When Brand Extensions Backfire: Exploring the Reciprocal Effect of Negative Information of Brand Extensions on Parent Brand
Brand equity has been highlighted as one of the most valuable assets one company possesses. However, negative information related with brand extension, such as brand extension failures, can lead to negative perceptions, which may be difficult to reverse. Therefore, it is of critical interest to managers and academicians to have better understanding of the effect of brand extension on the parent brand, especially its negative effect. In this research, the focus is to investigate the feedback effect of negative information of brand extension on the parent brand. This dissertation focuses on how negative information of brand extension impacts the parent brand. It attempts to clarify the previously mixed findings on reciprocal effects of brand extension. More importantly, it endeavors to fill the research gap of examining the issue of how negative information of brand extension affects the parent brand and to improve the understanding of the process by which negative information of brand extensions causes parent brand dilution, i.e. decreases the consumers¡¯ favorable attitudes towards the parent brand.Therefore, the focus of this dissertation was to investigate the effects of brand extension¡¯s negative information on consumers¡¯ attitudinal evaluation of parent brand, over different levels of brand extension fit, information negativity, and association set size with parent brand. In general, the significant impact of negative information on parent brand evaluation has been enlightened by this research.