Green brand extension strategy and online communities

Publication Date13 November 2009
DOIhttps://doi.org/10.1108/13287260911002503
Pages367-384
Date13 November 2009
AuthorPatrali Chatterjee
SubjectInformation & knowledge management
Green brand
extension
strategy
367
Journal of Systems and Information
Technology
Vol. 11 No. 4, 2009
pp. 367-384
#Emerald Group Publishing Limited
1328-7265
DOI 10.1108/13287260911002503
Green brand extension strategy
and online communities
Patrali Chatterjee
School of Business, Montclair State University,
Upper Montclair, New Jersey, USA
Abstract
Purpose – The purpose of this paper is to examine current and prospective consumer perceptions,
purchase intent and parent brand evaluation due to g reen brand – line and category extensions by
marketers of established (non-green) brands for products with high vs low perceived environmental
impact.
Design/methodology/approach – The paper analyses responses to online surveys by 602 pet-
owners at social networking websites. The quasi-experiment considered perceived environmental
impact of core product, parent-brand user status, and green extension strategy (line vs category).
Brand extension evaluation, purchase intent, and parent brand evaluation were then measured.
Findings – Results suggest that consumers are more likely to purchase green extensions of products
with high perceived environmental impact and that current consumers prefer green line extensions to
green category extensions. Both have similar reciprocal impact on parent brand evaluation among
current consumers.
Research limitations/implications – The data have external validity but lack the control possible
in laboratory experiments. Future research should replicate the study in other product categories.
Practical implications – Managers of established brands should consider brand extensions of
products associated with high environmental impact only.
Originality/value – This paper examines managerial implications of line vs categor y extension
strategies for green brand extensions of established brands.
Keywords Brand extensions, Consumer behaviour, Green marketing, Marketing strategy
Paper type Research paper
Introduction
The past decade has witnessed an explosion of commercial and organizational research
activity related to sustainability and green initiatives. Research from the Natural
Marketing Institute (NMI) estimates the market size of the environmentally-sustainable
or green products to reach $420 billion by 2010 (Bonini and Oppenheim, 2008). W hile
environmental associations with existing brands has become a generally acce pted way
of enhancing brand equity and gaining competitive advantage (Montoro-Rios et al.,
2008), current research shows that a growing number of consumers are distrustful of
firms ‘‘green-washing’’ efforts, including adding environmental claims o r labels to
existing products and overuse of such terms and descriptions as ‘‘environmentally
friendly’’ and ‘‘natural’’ (Karna et al., 2001). A 2007 study by TerraChoice
Environmental Marketing Inc (‘‘The Six Sins of Greenwashing’’) examined 1,735
environmental product claims and found that all but one were misleading o r false
(Bonini and Oppenheim, 2008).
As an increasing number of organizations aspire to ‘‘go green’’, companies are
challenged with distinguishing their products and services in an increasingly crowded
green marketplace. Fir ms with established brands are increasingly leveraging the
equity associated with their core products to launch green brand extensions, either as
line extensions or category extensions. Green line extensions involve developing a sub-
brand within the same product category through usage of eco-friendly ingredients to
appeal to current customers’ desire to reduce their carbon footprint and target a new
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1328-7265.htm
JSIT
11,4
368
market segment, the environmentally-conscious consumer. Green category extensions
involve using the parent brand to enter a different product category – that offers a
natural or eco-friendly alternative to satisfy the same functional need. This follows a
long recognized practice among companies that have capitalized on their established
brand names to aid the acceptance of the extension and to reduce the tremendous cost
and risk of launching a new product (Aaker and Keller, 1990). More than 85 percent of
new product introductions in the fast moving consumer goods category are brand
extensions (Kirmani et al., 1999). Good brand extensions also revitalize an d enhance the
parent brand name (Aaker, 1991).
Research in the brand management literature suggests that consumers respo nd
favorably to high-fit brand extensions rather than low-fit brand extension because of
cognitive consistency (Aaker and Keller, 1990), hence line extensions would be favored
compared to concept or categor y extensions. While there are significant benefits in
brand extension strategies, there can also be significant risks, resulting in a diluted or
severely damaged brand image. There are several examples of well -known brands that
have failed in their attempts to establish a stable and loyal customer base for their
green-brand extensions (e.g. Home Dep ot’s Eco-options). Poor evaluations for green
brand extensions may dilute and deteriorate the core brand thus damaging core brand
equity. This may be especially true of environmentally-friendly products that may be
perceived to be less potent compared to their non-green coun terparts by consumers.
Hence, it is imperative to examine how ‘‘greening’’ a product portfolio strategy affects a
firm’s brand value.
Managers of established brands launch green brand extensions in response to
growing consumer desire to reduce their carbon footprint and attract a new market
composed of prospective consumers whose category needs are either met better by
other non-green or pure-g reen competitors (users of rival brands) or are not met by
existing product offerings in the industry (non-users in the category), while enhancing
core brand equity. A critical decision facing brand managers is whether to launch
green line extensions to attract competitive users (new environmentally-friendly
products in the same category, e.g. paper towel manufacturer introducing paper towels
with high post-consumer recycled content) or green cate gory extensions to attract non-
users (new products in a new environmentally-friendly categor y, e.g. paper towel
manufacturer introducing cloth towels). This research addresses this dilemma by
understanding the impact of consu mers’ relationship with parent brands on evaluation
and purchase intention of green brand extensions and the reciprocal impact on parent
brand equity.
The role of social network websites in the grassroots movement towards
environmentally-sustainable marketplace have been widely documented (Eden-Harris,
2009). Many firms are leveraging community portals at their own websites and social-
networking websites to reach current and prospective consumers to publicize, advertise
and collect market-research data to guide their new product launchdecisions (Sinha and
Thompson, 2008). The increasing availability of information on consumer preferences
and opinions at social-networking websites that go beyond mere demographics and the
sophistication of the technology for capturing, tracking, processing, and analyzing this
information now make it possible for firms to pre-test their new product concepts with
actual prospective and existing customers at verylow cost. Sinha and Thompson (2008)
investigate the adoption behavior of brand community participants for order of new
product entry for focal and rival brands. This research will use data collected by an
unidentifiedmarket research agency at social-networking websites to examine consumer

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