Effective fashion brand extensions: the impact of limited edition and perceived fit on consumers' urgency to buy and brand dilution

UNCG Author/Contributor (non-UNCG co-authors, if there are any, appear on document)
Michelle L. Childs (Creator)
The University of North Carolina at Greensboro (UNCG )
Web Site: http://library.uncg.edu/
Byoungho Jin

Abstract: For apparel brands, vertical-downward brand extensions are one of the most highly utilized growth strategies. By introducing a lower-cost and quality brand underneath the parent brand, apparel companies can increase sales by reaching mass-market consumers who are more price-conscious. However, the long-term success of the parent brand may be uncertain because a downward extended brand may result in dilution to the parent brand. To avoid brand dilution and create immediate sales at the same time, apparel brands have started to collaborate with a retailer providing a limited edition (i.e., limiting quantity and time) such as when Missoni collaborated with Target. Despite the growing trend, very limited academic studies are directed to understand the effectiveness of these brand extension strategies. In addition, while the notion of perceived fit is known to be critical to the success of a brand extension, perceived fit has been limitedly understood and perceived fit between brand and retailer, and perceived fit between brand and price have not been examined. To address the research gaps, this study consisted of four experimental studies guided by commodity theory, categorization theory, cognitive dissonance theory, and Weber's Law of Just Noticeable Difference. In specific, this study manipulated and tested the effect of brand extension strategy (limited edition/ongoing) (Study 1), perceived fit between brand and retailer (Study 2), extension strategy and perceived fit between brand and retailer (Study 3), and perceived fit between brand and price (Study 4) on urgency to buy and brand dilution. This research also explored the role that consumers' brand consciousness level played in the relationships in Study 2 and Study 4. Across the four studies, a total of 674 college students participated in an online experimental study. Respondents were exposed to a video stimulus that included the manipulated variables and answered questions that were pertinent to each study. High and low brands (Ralph Lauren and Lee, respectively) and retailers (Nordstrom and Target, respectively) were chosen via a pre-test and manipulated for the evaluation of perceived fit. Results showed that urgency to buy was higher when consumers were exposed to a limited edition brand extension (Study 1), perceived high-fit between brand and retailer (Study 2), perceived high-fit between brand and retailer and the brand offered a limited edition (Study 3), and perceived high-fit between brand and price (Study 4). Brand dilution occurred when the brand offered an ongoing brand extension (Study 1) and when consumers perceived low-fit between brand and price (Study 4). However, brand image concentration (i.e., improvement) occurred when a brand collaborated with a retailer, regardless of perceived fit (Study 2), consumers' brand consciousness level (Study 2), or brand extension strategy (Study 3). These findings suggest that apparel brand managers should offer their brand extensions as limited edition, collaborate with a retailer, or offer their brand extension price no greater than 20% lower than the parent brand in order to increase urgency to buy and keep or even improve the brand image. Theoretically, this study expanded the notion of fit in brand extensions to include brand and retailer fit and brand and price fit. This research was also one of the earliest studies to investigate the effects of extension strategy (limited edition/ongoing) in apparel brand extension studies. Last, but not the least academic contribution includes examining the manipulating effects for two dependent variables (urgency to buy and brand dilution), which has not been examined previously.

Additional Information

Language: English
Date: 2014
Brand Dilution, Brand Extension, Fashion, Limited Edition, Perceived Fit, Urgency to Buy
Clothing and dress $x Marketing
Consumer behavior
Branding (Marketing) $x Management
Brand name products $x Management

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