The success of a brand extension depends largely on the similarity between the brand and its extension product. Recent psychological and neuroscientific evidence supports a dual-process model that distinguishes taxonomic feature-based similarity from thematic relation-based similarity. In addition to providing a parsimonious organizational framework for prior brand extension research, this dual-process model also provides novel predictions about the processing and evaluation of taxonomic brand extensions (e.g., Budweiser cola) and thematic brand extensions (e.g., Budweiser chips). Results indicate that taxonomic and thematic similarities independently contribute to branding professionals' and lay consumers' evaluations of real and hypothetical brand extensions (Studies 1A and 1B). Counter-intuitively, thematic brand extensions are processed more rapidly (Study 2), judged more novel, and evaluated more positively than taxonomic extensions (Study 3). When induced to consider the commonalities between the brand and the extension product, however, taxonomic extensions are judged more novel and evaluated more positively (Study 3). Implications for brand extension and marketing more generally are discussed.
Approximately 80% of new products introduced each year are brand extensions (Keller, 1998), so it is important for marketing researchers and brand managers to understand how consumers evaluate them. Indeed, what makes one brand extension succeed and another fail? In theory, the advice for brand managers when confronted with the task of extending their parent brand into a new category can be summarized in one simple word: “fit”. Essentially, “fit” is the relation between the extension product and the brand's core product, and a great deal of research indicates that the extension should be similar to the brand (e.g., Aaker and Keller, 1990, Boush and Loken, 1991, Martin and Stewart, 2001 and Volckner and Sattler, 2007). We therefore investigate how current psychological theorizing about similarity can advance our understanding of brand extension evaluation.
Recent research in cognitive psychology and neuroscience supports a dual-process model, whereby feature-based “taxonomic similarity” and relation-based “thematic similarity” independently contribute to our perception of similarity ( Estes, 2003a, Schwartz et al., 2011 and Wisniewski and Bassok, 1999). The present article redefines brand extension fit in terms of these two distinct sources of similarity. This new organizational framework provides clarity and parsimony to the rich but disjointed literature on brand extension, thus enabling a novel interpretation of several important drivers of brand extension evaluation identified in past research. The dual-process model of similarity also generates novel and counter-intuitive predictions about the processing and evaluation of brand extensions. Specifically, recent psychological and neuroscientific evidence suggests that taxonomic (e.g., Budweiser cola) and thematic brand extensions (e.g., Budweiser chips) may differ in processing ease, which in turn may affect evaluations of those different types of brand extensions (e.g., Lee & Labroo, 2004). Because processing ease can be manipulated as a marketing tool, for instance in advertising and point-of sales (Labroo et al., 2008), our conclusions also provide important thrusts for new managerial applications.1
The article is organized as follows. First we introduce the dual-process model that has emerged recently in the psychology literature on similarity judgments. After considering the implications of this model for prior research on brand extension, we then describe some of its novel predictions about brand extension. Finally we report four studies that demonstrate the unique contributions of taxonomic and thematic similarities to brand extension evaluation, and the differential processing and evaluation of taxonomic and thematic brand extensions.
The present study is the first to demonstrate differences in the processing and evaluation of taxonomic and thematic brand extensions. These differences have broad implications for managerial practice. To begin with, the results have practical implications for using thematic similarity as a more general branding strategy. They may suggest acquisitions, alliances, and sponsorships across categories that, while taxonomically dissimilar, nevertheless are thematically similar. Consider for instance the acquisition of Kinko's, a print and copy store chain, by FedEx, a parcel delivery company. While taxonomically dissimilar, the two companies were thematically related: FedEx noticed that many of its customers shipped documents that were printed or copied at Kinko's. This acquisition was widely commended by industry experts and has indeed proven successful. Thematic similarity can also be used to create corporate alliances. The Nike+, for example, is a combination of the Apple iPod and a Nike shoe. Apple and Nike are taxonomically dissimilar but thematically similar (see also Park et al., 1996). Another practical application is sponsorship. For example, Louis Vuitton sponsors The Climate Project, which is Al Gore's organization to promote awareness of climate change. Although taxonomically very different, they are related by a travel theme: Climate change is partly due to emissions from travel, and Louis Vuitton manufactures luxury travel goods. Louis Vuitton's sponsorship is an effort to reduce their impact on climate change. Thus, some thematic brand extensions, acquisitions, alliances, and sponsorships are evident in the marketplace, but we suggest that thematic similarity has greater potential than is currently being utilized.
The differential processing ease of taxonomic and thematic brand extensions may also be utilized as a marketing tool (cf. Labroo et al., 2008). Given that thematic extensions are processed relatively rapidly, they may be well suited for advertisements that are very brief (e.g., a 15-second commercial) or in busy contexts (e.g., a banner on a website). Contrarily, because taxonomic extensions tend to be processed more slowly, they may require more thorough (e.g., a 1-minute commercial) or focused advertisements (e.g., a page in a magazine) to be appreciated by consumers. As another example, the current results (and in particular the commonality condition of Study 3) underscore the efficacy of comparative advertising for taxonomic brand extensions (Zhang & Markman, 1998). For example, when promoting a new product such as Budweiser cola, it may be beneficial in the ad to compare it to another taxonomic extension such as Red Bull cola. In contrast, thematic brand extensions such as Budweiser chips may not benefit to the same extent from comparative advertising, which would likely highlight their lack of taxonomic fit. Budweiser might be a valued brewer, and their beer might indeed go well with chips. But upon further thought, producing good chips requires a different set of skills, so it might be best left to experts in that industry. Finally, in addition to utilizing the differential processing ease of taxonomic and thematic extensions, managers could also manipulate that processing ease. With sufficient exposures (i.e., repeated advertisements) or subtle pre-exposures (i.e., product primes), processing ease is facilitated (Labroo et al., 2008). Thus, the relatively slow processing speed of taxonomic brand extensions would presumably be overcome with a sustained advertizing campaign.
