Moving up or down : power distance belief and the asymmetric effects of vertical brand extension

• Main Author: Liu, Xiaoyan
• Other Authors: Elison Lim
• Format: Theses and Dissertations
• Language: English
• Published: 2016
• Subjects: DRNTU::Business::General
• Online Access: https://hdl.handle.net/10356/67027
• Institution: Nanyang Technological University

Vertical brand extension is uniquely different from horizontal brand extension in that it evokes a consideration of status due to the changed price points and prestige levels. Thus, to understand how consumers evaluate vertical brand extension, it is important to figure out how they feel about status and the potential status change. In this dissertation, I develop and test a theoretical framework of how individuals’ power distance belief (PDB) (i.e., the extent to which people accept and expect power disparity in a society) impacts consumers’ evaluation of vertical brand extension and the corresponding parent brand. A preliminary study provides empirical evidence for the proposition that consumers with high (vs. low) PDB strongly emphasize status enhancement. Results of the first three studies consistently demonstrate that, compared to consumers with low PDB, consumers with high PDB evaluate upward extensions more favorably and downward extensions less favorably. In addition, such differences in attitudes lead to an asymmetric brand feedback effect. Specifically, it shows that while upward extension results in greater brand enhancement effect for high versus low PDB consumers, there is no significant difference in brand dilution effect in the context of downward extension (study 2). Study 4 demonstrates that: a) processing fluency is the underlying mechanism that drives the impacts of PDB on consumers’ evaluation of vertical brand extensions, and b) the PDB effects on vertical extension evaluation is attenuated for products low in symbolic meaning. This dissertation expands the current research on vertical brand extension by examining the role of individual PDB. The findings also provide practical implications for marketers who are extending a brand vertically to tap into different customer segments.