The Effects of Extensions on Brand Name Dilution and Enhancement

In this article, the authors examine new product extension strategies that are likely to be effective in building brand equity. The framework accounts for mixed findings in brand equity literature by identifying motivation as a factor that moderates the dilution and enhancement effects observed in prior research. The authors find that the typicality of the extension and consumers’ level of motivation determine the effect of extensions on family brand name. In high-motivation conditions, incongruent extensions are scrutinized in detail and lead to the modification of family brand evaluations, regardless of the typicality of the extensions. However, in low-motivation conditions, brand evaluations are more extreme in the context of high (versus low) typicality. The less typical extension is considered an exception, which reduces its impact on evaluations. Results also show that brand name dilution or enhancement can occur in response to congruent extensions. However, processes that underlie the effect of congruent information are somewhat different.