James B.

Parfitt

Consumer Perceived Value:

A Determining Factor of Brand Extension Success
Brand extension can be an extremely profitable marketing strategy, however few extensions are successful and
many proposed factors of success are under industry debate. The research in this report addresses the issue of
whether consumer perceived value, the overall utilitarian and hedonic consumer assessment of a product, is a
determining factor of brand extension success by measurement against perceived fit, an industry accepted success
factor. An experiment was conducted to assess the consumer perceived value and perceived fit of four hypothetical
brand extensions for two international brands. Results identified consumer perceived value as a significant factor in
extension success, with the study indicating that consumers transfer their perceived value of a brand to its extension
products, whereby the level of perceived value transfer, and the potential success of an extension, is determined by
the degree to which the extension fits the consumer’s perceived understanding of the brand’s image.

1. Introduction associations diminished (Aaker, 1990), affecting both

Launching a new product into the market is typically
an expensive and high-risk exercise with five-year
success rates estimated at approximately 50 per cent
(Taylor & Bearden, 2003). As a result, a highly popular
marketing strategy for many decades has been to release
new products under already established brand names in
the hope that the consumer’s pre-existing perception of
the brand will ease the product introduction process and
reduce the potential promotional expenses (Völckner &
Sattler, 2006).
One such method of brand development is brand
extension, in which an existing brand enters an entirely
different product category (e.g. Bic cigarette lighters and
the Dyson Airblade hand dryer). Brand extensions now
equate to more than 80 per cent of new product
launches (Keller, 2003). This is hardly surprising given
that the results of extensive research over the past 30
years have displayed the positive effects of brand
extensions on market share, advertising efficiency and
brand equity, whilst remaining a far cheaper alternative
to launching a new brand (Taylor & Beardon, 2002).
However whilst an extremely profitable technique,
the success of a brand extension is still fairly uncertain
due to its high dependence on consumer perceptions.
According to a report by Ernst & Young and ACNielsen
(1999), there is an approximately 80 per cent failure rate
in the fast-moving consumer good category brand
extensions. Additionally, as a brand becomes broader in
its product offering its image can easily become diluted
(Montaner & Pina, 2009) and its product class
original and new products. Therefore, research findings
on consumer attitudes towards extensions, the transfer
of associations, and the factors of brand extension
success are highly valuable to the marketing world.
Originating with Aaker and Keller (1990) many
studies have been conducted, obtaining insights into the
factors of brand extension success and assembling
working models (e.g. Czellar, 2003; Montaner & Pina,
2009; Völckner & Sattler, 2006). There is still much
debate, however, over the accuracy and authenticity of
these models and the inclusion, or strength, of particular
factors identified. Key studies have been replicated with
altered variables (location, sample, product, etc.), and
consequently amended to meet new findings (e.g.
Bottomley & Holden, 2001). In 20 years of research,
approximately 15 factors of extension success have been
proven significantly relevant (Völckner & Sattler, 2006),
however no study has led a detailed investigation into the
affects of consumer perceived value on brand extensions.
This investigation shall make three contributions to
the research of brand extension success through the
following research questions:
1. Is there a relationship between the consumer
perceived value of the original and new product
in a brand extension?
2. Is there a relationship between the fit of a brand
extension and the consumer perceived value of
the new product?
3. Is there a difference between a brand extension’s
product-category and brand-image fit in relation
to consumer perceived value transfer?
2. Literature review and hypotheses
2.1 Consumer perceived value
There is an ever-increasing array of almost identical
competing products in seemingly every market, each
positioned with a marginally different feature, quality and
price offering. In this highly competitive world, brands
are becoming progressively more consumer-focused,
seeking to satisfy people’s needs and provide value to
consumers in order to retain their loyalty (Harnett, 1998).
In its simplest form, consumer perceived value is
defined according to Levins (2010) as the difference
between the perceived benefits received and perceived
costs sustained from the purchase, usage and disposal of
a product. This “what I get for what I give” (Zeithaml,
1988, p 13) relationship is commonly applied in a value-
for-money conceptualization, with a trade-off between
the variables of price and quality (Aaker, 1996; Zeithaml,
1988). Zeithaml’s (1988) study however displayed the
overall idiosyncratic and subjective nature of the concept
of perceived value for money, in which consumer’s
definitions varied widely from low prices and sales, to
the balance between price and quality, to whatever they
desire from a product, to a combination of all of the
above.
The price-quality relation, as well as being highly
subjective and motivation-driven, is also a simplistic and
narrow scale of consumer perceived value that fails to
consider such factors as continued consumer-brand
relationships, emotional responses to products, the social
factors that drive our purchase decisions and the fact
that consumers can create a generalized perceived value
without ever purchasing or using a product. Sheth,
Newman and Gross (1991) thus proposed that consumer
perceived value be the function of five independent
value dimensions: social, emotional, functional, epistemic
and conditional.
Working with this foundational model Sweeney and
Soutar (2001) devised a 19-item measure of consumer
perceived value, named ‘PERVAL’, intended for
consumer durable goods. Through continued literature,
focus group and sample survey research they proposed
that whilst Sheth et al.’s (1991) functional dimension
showed to be a prevalent indicator of value, it was
comprised of elements originating from the differing
variables of price (and value for money) and quality (and
performance), and suggested that they be treated instead
as separate dimensions (Sweeney & Soutar, 2001).
Additionally, they removed the epistemic and conditional
dimensions altogether for their lack of strength as an
indicator and conditional nature, respectively (Sweeney
& Soutar, 2001).
The ‘PERVAL’ measure is the most comprehensive
model and thus shall be used as the basis for
measurement of consumer perceived value in this
research. Consumer perceived value, henceforth, is
defined according to Sweeney & Soutar (2001) as the
overall utilitarian and hedonic consumer assessment of a
product in relation to four value dimensions:
quality/performance, price/value for money, emotional
and social.
Aaker & Keller (1990) suggested that attributes of the
original parent brand’s product transfer to the extension,
and that such attribute transfers are a determining factor
in brand extension success. It thus seems plausible that
consumer perceived value, one of Aaker’s (1996) ten
measures of brand equity, could be such an attribute, and
therefore we can hypothesize:
H1. There is a positive relationship between the
consumer perceived value of the original and new
product in a brand extension.
2.2 Perceived fit of a brand extension
According to Martinez et al. (2009), perceived fit is
“undoubtedly the most cited success factor in the
research on brand extensions” (Martinez et al, p. 307).
When Völckner & Sattler (2006) identified 10 factors of
brand extension success from a compilation of 45
empirical studies, their research displayed that the fit
between the parent brand and the extension product was
a major contributing factor towards brand success.
According to Bhat and Reddy (2001), the perceived
fit, or perceived similarity, is the “consumers’ overall
judgment of the extension’s fit with the parent brand”
(Bhat & Reddy, p. 114). On a psychological level, with
the launch of a brand extension consumers are forced to
develop new brand associations and, in doing so, re-
adapt their cognitive structure (Park et al., 1993). The
degree of perceived fit plays a very important role in this
mental process, thus making it such a significant success
factor (Czellar, 2003).
As the most, or one of the most, influential factors of
brand extension success, perceived fit is an ideal variable
to measure against in relation to consumer perceived
value transfer. Under the assumption that this transfer is
an influencing factor in brand extension success, we can
thus hypothesize that:
H2. There is a positive relationship between perceived
fit and the transfer of consumer perceived value in
a brand extension.
Research on perceived fit stems from three
psychological and consumer decision-making theories:
cognitive consistency theory (Heider, 1958), affect
transfer theory (Wright, 1975), and categorization theory
(Coen & Basu, 1987). Aaker and Keller (1990)
determined, based upon this theoretical background, that
the perceived fit of a product would be a factor of brand
extension success, with their research presenting a direct
relationship between fit and consumer attitude towards a
product.
Aaker and Keller (1990) put forward the first model
of perceived fit, consisting of three dimensions:
complement, an indication of the extent to which the
extension product can be used alongside the original;
substitute, the extent to which the extension product
could be used as an alternative to the original; and
transfer, the extent to which the company is perceived to
be able to manufacture the extension product. This
model was heavily based in economic terms, dividing
dimensions between demand-side (compliment and
substitute) and supply-side (transfer), and was the
predominant model for much of the decade.
Bhat and Reddy (2001) questioned the lack of brand
image considerations in this category-focused model,
proposing an expansion and re-arrangement of the
model to give it two dimensions: product-category fit,
the consumers’ perceptions of the similarities between
the product categories of the parent brand and
extension; and brand-image fit, the consumers’
perceptions of the similarity between the extension’s
image and the brand image. Bhat and Reddy (2001)
specify that their product-category fit dimension be
conceptualized purely on a product category only basis
(i.e. measured without the mention of any brand names).
This separation between category and brand
similarities stems from the research of Broniarczyk and
Alba (1994), who suggest that the cognitive structure
formed from brand association plays a greater role in
perceived fit than the difference in product category.
With this in mind, we can therefore hypothesize that:
H3. Product category fit has a lesser effect on
consumer perceived value transfer than brand
image fit.
3. Methodology
The methodology to test the hypotheses consisted of
a quantitative experiment utilizing real brands and
hypothetical extensions, a technique used in much
previous research (Aaker & Keller, 1990; Martinez et al.,
2009; Montaner & Pina, 2009; etc.). In order to
maximize validity, the experiment used two brands of
differing perceived value, each with two extensions of
differing perceived fit.
3.1 Sample
A sample of 40 undergraduate and postgraduate
students, both male and female, from Bond University
were selected for this study through convenience
sampling. Convenience samples of students are
commonplace in studies of brand perception (Aaker &
Keller, 1990; Martinez et al., 2009; Montaner & Pina,
2009; Taylor & Beardon, 2002) due to students being
good substitutes for consumers (Pitt & Nel, 1989) and
the ease of access to willing respondents a university
campus provides.
Respondents fell between the ages of 18 and 40, and
were a mixture of both Australian and international
students, due to the university’s population being
approximately 50% international. This sample was,
however, a generalization of the population due to such
sample limitations as respondent age, vocation and
socio-economic status.
3.2 Pre-tests
Prior to the main study, two pre-tests were conducted,
by means of a computer survey, with a convenience
sample of 7 and 4 undergraduate students from Bond
University, respectively.
The aim of the first pre-test was to identify two
brands with dissimilar perceived values to be used within
the main study. The brands chosen for this pre-test were
all well-known global brands, to cater for the large
international proportion of the sample, with limited
brand extension ranges, such that the original product(s),
and any potential line extensions, define the brand in the
mind of the consumer.
Participants assessed six brands with a five-point
Likert scale (1 = Low/5 = High) on their familiarity and
an elementary measure of consumer perceived value:
quality, performance, value for money and desire to own
(α = 0.82). The test results identified Colgate and Dell as
well known brands (FC = 4.86; FD = 4.14), with different
perceived values (CPVC = 15.43; CPVD = 11.71). Due
to the international nature of the brands selected, the
results for familiarity were all high, reducing the
importance of this variable as a factor for selection.
The second pre-test aimed to identify two logical
brand extensions (Aaker & Keller, 1990) with different
perceived fits for each of the two brands selected from
the first pre-test. For each brand, participants assessed,
with five-point Likert scales (1 = Disagree/5 = Agree)
the fit of four hypothetical extensions by their
compliment level, substitute level and brand image fit (α
= 0.85). The results of this pre-test identified ‘oral gel’
and ‘lip balm’ (CGEL = 8.25; CBALM= 6.75) as hypothetical
brand extensions with differing levels of fit for Colgate,
and ‘car satellite navigation’ and ‘game console’ (DSAT =
10.75; DGAME = 8.75) for Dell.
3.3 Study design and procedure
Pre-testing resulted in the selection of two brands of
differing consumer perceived value (A, Colgate; and B,
Dell), each with two potential brand extensions of
differing levels of perceived fit (AX1, Colgate lip balm;
AX2, Colgate oral gel; BX1, Dell car satellite navigation;
and BX2, Dell game console). Additionally, for each
Table I Brands and products used in the study The two sections of the questionnaire focused on
Brand A (Colgate) Brand B (Dell) brands A and B, respectively, each comprising of three
AO Total Toothpaste BO Inspiron Laptops subsections concentrating on the brand’s original
AX1 Lip Balm BX1 Car Satellite Navigation
product and its two hypothetical brand extensions.
Within the first subsection the respondents were given a
AX2 Oral Gel BX2 Game Console
brief outline of the brand, limited enough in scope to
encourage brand perception recall without generating
brand an ‘original product’, one of the brand’s current distortion or bias. They were then asked to assess the
and leading products, was selected (AO, Colgate Total consumer perceived value of the ‘original product’, and
toothpaste; and BO, Dell Inspiron laptops) for extension informed that this assessment was to be based upon
products to be evaluated against (see Table I). prior experience with, or their perceived understanding
A questionnaire was designed containing 132 of, the product. In the second and third subsections, the
questions over two sections. Respondents were informed respondent was informed that the brand was
that the purpose of the questionnaire was to investigate contemplating releasing extension X. A description of
consumer behavior towards brands, so as to remove the the product, or a list of its product category competitors,
chance of any bias that may have arisen if the respondent was provided for clarification. Respondents then
was to know the full intent of the research. assessed the consumer perceived value and perceived fit

Table II Scales used in the questionnaire

Scale Measured Concept

Consumer Perceived Value (CPV) Quality/Performance
Sweeney & Soutar (2001) QPF1: The product is well made
QPF2: The product has an acceptable standard of quality
QPF3: The product has consistent quality
QPF4: The product lasts a long time
QPF5: The product performs well
Price/Value
PRV1: The product performs consistently
PRV2: The product is reasonably priced
PRV3: The product offers value for money
PRV4: The product is economical
Emotional
EMO1: The respondent would like to own the product
EMO2: The respondent would enjoy the product
EMO3: The respondent would want to use the product
EMO4: The respondent would feel relaxed about using the product
EMO5: The product would make the respondent feel good
EMO6: The respondent would recommend the product to friends
Social
SOC1: The product would increase the respondent's self-worth
SOC2: The product would improve other's perception of the respondent
SOC3: The product would give the respondent social approval

Perceived Fit (PFIT) Product category fit (PCF)

Bhat & Reddy (2001), Aaker & Keller (1990)
PCF1: It is complementary to the brand's other products
PCF2: It is a substitute for the brand's other products
Brand image fit (BIF)
BIF1: The product is appropriate for the brand to sell
BIF2: The product is in line with the brand's other products
BIF3: Launching the product would be a logical step for the brand
BIF4: The brand would be capable of producing the product
of this extension.
It is important to note that respondents assessed all
products using the same set of questions, however with a
different product in mind each time. Whilst differently
worded questions could have been written for each
subsection, consistency was maintained to reduce the
time and effort required by the respondent to complete a
questionnaire that was already intimidating in length.
3.4 Variable measurement
Consumer perceived value was measured using
Sweeney and Soutar’s (2001) ‘PERVAL’ model, as we
can see in Table II, with each statement requiring a 7-
point Likert scale response (1 = Strongly disagree/4 =
Neither agree nor disagree/7 = Strongly agree). The
quality/performance dimension was measured by the
perceived quality of the product (e.g. “It is well made”)
and its expected performance (e.g. “It lasts a long time”).
The price/value dimension was identified by the
product’s short-term costs (e.g. “It offers value for
money”) and long-term costs (e.g. “It is economical”).
The emotional dimension was measured through the
feelings the product generates in the consumer (e.g. “I
would enjoy owning it”). Finally, the social dimension
was evaluated by the product’s effect on the consumer’s
social self-concept (e.g. “It would improve the way I am
perceived by others”). Overall the scale received a
Cronbach’s Alpha (α > 0.7) reliability value of α = 0.95.
Perceived fit was measured using a modified version
of Bhat and Reddy’s (2001) adaption of Aaker and
Keller’s (1990) original measure of fit, as we can see in
Table II, with each statement requiring a 7-point Likert
scale response (1 = Strongly disagree/4 = Neither agree
nor disagree/7 = Strongly agree). The product-category
fit dimension was identified by the amount the product
is a complement, that there is a joint satisfaction of
consumer need between the original and extension
products (e.g. “It would be used with other [brand name]
products”), and the extent to which it is a supplementary
product, that it satisfies the consumer need instead of
the original product (e.g. “It would be used instead of
other [brand name] products”). According to Bhat and
Reddy (2001) the product-category dimension must be
measured without any mention of brand names, however
the nature of this study revolves around the transfer of
elements of brand equity, thus for the purpose of this
research brands were identified. The brand-image fit
dimension was measured by the transfer of brand image
between original and extension products (e.g. “Its release
would be a logical step for [brand name]”) and the
perceived ability of the company to manufacture the
extension (e.g. “It would be a product that [brand name]
is capable of producing”). Overall the scale received a
Cronbach’s Alpha (α > 0.7) reliability value of α = 0.83.
3.5 Data collection and analysis
In order to prevent non-response, the questionnaire
cover sheet instructed respondents to select ‘neither
agree nor disagree’ (option 4 on the Likert scale) if they
felt unable to answer a particular question. Upon data
analysis, questions that respondents had still failed to
answer were corrected by assigning to them the value
‘neither agree nor disagree’.
The separated results of the study, between differing
brands and extensions, necessitated the creation of new
sum values upon data analysis. For H1, two new variables
OCPV, the sum consumer perceived value of the two
original products, and XCPV, the sum consumer
perceived value of the four brand extensions, were
calculated. For H2, the variables PFIT, the sum perceived
fit for the four brand extensions, and ΔCPV, the sum
consumer perceived value transfer (XCPV – OCPV) for
the four brand extensions. Additionally for H3, two new
variables PCF, the sum product-category fit for the four
brand extensions, and BIF, the sum brand-image fit for
the four brand extensions, were calculated.
4. Results
It should be noted that the mean consumer perceived
value or perceived fit for a product, original or extension,
is fairly insignificant to the results of this study. This is
due to both the desired wide range of opinion-based
responses and the focus of the study on the relationship
between scores across multiple products on a somewhat
individual basis.
H1 suggested a positive relationship between the
consumer perceived value of the original and new
product in a brand extension. As we can see in Figure I,
a Pearson correlation test was conducted between the
consumer perceived value of the original product
(OCPV) and the extension (XCPV) revealing a moderate
positive correlation (r = 0.67), and thus a substantial
relationship (Pfeifer, 2000). The test was significant at α
= 0.01 (p = 0.000; p < 0.01) and the null hypothesis was
rejected.
According to H2, there is a positive relationship
between perceived fit and the transfer of consumer
perceived value in a brand extension. As we can see in
Figure II, a Pearson correlation test between the
perceived fit of the extension product (PFIT) and the
consumer perceived value transfer (ΔCPV) revealed a
moderate correlation (r = 0.49), and hence a substantial
positive relationship (Pfeifer, 2000). The test was
significant at α = 0.01 (p = 0.002; p < 0.01) and so the
null hypothesis was rejected.
Figure I Correlation between original and extension consumer perceived value

Figure II Correlation between perceived fit and transfer of consumer perceived value

Aaker & Keller (1990) suggest that attributes of the

H3 suggested that product-category fit has a lesser
original parent brand’s product transfer to the extension,
effect on consumer perceived value transfer than brand-
and it was hypothesized that consumer perceived value
image fit. A Pearson correlation test was conducted
be such an attribute. Results displayed a substantial and
between the transfer of consumer perceived value
significant positive relationship between the consumer
(ΔCPV) and the two dimensions of perceived fit (PCF
perceived value of a brand’s original product and its
and BIF). As we can see in Figure III, PCF was revealed
extension. This relationship between the variables was
to have a low positive correlation with ΔCPV (r = 0.27),
maintained across all original-extension relations, which
verses BIF (see Figure IV) which displayed a medium
in the study were between two brands, within different
positive correlation (r = 0.52), and hence a substantial
product categories, and their two assigned hypothetical
relationship (Pfeiffer, 2000). The correlation for BIF was
extension products, also of different product categories.
significant at α = 0.01 (p = 0.001; p < 0.01) yet
Additionally, the high reliability of the adapted
insignificant for PCF. Due to the extent of the
‘PERVAL’ model of consumer perceived value, put
significance of the BIF correlation, and the nature of the
forward by Sweeney and Soutar (2003), coheres with the
hypothesis, the data still displayed the greater effect of
claimed success of the model in perceived value
BIF on ΔCPV and thus the null hypothesis was rejected.
measurement.
5. Discussion The results therefore suggest the existence of a
cognitive transfer of a brand’s consumer perceived value
5.1 Summary and implications to extensions; simply put, consumer’s transfer their
The study sought to obtain insights into the transfer perception of a brand’s value to its extension products.
of a brand’s consumer perceived value to a brand
This therefore authenticates the marketing strategy of
extension, in an effort to understand whether consumer
releasing new products under already established brand
perceived value acts as a determining factor in an names, as the consumer’s pre-existing perception of the
extension’s success. According to Martinez et al. (2009),
brand will, as suspected, ease the product introduction
perceived fit is a highly significant factor in an
process.
extension’s success; which made it an ideal indicator of Based upon the existing literature knowledge of
brand extension success to measure consumer perceived perceived fit as an indicator of brand extension success
value against.
Figure III Correlation between product-category fit and transfer of consumer perceived value
Figure IV Correlation between brand-image fit and transfer of consumer perceived value
(Martinez et al., 2009; Völckner & Sattler, 2006), the four
brand extensions were selected for use in the study based
upon their perceived difference in fit with respect to
their parent brands. It was hypothesized that the degree
of an extension’s fit would directly influence the transfer
of consumer perceived value, suggesting that an
extension with a lower perceived fit would have a lesser
consumer perceived value and would have a smaller
theoretical chance of success. In coherence, the results
displayed a substantial and significant positive
relationship between the two variables.
The implications of this finding are two fold. Firstly,
due to the existence now known of the transfer of
consumer perceived value, it can be suggested that
consumer perceived value be an additional determining
factor in brand extension success. Secondly, using
consumer perceived value as a representative measure of
brand understanding, it can therefore be suggested that
the distance that an extension product falls from a
consumer’s preconceived understanding of a brand
affects the cognitive structure re-alignment required for
brand extension success (Park et al., 1993). Simply stated,
whilst consumers transfer their perception of a brand’s
value to an extension product, the perceived fit of that
extension to their understanding of the brand, limits the
extent of this transfer.
In further examination of the relationship between
perceived fit and consumer perceived value, it was
hypothesized that the product-category fit of an
extension would have a lesser effect on the transfer of
consumer perceived value than the brand-image fit. This
was based upon Broniarczyk and Alba’s (1994) claim that
the cognitive structure formed from brand association
plays a greater role in perceived fit than the difference in
product category. Results, in coherence with the
literature, displayed the relationship between brand-
image fit and the transfer of consumer perceived value to
be far more substantial than that of the product-category
fit.
The results therefore suggest that it is the cognitive
distance that an extension product lies from a
consumer’s preconceived understanding of a brand’s
image, in particular, that affects the cognitive structure
re-alignment required for brand extension success (Park
et al., 1993). Simply stated, the perceived fit of a brand
extension to a consumer’s understanding of the brand’s
image limits the extent of the transfer of perceived value
to the extension, and thus the success of the extension in
the market.
Overall, the study’s results suggest that consumers
transfer their perceived value of a brand to its extension
products, and the success of an extension, and the level
of perceived value transfer, is determined by the degree
to which the extension fits the consumer’s perceived
understanding of the brand’s image.
5.2 Limitations
This study suffers from several limitations. Firstly, the
population is highly generalized, with the study using
only a very small sample of Australian private university
students. Secondly, the study has only examined the
effects of consumer perceived value and perceived fit on
hypothetical extensions of large and highly successful
international brands. Thirdly, the limited scope of the
experiment resulted in the testing of only two product
categories: consumer electronics and oral hygiene.
Additionally, several flaws in instrumentation became
apparent upon data collection. Certain questions (EMO4,
EMO5, EMO6, SOC1, SOC2, SOC3) were deemed
inappropriate for several of the products, with a large
percentage of respondents finding the questions
laughable. Similarly for the Colgate oral gel hypothetical
extension (AX2), a number of respondents provided a
biased response to question EMO1 (“I would like to
own it”), stating that they had no desire to own the
product as that purchase would be the result of an
undesirable medical condition.
5.3 Future Research
Further research may be required to confirm the
validity of the study’s results across a larger and broader
sample, a greater range of product categories, and a
broader, more differentiated in perceived value, selection
of brands. Additionally, it may be advantageous to the
study to measure real brand extensions as they enter the
market, factoring in their actual success rates into the
results.
Based upon the results of the study, future research
should be conducted at greater depth to further
understand the relationship between consumer perceived
value transfer and brand extension success. Such a study
could investigate the strength of consumer perceived
value against Völckner and Sattler’s (2006) 15 other
significant factors of brand extension success. Another
study could investigate the relative strength of the
dimensions of consumer perceived value as determinants
of brand extension success. Additionally, a study highly
practical to the industry could investigate diminishment
of consumer perceived value transfer in relation to the
cognitive distance an extension lies from a brand’s
perceived image.
6. Conclusion
In conclusion, this investigation contributes to brand
extension research through the proposition that
consumer perceived value be a significant determining
factor in brand extension success. The study revealed
that consumers transfer their perceived value of a brand
to its extension products, whereby the level of perceived
value transfer, and thus the potential success of an
extension, is determined by the degree to which the
extension fits the consumer’s perceived understanding of
the brand’s image.
Suggested implications of, and responses to, the
study’s findings, in relevance to the marketing industry,
are as follows:
1. Brands with lower perceived values will find greater success
in releasing brand extensions with closer brand image fits.
This is due to diminishing value transfer that
results from the increased distance an extension
lies from consumers’ perceived understanding of
the brand image. Essentially, a brand with
products already perceived to be of low value
would struggle to successfully release extension
products that have an even lower perceived value
in the market.
2. The greater the brand’s perceived value, the greater the
distance an extension can be from the consumer’s
perception of the brand’s image. This again is a result
of the diminishing value transfer that comes with
increased extension fit distance. A brand of high
perceived value may still find success with
extensions of a lesser image-fit, as the relative
perceived value lost in this cognitive transfer will
we lesser than that for a low value brand.
3. Brands should measure and know their relative consumer
perceived value prior to developing extension products.
The development and release of brand
extensions can be a costly process, thus the
knowledge of the brand’s perceived value can
determine, at the drawing board stage, the extent
to which the product can lie from the brand’s
image and thus the potential success of the
extension.
7. References
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Bhat, S. & Reddy, S. K. (2001). The impact of parent brand
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