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How Good Brands Do Better: Finding Feasible Communication Strategies when Brand Extension Is Decided

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Title:
How Good Brands Do Better: Finding Feasible Communication Strategies when Brand Extension Is Decided
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PARK, JIMI ( Author, Primary )
Copyright Date:
2008

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Advertising campaigns ( jstor )
Apples ( jstor )
Brand image ( jstor )
Brands ( jstor )
Cell phones ( jstor )
Consumer attitudes ( jstor )
Consumer research ( jstor )
Graphics ( jstor )
Marketing ( jstor )
Psychological attitudes ( jstor )

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University of Florida
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University of Florida
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Copyright Jimi Park. Permission granted to the University of Florida to digitize, archive and distribute this item for non-profit research and educational purposes. Any reuse of this item in excess of fair use or other copyright exemptions requires permission of the copyright holder.
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12/31/2007
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649810218 ( OCLC )

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1 HOW GOOD BRANDS DO BETTER: FI NDING FEASIBLE COMMUNICATION STRATEGIES WHEN BRAND EXTENSION IS DECIDED By JIMI PARK A THESIS PRESENTED TO THE GRADUATE SCHOOL OF THE UNIVERSITY OF FLOR IDA IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ADVERTISING UNIVERSITY OF FLORIDA 2006

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2 Copyright 2006 by Jimi Park

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3 For my family-again, more than ever.

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4 ACKNOWLEDGMENTS I express my gratitude to Hyun-sung Park, Sun-soon Kim and Sang-lin Park, for fully supporting me to do this research and for thei r encouragement through th e entire process. I would also like to give heartfelt thanks to Kee-chul Yeom, who ha s provided insightful suggestion and valuable comments. I appreciate the committee members for their patience and persistence in the review process, and fore most to God for superb guidance and faith.

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5 TABLE OF CONTENTS page ACKNOWLEDGMENTS...............................................................................................................4 LIST OF TABLES................................................................................................................. ..........7 LIST OF FIGURES................................................................................................................ .........8 ABSTRACT....................................................................................................................... ..............9 CHAPTER 1 INTRODUCTION................................................................................................................. .10 2 LITERATURE REVIEW.......................................................................................................13 Brand Extensions............................................................................................................... .....13 Fit Theory..................................................................................................................... ...13 Category Extension.........................................................................................................14 Distance Extension..........................................................................................................14 Communication Strategies......................................................................................................1 6 Hypotheses Development.......................................................................................................18 3 METHOD....................................................................................................................... ........21 Design......................................................................................................................... ............21 Stimuli Development............................................................................................................ ..21 Brand Selection...............................................................................................................2 1 Distance Decision............................................................................................................22 Product/Image Communi cation Strategies......................................................................22 Independent Variables.......................................................................................................... ..23 Dependent Variables............................................................................................................ ...23 Pretest........................................................................................................................ .............23 Selection of Extension Type............................................................................................24 Selection of Communication Cues..................................................................................25 Procedure...................................................................................................................... ..........26 4 RESULTS...................................................................................................................... .........27 Manipulation Checks............................................................................................................ ..27 Covariates..................................................................................................................... ..........28 Brand Extension Evaluations..................................................................................................28 Main Effects................................................................................................................... .28 Interaction Effect............................................................................................................. 30

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6 5 DISCUSSION................................................................................................................... ......33 6 LIMITATIONS.................................................................................................................. .....36 APPENDIX A EXPERIMENT STIMULI......................................................................................................38 Remote Brand Extension with Imagebased Appeals Print Advertisement...........................38 Remote Brand Extension with Productbased Appeals Print Advertisement.........................39 Close Brand Extension with Image-ba sed Appeals Print Advertisement..............................40 Close Brand Extension with Product-ba sed Appeals Print Advertisement............................41 B QUESTIONNAIRE................................................................................................................ 42 LIST OF REFERENCES............................................................................................................. ..45 BIOGRAPHICAL SKETCH.........................................................................................................47

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7 LIST OF TABLES Table page 3-1 Distance score between iP od and extension categories.....................................................244-2 Attitude & Purchase Intention toward the print advertisement.........................................324-3 MANCOVA results between brand extens ion and communication strategies with Covariates..................................................................................................................... .....32

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8 LIST OF FIGURES Figure page 2-1 Communication strategies for each brand extension.........................................................184-2 Attitude toward pr int advertisement..................................................................................314-3 Purchase intention toward print advertisement..................................................................31

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9 Abstract of Thesis Presen ted to the Graduate School of the University of Florida in Partial Fulfillment of the Requirements for the Degree of Master of Advertising HOW GOOD BRANDS DO BETTER: FI NDING FEASIBLE COMMUNICATION STRATEGIES WHEN BRAND EXTENSION IS DECIDED By JIMI PARK December 2006 Chair: Jorge Villegas Major Department: Advertising Which communication strategy is feasible for various brand extensi on decisions? The goal is to show effective communication strategies for each brand extension and analyze each procedure to find the best way to determine the success of brand extension. Previous research on brand extension evaluations assumes that these ev aluations are largely mediated by perception fit with the parent brand. This research extended the investigation to the practical usage of communication strategies for each brand extension type. The two categorical independent variables are measured to explain which brand extension nature is close or remoter to its parent brand concept and explain communication strategi es that are product based or image based in showing their practical design execution. The fi ndings suggest that successful communication strategies serve to build bridges across distance. The results imp ly that when the brand is closely or remotely extended, consumers communicate with the current image and concept of parent brand, which in turn means the image-focused communication to its pare nt brands has strong impact on the consumers’ evaluation toward the brand extension.

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10 CHAPTER 1 INTRODUCTION When developing new products, many researcher s and development project managers have a saying: “Good, fast, and trendy-pick two” It has become critically important for marketing managers to fully understand the whole new prod uct introduction process in order to maximize the likelihood of a success. Many me thods are applied into market to successfully launch a new product under the name of brand extension because it has been evaluated that the extension from the strong parent brand is one of the effective ways to gain more powerful market dominance with less investment in finance. Others argued that it will increase the range of categories suitable for future extensions (Boush and Lock en 1991; Dacin and Smith 1994). The market is getting complicated with more direct and indire ct competitors, thus the continuous innovation of the business model gives chance to minimize the instability. Due to the opening of future extendibility, brand extension may help the co mpany to try new business filed. Whereas some have argued that a broad set of extensions will cr eate more diffuse associations and weaken the parent brand (Keller and Aaker 1992; Loken and John 1993). Moreover, the growing use of brand extensions gives rise to a subtle risk in the form of lost oppor tunities to develop new brands which might enhance the long-term value of a firm by building its brand portfolio (Keller 1997). Also the brand extension can confuse or perhaps even frus trate the consumers who were not satisfied the extended brand. Thus, the wrong decision of the brand extension can fall the whole business into troubl es Therefore, brand extension can be regarded as a challenge in current market. Vlckner and Sattler found that fit between the parent bra nd and an extended brand is the most important driver of brand extension su ccess, followed by marke ting support and parentbrand conviction. This fit theory is also found to explain the successful marketing

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11 communication strategies for brand extension (Keller and Aaker 1992; Loken and John 1993) . Finding the best fit between th e extended brands and marketi ng communication strategies may not be easy because it is impossible to calculate the result before the execution. Thus, both academic and industrial support is critically necessary for brand ex tension to have the expected value. As the research stream for brand extension ha s matured, it is obvious that brands that have favorable, strong and unique associations are be tter differentiated from competing brands and can be more easily extended into other product categories (Meyvis and Ja niszewski 2004) This means the adequate communication strategy which f its each brand extension has to be studied to guarantee a successful brand intr oduction with new communicati on message. Yet, few studies have dealt with marketing comm unication strategies for variou s brand extension situations. Extended brand needs new communication strategy because its user, usage pattern, current and future market situation is completely differe nt (Boush and Locken 1991; Dacin and Smith 1994). Moreover, it has to be considered with different marketing point of view if the brand is extended into different category because the positioning and target audience of the new category will be different with that of parent brand. Thus, how to effectively connect managerial considerations of brand extension with marketi ng communication strategies can deci de the success or failure of brand extension. The goal of this research is to show th e conditions under communi cation strategies for each brand extension and analyze eac h procedure to find the best way to determine the success of a brand extension. To achieve this goal, first, this research addresses the issue of the determinants of extension success by simultaneous ly investigating previous studies. Second, this research applies a structural communication strategi es analysis to test level of extension success.

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12 The analysis considers the direct relations hips between extension success and successful communication factors. This research is organized following the stru cture of previous revi ew. Two explanations have been advanced to explain the success and fa ilure of brand extensions . First, two separate streams of literature review are proposed together based on the theoretical and empirical founding for brand extension: (1) the literature about brand extension developed by category and (2) the literature about brand ex tension by distance. Doing so cl arifies the nature of the dual processes of creating and communicating brand concept to consumers who form new brand images. The second is to examine the dynamic me thods of communication strategies. To conduct the brand extension study which is related comm unication strategies, this research synthesized the past findings and classificati ons of brand extensions. First, using Tauber’s classification (1988), the communication strategy for brand extension can be simplified into two parts: (1) product related association extension and (2) image related association extension.

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13 CHAPTER 2 LITERATURE REVIEW Brand Extensions Fit Theory It is necessary to remember that a successful brand extension has been developed with an assumption that a brand is a collection of asso ciations (Keller 1993). Th ese associations are composed with product attributes, benefits that consumers evaluate on the basis of their attitude toward the brand as a continuous marketing communication Researchers have identified two dimensions of the fit construct (Bhat and Reddy 2001; Park et al. 1991). The first is product level fit, which refers to the perceived similarity between the extension product and the existing product of the brand. The second is brand-level fit, referring to the match between the image of the parent brand and the ex tension brand (Bhat and Reddy 2001; Park et al 1991). For example, a ssume that iPod launches iPod cell phone. The perceived fit between iPod and iPod cell phone will be composed of a product level fit because there are shared product attri butes between MP3 players and cell phones, such as ‘portable personal electronic devices’. At the same time, brand-level fit is another component for the iPod example because there is a certain image ma tch between iPod’s young, trendy brand image and the image of the cell phone. Thus, the fit theory can explain not only product level but also brand level, which in turn, is critical to explai n the relationship between brand extension and communication strategy. This research describes the current research of brand extension with two streams suggested by Tauber’s typology (19 88). Further, it extends Tauber’s traditional approach of brand extension by relating each level of extension to each appropriate communication process that consum ers engage in. According to pr evious research review, the two streams of brand extension can be summarized that 1) the category extension represents the

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14 traditional classic marketing approach in brand extension criteria while 2) distance extension represents the current approach to brand extens ion based on fit percepti on theory (Boush and Loken 1991; Broniarczyk and Alba 1994). Category Extension There are several brand categorie s that are divided by the char acteristics of the product or service. The categorization is automatically proc essed within a short period in the consumer’s perception because brands traditionally have been categorized in certain ways to explain the market situations (Broniarczyk and Alba 1994; Dancin and Smith 1994; Park, Milberg, and Lawson 1991). Consumers have recognized the category differences based on the common experiences of their lives because the human cognition system is planned to categorize the variables according to certain rule s which can be socially controll ed or historically perceived. This categorization habit has been applied to explain the brand exte nsion type. When the brand extension occurs in the same category, th e marketing communication strategies have been rather consistent with the parent brand because th e characteristics of targ et market and audience are similar tothe parent brand. If the brand is extended into diffe rent category, marketers need to find the appropriate target a udience and marketing communication message which fits the new category (Jiyao, Richard, and Gary 2005). Distance Extension The Second stream of explaining brand exte nsion deals with the distance between the parent brand and the new brand. Ho w close or remote extension fr om the parent brand territory determines the characteristics of the new brand. In other words, the percei ved distance about the new brand from the original brand can influence c onsumers to determine whether it is preferable to transfer the good image of the parent brand or further improve the original image. Research has been investigated that consumers feel the de gree of an extension’s distance (i.e., closeness

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15 and remoteness) by estimating the perceived fit of the original brand es sence in extensions (Broniarczyk and Alba 1994; Dancin and Smith 1994; Park, Milberg, and Lawson 1991). Thus, finding the perfect fit between the parent brand and extended brand is a critical factor to explain brand extension with distance. According to di stance extension theory, brand extensions should be successful when consumers evaluate brand ex tensions primarily by evaluating brand essence consistency rather than just the product level of similarity (John, Loken, a nd Joiner 1998). Again, repeating the same communication message does not work well because consumers are more engaged in the consistent voice of a brand as a whole picture rather than being tamed with similar messages continuously. Thus, the brand extension explained wi th distance focused on finding the fit between brands. This research takes this standpoint because 1) the perceived distance of a parent brand and its extension can be applied to extensions in th e same category (seen as close) and in different categories (seen as remote). Thus, cate gory extension can be described with closeness/remoteness brand extens ion. In addition to this, categories are becoming complicated to classify one by one as the current marketi ng is getting more and more complex with many business decisions such as Merger and acquis ition (Ted and Weiyu 2004). We can no longer saw this brand is included into one specific category and the other is in a different category (Jiyao, Richard, and Gary 2005). For example, assuming that iPod decides to go with a close brand extension, the possible brand extension can be iPod cell phone because the characteristics of iPod are trendy and young and portable which is si milar with cell phone in terms of product characteristics. Simply, we ignore the consider ation whether MP3 players and cell-phones would be included in the same cat egory or not. Consumers just know the distance immediately according to their previous experiences and pe rceptions. Another fictitious example explaining

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16 remote brand extension is iPod jeans. Even thoug h jeans are the representative of youth just like iPod, the apparel product has been tr eated to be in a completely di fferent category compared to electronic appliances such as MP3 players. We can easily guess that iPod jeans need to employ different approaches from the original iPod char acteristics. In sum, the brand, whether it has been treated in the same category or different category, can not fully explain the current brand extension situation. The distance theory can easily explain the distinct char acteristics of brands and can be applied to inde finable brand extensions. Communication Strategies Over the past decade, a considerable amount of advertising research has suggested that attitudes are based not only on beliefs and cognition but also on feelings and emotions {Batra and Ahtola1990; Batra and Ray 1986; Breckler 1 984; Burke and Edell 19 89; Edell and Burke 1987; Leclerc, Schmitt, and Dube 1994; Zanna and Rempel 1986). The attitudes that consumers form toward brands extensions depend on the percep tions that they already have about the parent brand. Consumers generate their own thoughts or cognitive responses as a consequence of a parent brand's message. In this regard, comm unication cues have been investigated by the consumers’ evaluation whether it is informationa l or transformational, cognitive or affective and product based or image based (Gould 2003; Lambia se and Reichert 2003). Overall, these two sets of communication cues can be summarized as execution cues and messa ge cues in terms of usage and components. Execution cues convey c ognitive factors such as information or performance about the product, whereas message cues convey emotional factors such as the symbol of the brand asset a nd user characteristics. The new brand has to be fit with the parent brand which is related with brand level associations such as brand essen ce transfer. To make this transfer more fluent the brand essence can be searched with two levels of communicat ion cues which are composed by execution and

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17 messages. This research will investigate the ad equate fit of communication strategies in each brand extension type. First, by relating Tauber’s clas sification(1988) with two sets of communication cues the communication strategy related to the brand extension can be simplified into two levels:(1) product related association extension and (2) message related associations extension. The product related extension refers to the ex tended brand containing the origin al brand’s distinctive features such as tastes, ingredients and components. For ex ample, assuming that iPod has distinct features such as black and white color simplicity of the product design, which is another product feature which appeals to the young target . If iPod cell phone extends its brand with a line of simple, black/white features, this can be considered a produc t related association. Also, a brand can be extended as the companion product which either supplements or complements the product. For example, Duracell Durabean flashlight is one kind of usage pattern extension through supplement (Barone et al. 2000). This usage pattern can be included in product related associations. Message association is generally about non-pr oduct related association extensions, which means new brands that capitalize on the original brand’s personality, user, and usage imagery (Gould 2003; Lambiase and Reichert 2003). Curre nt market symbolic needs are important factors of consumers. Brands with a symbo lic positioning enable their consumers to be associated with a desired group, role, or selfre spect (Park et al. 1991). The individual’s desire for self identity creation, maintenance, and enhanc ement are easier to stretch to more dissimilar product categories than functiona l brands (Barone et al. 2000). For example, the symbol of iPod is youth and trendy. If iPod launches iPod jeans which is dissimilar in terms of brand classification, consumers are exp ected to buy the jeans due to th e symbolic meaning of the iPod

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18 brand itself. In the same spirit, this research argues here that fi t perceptions of symbolic brands are influenced mainly by non-product related associ ations; the fit of a func tional or experimental brand with the extension category, on the othe r hand, will be determined basically by product related associations. Figure 2-1. Communication strate gies for each brand extension Hypotheses Development Past research has mainly investigated the effect of extension attitude on the parent brand; the relationship between brand extension and communication strategies has scarcely been investigated. Moreover, past research has essentia lly dealt with the general associations and has not investigated the specific le vel of associations. Two hypothese s are proposed aiming at filling these gaps. The hypotheses refer to th e concepts and relations in Fig 1. A lot of close brand extension examples can be found, because it has been investigated that with close brand extension it is eas ier to take advantage of the pa rent brand effect than with a remote brand extension. To see the relati onship between brand extension type and Brand Extension Distance extension -Close extension: Perceived distan ce about the new brand is short -Remote extension: Perceive d distance is relatively long Communication strategies Product related associations -New products that have the origin al brand’s distin ctive features. Image related associations -New products that show the personal ity and user imagery of original brand Perceived Fit

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19 communication cues, it is necessary to prove the existing belief that a close extension will be more favorable to consumers than a remote extension. Thus, the following is hypothesized. H1: There will be a main effect of brand extension type on consumer evaluations H1-1 : A close brand extension will generate a more favorable attitude toward the ad than a remote brand extension H1-2 : A close brand extension will generate a higher purchase intention than a remote brand extension. It is hard to find existing examples of remote extension because marketing managers want to minimize the risks that might happen from ex tending their brand into a remote industry. However, following the comfortable path might inhibit the chance to grow business and competitors might take the opportunity. Thus, inve stigating the remote extension characteristics can offer a new business insight. Remote extens ion can offer another business challenge to revitalize the brand by enhancing th e brand image. Dilution effect e xplains that the parent brand knowledge and affect are more likely to dilute the closely extended brand, whereas enhancement effects are more likely to occur for remote exte nsions (Ahluwalia and Gurhan-Canli 2000). This suggests that consumers would not confuse their prior brand concep t with the remotely extended brands whereas consumers will have trouble di stinguishing the brand concept for closely extended brands. Considering that the delution of the parent br and is expected with a poor quality communication strategies plan, it is necessary to differentiate the messages for each brand extension. For close brand extensions, give n that consumers already build their own brand concept, it is required to use cognitive communication tools that do not dilute the parent brand concept. Also, it is essential to give a full expl anation of the added value of the closely extended brand. This cognitive communication can be used by employing the product-oriented communication cues. On the other hand, for remote brand extension, it needs to involve the emotional communication to build the brand concept. By using the image-oriented

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20 communication cues consumers can get a general concept of the remotely extended brand and it also lowers the entry level, which would be rela tively higher than the cl ose extension. Moreover, Park et al. (1991) showed empirically that sym bolic brands, characteri zed by the dominance of image related associations, are easier to stretch to more remote extension than the functional brands. This suggests that remote brand extension will be more effective when it uses symbols of the brand, which are image-oriented communi cation cues. Therefore, the following is hypothesized. H2: There will be an interaction effect be tween brand extension types and communication appeals H2-1: Attitude toward the ad for a close brand extension will be more positive when consumers are exposed to a product appeal, while the attitude toward the ad for a remote brand extension will be more positive when they are exposed to an image appeal. H2-2: Purchase intention for a close brand extension will be higher when consumers are exposed to a product appeal, while purchase intention for a remote brand extension will be higher when they are exposed to an image appeal.

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21 CHAPTER 3 METHOD Design The hypotheses were tested via a 2 * 2 betw een subject experiment in which brand extension nature (close and remote) and communi cation strategies (produc t oriented and image oriented) were manipulated. Since this study required the use of real brands , attitude toward the parent company was used as a cova riate to control the effect of pr evious experience and attitude with the brand used in the experimental stimu li using Multivariate Analysis of Covariance (MANCOVA). Stimuli Development Brand Selection The stimuli were designed to emulate a new pr oduct concept test. In such tests, managers often rely on written or verbal product descri ptions because they cannot develop prototype models until a new product concept has cleared ear ly stage-gate hurdles. Thus, by using print advertisements our results should be useful to managers interested in developing new product opportunities for a brand (DelVecchio and Smith 2005). The stimuli were created with an existing brand which has not yet extended to any other business because it is necessary to avoid confounding factors that might d ilute the perception of the br and. Yet, it has to show the powerful brand image that can be easily descri bed by most of the subjects and needs to be targeted to college students as th ey were the participants in this study. In this way iPod was taken as a relatively neutral and well known brand. It is necessary to remind that iPod is an extended brand from Apple which can be described as a close brand exte nsion. After the first iPod was re leased in the US in 2001, the brand awareness and brand loyalty of iPod has deve loped incredibly in six years. Compared to

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22 any other product, consumer perceived iPod as a next big thing and many business decisions are currently considered from the aspect of the success of iPod. In other words, iPod opened a new discussion about future extendib ility of brand in terms of pr oduct design and portability. The iPod had an 82 %t share of the market in U.S. retail stores in the 12 months ending in August 2006, up from 64 % in the same period a year earli er, and 33 % two years ago, according to Port Washington, New York-based NPD Group Inc. T hus, selecting iPod as a stimulus for brand extension in this study will be an adequate decision both for the practical and academic approach. Distance Decision In this study the distance which is far from iPod was selected to credibly distinguish the extension type. The iPod cell phon e is usedfor the close-extension, which was moderately similar to iPod and the iPod jean, which is dissimilar to IP od is used as the remote extension stimuli. Traditionally, brand extension types were ope rationalized by using category extension (Broniarczyk and alba 1994; Dancin and smith 1994; Park, Milberg, and Lawson 1991). They divide the brand extension type in terms of category, for example same category versus other category. As this research disc ussed earlier, this operation is not enough to explain the current and future brand extension practice because, first of all, the products are not exactly included in one category and, secondly, many innovational busi ness decisions are currently made based on the concept of convergence, which means decisi on makers have to open the criteria of their business operation to grab the le adership in the following period. Product/Image Communication Strategies On the basis of this assumption, to compare different effects of co mmunication strategies, 4 different versions of a printed ad were employe d. In line with these manipulations of extension, each of the communication strategies are applied to each extension stimuli. The appeals of cell

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23 phones such as slimness, advanced performance, and sleek design were adopted to show a product-based advertisement while young, exciti ng, and progressive images which did not include any product features were used to explain an image-base d advertisement. Similarly, the advancement in jean technology is introduced in a product-based advertisement and funky and premier images were used as an imag e-based advertisement for iPod jeans. Independent Variables The two categorical independent variables are measured to explain brand extension nature that is close or remote to its parent brand concept and explain communication strategies that are product based or image based in showing their practical design execution. The brand extension types were operationalized by Kapferer (1998) and communication strategi es were taken from Aaker and Keller (1990) a nd Park et al (1991). Dependent Variables Two dependent variables are used in this experiment. First of a ll, participants reported their overall evaluation of the advertisement us ing four-item (low quality/high quality, inferior/superior, negative/positive, not likely to buy /very likely to buy) with seven-point semantic differential scales. S econd, participants are asked to report their purchase intention using three-item (possible/impossi ble, probable/improbable, likabl e/dislikable) with seven-point semantic scales by using the operatio n of Morrin (1999) and Tauber (1988). Pretest As mentioned, the use of real brands introduces existing perceptions into the participants’ estimate of the brand extension that they are enga ged in. Therefore, to provide a strong test of manipulations, this research conduct two pretests to evaluate attitude s toward Apple and iPod because favorable attitude toward Apple can aff ect the consumer perception toward the extended brand of iPod. At the same time, it is necessary to see if the attitude toward iPod will affect

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24 attitude toward the extended br and of iPod. Using an online ques tionnaire the researcher asked 26 members of a course, about th eir attitude toward Apple a nd iPod such as, favorability, likeability, and their evaluation about the quality. These rating were reported on scales that ranged from 1 (negative) to 7 ( positive). Attitudes toward Apple and iPod were measured with a similar Likert scale anchored by 1 (negative) an d 7 (positive) that consisted of four items. Attitude toward Apple (MApple=5.60) and iPod were de finitively positive (MiPod=5.79). The measurements according to Cronbach’s ( Apple= .95 and iPod=.96) were deemed reliable. Selection of Extension Type To ensure thedistinct distance between close a nd remote extension, the researcher selected several dissimilar brand categories across the business field by asking 26 participants to evaluate their perception of distance towa rd extended brands of iPod ( cell phone, fast food restaurant, digital camera, denim jeans, entertainment busin ess, and insurance). The researcher averaged these ratings, which were measured on scales that ranged from 1 (close extension) to 7 (remote extension). Participants unanimously rated th e cell phone as a close extension (M=2.96) and denim jeans as a remote extension of (M=6.35). Ev en though the participan ts rate life insurance as the most remote extension among the six categor ies, Denim jeans were selected because it is highly unlikely that iPod would extend their business into the insurance category, thus there would be no practical implication with that f actor. The distance scor e is shown in table 1. These differences were confirmed by an in teraction between iPod and extension type. Therefore, the researcher selected iPod cell phon e and iPod jeans as the extension brand type. Table 3-1. Distance score between iPod and extension categories Extension category Mean Cell phone 2.96 Fast food restaurant 6.35 Digital camera 3.12

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25 Table 3-1. Continued Extension category Mean Denim jean 6.35 Movie production 4.46 Life insurance 6.65 Note Scale of the closeness/remoteness score 1-7 (1-closest, 7-remotest) Selection of Communication Cues The pretest was conducted with a sample of 26 participants by presenting 4 rough versions of a print advertisement which shows different communication cues with in close and remote brand extension. On the basis of the previous pretest, the resear cher selected the iPod cell phone and iPod jeans for brand extension stimuli respecti vely and participants were asked to answer four items that measured the perceived comm unication objective of the message (information about the brand; image of the brand; performance of the brand; personality of the brand) with seven point scales from 1 (Strongl y disagree) to 7 (strongly agree) after viewing a rough cut of an advertisement. The pretest confirmed that the four rough cut advertisements have the expected communication cues. First of all, the rough cut print advertisements which focus on showing image oriented cues were found that they conve y images rather than product attributes (M image=5.85 VS M product=4.81 F=8.40, p<.01). And it was also found that this image oriented ad focused on showing the personality of the br and rather than the product attributes (M image=6.27 VS M product=4.85, F=19.80, P<.01). Second, the rough cut ads which mainly focus on showing product oriented cues were found that they have more brand information than brand image (M image=3.65 VS M product=5.96, F=38.10, p<.01). It was also found that the product oriented ads focused on showing performance of the brand rather than showing the brand image (M image=3.69 VS M product=4.73, F=7.12, p<.01).

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26 Procedure The entire experiment was administered on the subject’s personal computer since the implementation of the study was online and at the time discretion of the participant. The researcher went to four classe s that were composed with different majors such as computer science and public relations. The 125 subjects were told to go to the website that was written in the consent form and it took two weeks to gather the data. To independently compare the effects of communication, 4 groups of undergraduate stud ents were employed. a We b-based script that assigns randomly visitors of the initial Web site to one of the four online questionnaires. Each group saw one print advertisement from the four di fferent manipulations. Part icipants first read a description page about the iPod on the webpage . The product descripti on began with a brief discussion of the functions, features, and bene fits of the iPod. The next page informed participants that iPod wished to introduce a new brand into the market and wanted to know consumer’s possible reactions to the communica tion messages of each brand extension. On the following page the subjects were exposed to one of the four versions of the ad, which was previously examined and adopted by the pretest. After being exposed to the ad the subjects of the study answered scales that measured the de pendent variables from 1 (“unfavorable, bad, unlikable, and negative”) to 7 (“favorable, good, lik able, and positive”). After the initial attitude question the purchase intention test was conducted to see how the respondents react differently compared to their attitude. Participants evaluate d purchase intention with the following question: “ If you were in the market place, what is the likelihood that buy this pr oduct?” on a scale that ranged from 1 (unlikely, improbable, and impossi ble) to 7 (likely, probable, and possible).

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27 CHAPTER 4 RESULTS Manipulation Checks On the basis of the previous pretest, the iPod cell phone and iPod were selected for brand extension stimuli respectively. The distance ma nipulation scales (1=close, 7=remote) was successful seeing that participan ts responded to the iPod cell phone as a close brand extension and to iPod jeans as a remote extension (Mcell phone=3.30 versus Mjean=5.21; F (1,122) =37.44, p<.01). They also reported that the stimuli manipulation was successful. Four items were used to assess the image/ product manipulation. Two of these items (“The print advertisement conveys the pe rsonality of the brand” and “T he print advertisement conveys the image of the brand”) were summed and divide d by two. The correlation of the two variable is statistically significant (r=.65, p< 0.01). Again, two o items (“The print advertisement shows the performance of the brand” and “The print adve rtisement shows the information of the brand) were summed and divided by two. The correla tion of the two variable is statistically significant(r=.75, p<.01). After combining the two f actors the numbers were divided by two and used a ANOVA. It was found that the image or iented stimuli have the expected image communication cues (Mimage=5.46 versus Mproduct=3.54, F (1,123) =55.02, p<.01). It was also found that the product oriented stimuli have the product communication cues (Mproduct=4.38 versus Mimage=2.92; F (1,123)=32.23, p<.01). Finally it was found that the reliability test was successful for the four items to measure the attitude toward the print advertisement ( =.95) and for the three items to measure the purchase intention ( =.94)

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28 Covariates Brand extensions are likely to vary with consumers’ level of interest with the parent brand. To control for this variance, a four item vers ion of Zaichkowsky’s (1985 ) measure of attitude toward Apple ( =.96) and iPod ( =.93)was collected as covariates respectively. The effects of fit between brand extension and communication st rategies were assesse d via MANVCOVA. The attitude toward Apple was not statistically sign ificant (p>.05, F=.70 of Wi lk’s Lambda). It was also found that the attitude toward iPod was not statistically related to the main test (p>.05, F=2.76 of Wilk’s Lambda). There was no effect of the covariates on the relationship between brand extension type and communication strategi es when the two dependent variables were tested together. When the attitude and purchase intention were tested separately, the attitude toward Apple still had no statistical influence on both attitude and purchase intention of extended brands. However, it was found that the attitude toward iPod was statistical ly significant with the purchase intention (p<.05, F=5.03). Ye t attitude toward iPod still did not have relation to the test. This means the attitude toward the iPod was relate d to the test only for the purchase intention. It can be interpreted that when subjects were in the process of building their attitude toward the extended brand, the attitude toward Apple and iPod had no influence on attitude building, while when subjects were on the buying decision proce ss, the attitude toward iPod affected the purchase intention toward the extended brands. Thus , the main test result can be interpreted that the purchase intention was affected even af ter controlling the attitude toward iPod. Brand Extension Evaluations Main Effects The first set of Hypotheses 1 pr edicted that there will be a ma in effect of brand extension type on consumer evaluations. More specifically, it predicted that a close brand extension will generate a more favorable attitude toward the ad than a remote brand extension. It also predicts

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29 that a close brand extension will generate a hi gher purchase intention than a remote extension. The results support the Hypothesis. First of all, it was found that th e attitude towa rd the iPod cell phone (Mcell phone=4.67) is more favorabl e than the iPod jeans (Mjean=3.84). Second, it was found that the purchase intenti on toward the iPod cell phone (Mcell phone=4.53) was higher than iPod jeans (3.03). These results indicate that the subjects have a more favo rable attitude toward close brand extensions. When considering the two dependent variables t ogether, the main effect of brand extension type was statistically significant with at p<.01, F=13.06 of Wilk’s Lambda, therefore the first set of hypotheses1 were supported. The main eff ect of communication st rategies was also statistically significant at p<.01, F=13.65. The results indicate that the consumer’s evaluation is related to the brand ex tension type when the attitude a nd purchase intention are considered together. However, when the two dependent variables were tested separately, the results were different. The attitude toward brand extension ty pe and communication cues were still significant at p<.05 with F=5.95 and F=25.15 respectively. And the purchase intention toward the brand extension type was stat istically significant at p<.05 with F=26.27 while the purchase intention towards the communication cues was not statistic ally significant (p>.05, F=1.19). Overall, three results out of four were statistically related to dependent variables when they were separately tested. The results indicate that the brand extens ion type affects consume r’s attitude and purchase intention respectively. The communication cues have an influence on building the attitude toward the extended brand while the purchase inte ntion is not affected by the communication cue differences.

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30 Interaction Effect The second set of Hypotheses 2 pr edicted that there would be an interaction effect between brand extension types an d communication appeals. Hypothesis 2-1 predicted that attitude toward the ad for a close brand extension would be more positive when consumers are exposed to a pr oduct appeal, while the attitude toward the ad for a remote brand extension will be more positiv e when they are exposed to an image appeal. The table 2 shows that the average attitude toward th e iPod cell phone ad was more positive when image cues were used (Mimage=5.15) than product cues (Mproduct=4.19). Consumers’ attitude toward iPod jeans was more positive when image cues (Mimage=4.75) were used than product cues (Mproduct=3.08). Overall, participants had a more favorable attitude when image cues were used in both clos e extension and remote extension. Hypothesis 2-2 predicted that purchase intention for a clos e brand extension would be higher when consumers were exposed to a product appeal, while purchase intention for a remote brand extension would be higher when they were exposed to an image appeal. The table 2 shows that the purchase intention toward the iPod cell phone was higher when image appeals (Mimage=4.64) were used than product cues (Mproduct=4.42). The purchase in tention toward iPod jean was higher when image cues (Mimage=3.28) were employed than product cues (Mproduct=2.83). As it was shown in th e attitude experiment, the purchase intention was higher when image appeals were employed for bot h close and remote brand extensions. However, there was no statistical signifi cance between the brand extension type and communication cues when the two dependent vari ables were considered together (p>.05, F=.23 of Wilk’s Lambda). Thus, there was no interact ion effect as a whole. The same results were found when the two dependent variables were tested separately. The interac tion effect of attitude was not statistically significant at p>.09 with F=3.03 and the interaction effect of purchase

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31 intention was not statistically significant as well at p>.48 with F=.51. Thus, the second set of Hypotheses was not supported. 0 2 4 6 productimage iPodcellphone iPodjean Figure 4-2. Attitude toward print advertisement 0 1 2 3 4 5 productimage iPodcellphone iPodjean Figure 4-3. Purchase intenti on toward print advertisement

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32 Table 4-2. Attitude & Purchase Inten tion toward the print advertisement Brand Extension Type Attitude Purchase Intention Communication strategies Cell phone Jean Cell phone Jean M Std M Std M Std M Std Product cues 4.19 1.32 3.08 1.63 4.42 1.53 2.83 1.53 M Std M Std M Std M Std Image cues 5.15 1.00 4.75 1.41 4.64 1.30 3.28 1.22 Table 4-3 MANCOVA results be tween brand extension and co mmunication strategies with Covariates. Source Dependent Variable Type III Sum of Squares Mean Square F Wilk’s Lambda. Covariates 1 Attitude toward Apple Attitude toward ad2.114 2.114 1.223 Purchase Intention.048 .048 .026 .70 Covariates 2 Attitude toward iPod Attitude toward ad5.252 5.252 3.038 Purchase Intention9.315 9.315 5.030* 2.76 Main Effect 1 Brand extension type Attitude toward ad 10.278 10.278 5.946* Purchase Intention48.835 48.835 26.371* 13.06* Main Effect 2 Communication strategies Attitude toward ad43.472 43.472 25.150* Purchase Intention2.197 2.197 1.186 13.65* Interaction Effect Attitude toward ad5.235 5.235 3.029 Purchase Intention.941 .941 .508 1.51 d.f. =(123,1), P*<.05

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33 CHAPTER 5 DISCUSSION The first set of hypotheses that a close brand extension will genera te a more favorable attitude and higher purch ase intention toward the ad than a remote brand extension were supported. This result also supports the past re search findings. However the second hypotheses that assumed interaction effect between brand ex tension type and communi cation strategies were not supported by the experiment. Image oriented communication strategies were more effective than product oriented strategies no matter what th e distance is. The attitude toward parent brand affects consumers’ evaluation of the extended brand. Especially, if the parent brand has developed the size of brand with continuous effort s of brand extension, the attitude toward the right before step of parent bra nd has greater influence on consumers’ evaluation than the original parent brand, which means the attitude toward iPod affects more highly than that of Apple. Previous research on brand extension evalua tions assumes that these evaluations are largely mediated by the perception of the extension’s fit with the parent brand (Barone, Miniard, and Romeo 2000). The results of this study are co nsistent with a similarity-based account of brand extension evaluations which means consumer s are more likely to generalize the benefits associated with the similar, narrow brand than th ose associated with the less similar, broad brand (Boush and Loken 1991). In contrast to previous wo rk in the area that ex amines the effects of characteristics of brand extension and its relations hip with the parent bra nd, this research shows the practical usage of communica tion strategies for each brand extension type. Furthermore this research describes the brand exte nsion type with dist ance from the parent brand which can apply practical marketing executions instead of the traditional approach, which is based on the category brand extension.

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34 The findings suggest that successful communicati on strategies serve to build bridges across the distance from the parent brand that lowers th e entry barriers to the consumers’ concept. No matter what the extension type is, image orient ed communication will be more effective than using product-oriented communicati on strategies. These results im ply that when the brand is remotely extended consumers communicate with th e current image and concept of the parent brand. It means the image-focu sed communication with its parent brand has a strong impact on the consumers’ evaluation toward the remote extension. Again, for close brand extensions, consumer’s evaluation is based on image rather than product attributes. Consumers not only find it easy to build th eir attitude by relating their previous brand image to the extended product but also are motivated to buy the extended bra nd when the parent brand image was mainly transferred. The implication is that, first of all, the brand it self is theorized as crit ical in the process of the brand extension evaluation, thus this result implies that the closely extended brand does not need to be actually communicated with produc t attribute cues because consumers may have already found, assumed, and linked the brand esse nce to extensions by presented extension attributes. Second, this research is consistent with the si milarity fit theory. It implies that consumers prefer similar communication passages with the pa rent brand when they have all of the brand information available at the time of choice. Th e results of the study indicate that consumers evaluate brand extensions by relying on the most easily accessible method, such as brand image and concept. Application communication strategies in each brand extension type holds important messages for marketing managers because they regard the brand extension as a risk which does

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35 not guarantee the success of business. The trend of convergence from one category into different categories is growing and the market is changing quickly Considering that there are limited and conflicting findings on the relationship between brand extension and practical execution, this research highlights the importan ce of the bridges between academic and practical efforts and provides more insight into the effects of the breadth on extension evaluations.

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36 CHAPTER 6 LIMITATIONS The results of this study must be interpreted with light or inherent limitations. The first stems from the usage of existing brands. As disc ussed earlier, it was assumed that the consumers evaluate iPod using both symbol and function because iPod is described as a technologically advanced product in terms of usage and consumer expertise and for this reason it provides certain extent of image of the ta rget market profile such as tre nd setter and tech savvy. However, Tom and Chris (2004) argue that for brands with a symbolic positioning, non-product related information is processed more than product rela ted information in brand extension evaluation. Consumers tend to have more product-based expe ctations about brands with functional and experiential positioning while symbolic brands, on the other hand, are expected to convey more non-product related associations (Czellar 2003; Park et al. 1992) . Currently it is hard to categorize the positioning of the brand by either symbol or function because it is a matter of chicken and egg. But according to positioning-as sociation theory, if iPod has a symbolic positioning, image-based association will be more effective. Again, if iPod has functional positioning it has to be dealt with in terms of prod uct-based associations. But still it is hard to decide the positioning of a certain brand from one of two groups. As explained earlier, using existing brands can limit the ability to generalize the results. Second, many consumer decisions are memory base d rather than stimulus based (see also Lynch, Marmorstein, and Weigold 1988). Given this assumption, very distinct and strategically planned advertisements could at least get a ttention from consumers who have already built memories about iPod. Therefore, the poor qual ity of stimuli might not be enough to make participants pay attention to overcome the genera l memory of iPod. Thus not only is it important

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37 to build the favorable brand associations, but these associations also need to be highly accessible in consumers’ minds. Third, in an actual market, consumers are expos ed to every single different situation. Plus, current marketing research has been essentiall y investigating consumer’s attitude toward extensions in real marketplace conditions because consumers are exposed to a host of information through different media, which is called “background effects”. Consider, for example, Verizon launching hom e appliances. Consumers may view the new home appliances as a new instance that can be mo re or less similar to the brand and its existing products such as cell phones and wireless internet services. In addition to this, according to their own situational factors such as age and mood, their evaluatio n for the new businesshome appliances of Verizon would be completely diffe rent. Novice consumers, high self monitors, and younger people are more sensitive to these ac tions than expert consumers (Czeller 2002). Therefore, the perceived fit of consumers took an important part in brand extension. But this research doesn’t include confoundi ng effects such as consumer characteristics and competitor activity . First of all, consumer characteristics ar e composed of mood, expertise, and selfmonitoring. Recent research show s that positive consumer mood improves fit perceptions for moderately far extensions (Barone et al. 2000). It is argue d that the extent of consumer expertise can affect the brand extensi on evaluation. Expert consumers possess elaborate and complex knowledge structures about the br and extension, thus they might need the product related cues are to be effectively transfe rred (Alba and Hutchinson 1987). Future research that addresses this sh ortcoming by including both positioning and individual differences would improve the acad emic approach and managerial practice.

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38 APPENDIX A EXPERIMENT STIMULI Remote Brand Extension with Image-b ased Appeals Print Advertisement

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39 Remote Brand Extension with Product-based Appeals Print Advertisement

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40 Close Brand Extension with Image-based Appeals Print Advertisement

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41 Close Brand Extension with Product-b ased Appeals Print Advertisement

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42 APPENDIX B QUESTIONNAIRE Thank you for your interest in this study iPod will launch a new product using its brand in th e U.S. market. The following print ad is an example of the campaign that will be used to la unch the new product. Please take some minutes to examine the print ad and an swer the following questionnaire. One of the four print ad 1. Please answer the following questions based on your feeling or opinions about the print ad shown in Figure 1,Unfavorable 2 3 4 5 6 7,Favorable 1, Bad 2 3 4 5 6 7, Good 1, Unlikable 2 3 4 5 6 7, Likable 1, Negative 2 3 4 5 6 7, Positive 2. If you were looking to buy a pair of jeans, what is the likelihood of you buying this brand? 1, Unlikely 2 3 4 5 6 7, Likely 1, impossible 2 3 4 5 6 7, Possible 1, Improbable 2 3 4 5 6 7, Probable 3. Please indicate your opinion about the pro duct presented in the ad using the following items 1, Unappealing 2 3 4 5 6 7, Appealing 1, Unlikable 2 3 4 5 6 7, Likable 1, Very good 2 3 4 5 6 7, Very bad

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43 4. Please indicate your feeling toward A pple Computer using the following items 1, Unfavorable 2 3 4 5 6 7, Favorable 1, Bad 2 3 4 5 6 7, Good 1,Unlikable 2 3 4 5 6 7, Likable 1, Negative 2 3 4 5 6 7, Positive 5. Please indicate your feelings towa rd iPod using the following items 1, Unlikable 2 3 4 5 6 7, Likable 1, Bad 2 3 4 5 6 7, Good 1, Negative 2 3 4 5 6 7, Positive 1, Unfavorable 2 3 4 5 6 7, Favorable 6. Please answer the following questions based on your feelings or opinions about the print advertisement. The print advertisement presents information about the product 1, Completely disagree 2 3 4 5 6 7, Completely Agree The print advertisement conve ys the image of the brand 1, Completely Disagree 2 3 4 5 6 7, Completely Agree The print advertisement presents informa tion about the performance of the product 1, Completely Disagree 2 3 4 5 6 7, Completely Agree The print advertisement conveys the personality of the brand 1, Completely Disagree 2 3 4 5 6 7, Completely Agree 7. Please indicate how close or far is the image of iPod to the image of the product shown in the ad 1, Close 2 3 4 5 6 7, Remote

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44 8. Do you own a MP3 player? Yes No 9. If you do, which brand is your MP3 player? 10. What is your gender? M F 11. What is your age? 12. Please write down your name and for which course you want to use your extra credit for.

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45 LIST OF REFERENCES Aaker, D. A. and Kevin L. Keller (1990), “C onsumer Evaluations of Brand Extensions,” Journal of Marketing, 54 (2), 27. Boush, David. M. (1993), “How Advertising Slogans Can Prime Evaluations Of Brand Extensions,” Psychology and Marketing Research, 10 (1), 67-78. Boush, David M.and Barbara Loken (1991),” A Process-Tracing Study of Brand Extension Evaluations,” Journal of Marketing Research, 28(2),16-28 Bridges, Sheri, Kevin Lane Keller., and Sanjay S. (2000), “Communicatio n Strategies for Brand Extensions: Enhancing Perceived Fit by Establishing Explanatory Links.” Journal of Advertising, 29(4), 1-11. Broniarcyzk, Susan. M. and Joseph W. Alba ( 1994), “The Importance of the Brand in Brand Extension,” Journal of Marketing Research, 31(5), 214. Chen, J., Richard R. Reilly and Gary S. Lynn (2005), “The Impacts of Speed-to-Market on New Product Success: The Modera ting Effects of Uncertainty ”, IEEE Transactions on Engineering Management , 52 (5), 199-212. Keller, Kevin. L. (1998), Strategic brand management: building, measuring, and managing brand equity Upper Saddle River, Prentice-Hall. Klastorin, T. and Weiyu Tsai, (2004), “New Pr oduct Introduction: Timing, Design, and Pricing”, Manufacturing & Service Operations Management , 6(4), 302-320. Kumar, Piyush (2005), “Brand Counter extensio ns: The Impact of Brand Extension Success Versus Failure” , Journal of Marketing Research , 5, 183-194. Meyers -Levy, Joan and Alice Tybout (1989), “Schema Congruity as a Basis for Product Evaluations,” Journal of Consumer Research, 16 (6), 46-53. Meyvis, Tom and Chris Janiszewski (2004), “Whe n Are Broader Brands Stronger Brands? An Accessibility Perspective on the Success of Brand Extensions,” Journal of Consumer Research 31(09), 346-357. Morrin, Maureen. (1999), “The Impact of Brand Ex tensions on Parent Brand Memory Structures and Retrieval Processes,” Journal of Marketing Research 36 (11), 517-525. Nijssen, Edwin J. and Clara Agustin (2005), “B rand extensions: A Mana ger’s Perspective.” Journal of Brand Management, 13(10), 33-49 Park, C. Whan., Sandra Milberg., and Robert La wson, (1991),. “Evaluation of Brand Extensions: The Role of Product Feature Similarity and Brand Concept Congruency.” Journal of Consumer Research 18(9), 185.

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46 Romeo, Jean B., (1991), “The Effect of Nega tive Information on the Evaluations of Brand Extensions and the Family Brand.” Advances in Consumer Research 18, 399-406. Tauber, Edward.M. (1998), “Bra nd Leverage: Strategy of Growth in a Cost-control World,” Journal of Advertising Researc h, 8(9), 26-30. Vlckner, Franziska and Henrik Sattler ( 2006), “Drivers of Brand Extension Success.” Journal of Marketing, 70(4), 18-34 Yeung, Catherine. W. M. & Robert Wyer, JR. (2005), “Does Loving a Brand Mean Loving is Products? The Role of Brand Elicited Af fect in Brand Extension Evaluations,” Journal of Marketing Research , 11,495-506. Ziamou, P and Veryzer, R. (2005), “The Influe nce of Temporal Distance on Consumer Preferences for Technology-based Innovations,” Journal of Product Innovation Management , 22(1), 336-346.

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47 BIOGRAPHICAL SKETCH JIMI PARK ( renton10@hotmail.com ) is a graduate student at the College of Communication and Journalism at the University of Florida. Her research focuses the impact of brand extension on consumer expertise and perception.