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(originally published by Booz & Company)


A Limit to Brand Extensions

The researchers wondered, however, whether the same would be true of brands that do not have strong cultural symbolism but are tied to a specific country. If so, this would suggest that consumers deliberate about the “expertise” of the brand’s country of origin — in other words, rather than forming subconscious cultural associations, consumers might be evaluating products on a methodical assessment of, say, Italian manufacturing.

To test this question, the researchers focused on alcoholic beverages produced in Mexico and the United States. First, two brands with strong cultural associations were chosen: Corona represented Mexico and Budweiser the United States. Another U.S. brand, Coors, was also included as a comparison. In pretests with 50 participants, Coors was rated similarly to the other two beers in terms of favorability, familiarity, and breadth of products. But although it was known to 90 percent of the participants as a U.S. product, Coors was rated as neutral in both U.S. and Mexican cultural symbolism. (A fourth beer, whose brand name was not provided, was also included as a control.)

Tequila was chosen as one targeted brand extension because of its high level of cultural symbolism with Mexico but not the United States. A second test product, brandy, was included because of its tenuous cultural connections (less than 17 percent of the participants spontaneously associated it with a particular culture). The researchers noted that the proposed tequila and brandy extensions represented equivalent fits for each beer maker — in other words, any beer company could be reasonably expected to branch out into those products. But, they added, Corona’s tequila would be the only extension that had strong cultural ties.

The participants — for this test, fittingly, 205 college students, from the University of Minnesota — were each asked to rate one of the extensions in terms of the ease with which they understood the new product’s concept. They also indicated, on a seven-point scale, their buying intentions, how competently they thought the brand could manufacture the product, their feelings toward products made in the United States and Mexico (products in general as well as alcoholic products specifically), and their prior attitudes toward either tequila or brandy.

Overall, participants thought more highly of the culturally congruent Corona tequila. Participants thought much less favorably of the Budweiser tequila than that of Coors (even though both are U.S. brands), because Budweiser was more strongly identified with the United States and tequila thus created more of a cultural contrast. These effects also extended to participants’ intentions to buy the product.

The findings ruled out the idea that a company’s country of origin, rather than its cultural symbolism, drove the panel’s reactions. Participants did not perceive a difference in the manufacturing expertise of the beer makers, and the students’ prior attitudes toward tequila and brandy didn’t matter. The participants also didn’t elaborate on their assessments, underscoring the influence of their automatic cultural associations.

The researchers say their findings have important implications for branding managers, pointing the way to extensions they might not otherwise have considered but also serving as a warning about the dangers of going too far. For example, although consumers thought better of Armani’s move into cappuccino makers than might be expected (after all, it’s a clothing company), they were less enamored of an Armani teakettle (because it not only is an unusual fit for the company but also is at odds with its national culture). And even when the product fit is right, alarm bells should go off when the cultural connection is wrong, as it was with Budweiser and tequila.

“Culturally symbolic brands may successfully extend into culturally congruent products regardless of fit,” the authors conclude, “and may backfire in culturally incongruent categories, despite their perceived fit.”

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