisstudy.Thenegativesignonpolynomialtermforsubstitutabilityindicatedtowardsexistenceofidealpointeffect,althoughitssignificanceisat15%C.L.Further,allthecategory-Avariableswerefoundinsignificantat5%C.L.Therefore,itispossiblethatthesevariablesareirrelevantinPakistan’scontext.Ifso,generalizationofbrandextensionataworldlevelisnotpossible.Weareoftheviewthatbrandextensionresearchshouldconcentrateonfindingcountryspecificmodelinsteadofgeneralizationattheworldlevel.

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