Value Creation for Luxury Brands through Brand Extensions: An Investigation of Forward and Reciprocal Effects

摘要

Luxury brands such as Louis Vuitton, Gucci, or Chanel regularly expand beyond their core business and nowadays offer a wide range of products including accessories, perfumes, watches or jewelry, and even services. The use of brand extensions has become central to the business model of most luxury brands. While research on brand extensions for non-luxury brands has produced many insights into the process of brand extension evaluation from a consumer point of view, surprisingly little research has addressed the extendibility of luxury brands, although some authors even argue that the roots of brand extension practice stem from luxury goods. The current study contributes to the understanding of luxury brand extensions by simultaneously analyzing different dimensions of parent brand equity as well as extension category related factors and their impact on value creation for luxury brands. Results of a structural equation model (n=752) show that product-category fit is the main driver of the consumer's attitude towards the extension, followed by the consumer's involvement in the extension category, and the functional, hedonic, and prestige equity of the parent brand. Moreover, the evaluation of the extension influences the evaluation of the parent brand, indicating a positive reciprocal spillover effect for the parent brand.