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A Limit to Brand Extensions

Cultural associations can really help — or hurt.

Title: Extending Culturally Symbolic Brands: A Blessing or a Curse? (Subscription or fee required.)

Authors: Carlos J. Torelli (University of Minnesota) and Rohini Ahluwalia (University of Minnesota)

Publisher: Journal of Consumer Research, vol. 38, no. 5

Date Published: Forthcoming (February 2012)

Certain well-known brands represent more than just their products or services. They also evoke particular cultures and their associated traits. In some cases, marketers have devoted considerable resources to building their brands into cultural icons, which can help them dominate product categories in the global marketplace.

But this paper warns that because consumers associate well-known brands with particular countries and their symbolism, branching out into new categories can backfire when the new product doesn’t match the cultural values that are tied to the brand. Budweiser, for example, is recognized around the world as a quintessentially American brand. But what if Budweiser tried to branch out from beer and venture into, say, barbecue sauce or cappuccino makers?

The company would fare much better with barbecue sauce, argue the authors of this paper, because both the brand and its new product extension represent the same country and culture. “A brand’s cultural symbolism can be a liability or an asset, and to harness it profitably, a manager needs to understand the cultural symbolism of the potential extension categories under consideration,” the authors write.

And it’s an increasingly important issue, the authors say, because brand extensions can be an essential stream for growth in today’s ultra-competitive marketplace, especially for iconic brands that might already be leaders in their own category. But research has shown that the rate of failure when a brand extends its products into a new category is as high as 84 percent, so factors that are likely to improve the chances of success could be highly consequential.

To identify those factors, the researchers first compared how consumers evaluated potential product extensions that were either a moderate or a low fit with the identity of a well-known brand — in this case, Sony. The researchers turned to 73 members of a consumer panel in the Minneapolis–St. Paul, Minn., area to rate six hypothetical product extensions.

For products that were moderate fits with Sony’s history as a manufacturer of electronics, the participants were asked to react to the idea of a Sony cappuccino maker (culturally incongruent because cappuccino is associated with Italy), a Sony electric car (culturally congruent because of Japan’s automotive industry), and a Sony toaster oven (culturally neutral). For extensions that had a low fit with Sony’s product history, the panel evaluated serving sets for cappuccino (culturally incongruent), sushi (culturally congruent), and general food (neutral).

In both the moderate- and low-fit categories, the culturally similar extensions were ranked more favorably and the culturally dissimilar products less favorably than their neutral counterparts. This supports the idea that perceptions of cultural connectedness transcend ideas about whether an extension “fits” with a company’s past products.

In addition, an analysis of written evaluations provided by the panelists showed a lack of deliberation about the proposed products’ cultural or national associations; this is consistent with prior research that has found people often fail to articulate or consciously assess the influence of such associations in forming opinions.

The next study tested these findings on different brands and product categories. The researchers picked two brands with distinct cultural associations (Giorgio Armani for Italian associations and Burberry for British). Both belong to the high-end fashion category and were ranked similarly by study participants for favorability, familiarity, and breadth of products.

For new products, a teakettle was chosen to evoke high levels of British symbolism and low levels of Italian culture, and a cappuccino maker was picked for the opposite effect. A toaster oven was chosen as the “neutral” product. The participants — this time, 81 members of a consumer panel in the Minneapolis–St. Paul area — were each asked to give their gut reaction to one of the products by using a nine-point scale. They then used a seven-point scale to rate how much they thought the products fit with the brand’s identity. Once again, the analysis showed that participants preferred products that were culturally connected to the brand.

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