Evaluating the Brand Extension Decision Using a Model of Reputation Building
| Pages | 39-47 |
| Date | 01 March 1994 |
| DOI | https://doi.org/10.1108/10610429410053077 |
| Published date | 01 March 1994 |
| Author | John Milewicz,Paul Herbig |
| Subject Matter | Marketing |
VOLUME 3 NUMBER 1
1994
39
Introduction
Reputation and credibility are familiar
concepts. Examples include whether to
believe the product claims made by a
manufacturer’s advertising, credit
check/verification for a new account, or
whether to believe delivery dates or claims
made by a vendor. A firm with a good overall
reputation owns a valuable asset –
“goodwill”: brand names, corporate logos and
customer loyalty. Brand names can often be
repositories for a firm’s reputation: high
quality performance on one product can often
be transferred to another product by the brand
name alone (Moorthy, 1985; Wernerfelt,
1988). What is the relationship between
reputation of the firm, the brand, and the
potential of a brand extension success? This
article discusses the concept of reputation,
presents two models, one of reputation
building and destruction and one extending
the reputation concept to the brand extension
evaluation process, and portrays how the
model can assist the brand or product
manager with the brand extension decision.
Reputation and Brand Management
The primary purpose of brands and brand
names is to provide to the user a symbolic
meaning which assists the user in the
recognition and decision-making process.
Often brands develop a “personality” of their
own that has an effect on whether users
decide the product’s image is consistent with
their needs. With this “personality” often goes
a reputation as well. Brand names can often
be repositories for a firm’s reputation: high
quality performance on one product can often
be transferred to another product via the
brand name (Moorthy, 1985).
For a firm expanding its product line, a
well-known brand name can be advantageous
in facilitating user acceptance of the new
product because of its existing brand
reputation. Family branding, that is a
company placing the same brand name on all
products in a product line, enjoys the distinct
advantage of instant recognition, benefitting
from the “halo effect” of the brand’s
established reputation. A new entry using the
family brand name gains instant credibility
and visibility from the brand’s established
reputation. This leveraging effect has led
Evaluating the Brand
Extension Decision Using a
Model of Reputation Building
John Milewicz and Paul Herbig
Journal of Product & Brand Management, Vol. 3 No. 1, 1994, pp. 39-47
© MCB University Press, 1061-0421
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