Journal of Euromarketing, 18:71–88, 2009

Copyright
c Taylor & Francis Group, LLC

ISSN: 1049-6483 print / 1528-6967 online
DOI: 10.1080/10496480903021867

ARTICLES

Brand Extension Effects on Brand Equity:

A Cross-National Study
Isabel Buil
Eva Martı́nez
Leslie de Chernatony

ABSTRACT. The objective of this paper is to analyze the effect that brand extension strategies have
on parent brand equity. Specifically, we propose and test a model to explore how variables related to
the parent brand, the extension and the consumers personality influence parent brand equity after the
extension. Data was gathered from a survey in the UK and Spain. Results show that brand extension
strategies dilute parent brand equity in both markets. We found that the initial parent brand equity and
the perceived fit (category and image fit) have a positive effect on consumers’ attitude toward brand
extensions. Consumers’ attitude and the initial parent brand equity also influence parent brand equity
after the extension. Finally, through a multi-sample analysis we demonstrate that brand extensions have
similar effects on brand equity among the UK and Spanish consumers’ samples.

KEYWORDS. Brand extension, brand equity, consumer behavior, cross-national

INTRODUCTION competitive advantages. Among other benefits,

Building strong brands is the goal of many
organizations. Brand equity creates value for the
firm as well as for the customer (Aaker, 1991;
Ambler, 2003) and provides a basis for gaining
a rich brand equity provides an opportunity for
brand extension (Rangaswamy, Burke, & Oliva,
1993).
Given the high costs and risks involved in
launching new brands, the use of established

Isabel Buil is Assistant Professor, Department of Economy and Business Studies, University of Zaragoza,
Spain. Eva Martı́nez is Professor of Marketing, Department of Economy and Business Studies, University
of Zaragoza, Spain. Leslie de Chernatony is Professor of Brand Marketing and Honorary Chairman of the
Centre for Research in Brand Marketing at Birmingham University Business School, Birmingham, England,
United Kingdom.
Address correspondence to Eva Martı́nez, Faculty of Economics and Business, University of Zaragoza,
Gran Via 2, 50005 Zaragoza, Spain. E-mail: emartine@unizar.es
71
72 JOURNAL OF EUROMARKETING
brand names is seen by many companies as an at-
tractive way for launching new products. Brand
extensions are attractive to consumers (Aaker,
1990; Keller, 2007), distributors (Milewicz &
Herbig, 1994), and firms (Keller, 2007) because
they broaden choice, reduce marketing costs,
and increase the probability of brand success
(Morrin, 1999; Sullivan, 1992). Together these
benefits could improve the firm’s market share
and the effectiveness of advertising (Smith &
Park, 1992).
Brand extensions can have a positive effect
on the core brand. A successful extension can
increase sales for the parent brand and enhance
brand equity by reinforcing the awareness and
the core image of the original brand (Aaker,
1991; Tauber, 1981). However, this strategy may
also negatively affect the parent brand. An ex-
tension may damage the reputation of the par-
ent brand and dilute its brand equity (Aaker,
1990; Loken & John, 1993). Therefore, man-
agers should analyze whether the benefits of
launching a brand extension outweigh the disad-
vantages. Despite the importance of this issue,
the existing research on brand extensions has
mainly focused on analyzing consumer evalua-
tions of extensions (Grime, Diamantopoulos, &
Smith, 2002). By contrast, there are few studies
that analyze the feedback effects that brand ex-
tension strategies have on parent brand equity in
particular (A.C-H. Chen & Chen, 2000).
The popularity of brand extensions is seen
in terms of many global brands following this
strategy (Milberg & Sinn, 2008). However, con-
sumers from different countries may place vary-
ing emphasis on different factors when assess-
ing brand extensions. A cross-national study of
the effect of brand extensions on parent brand
equity is therefore critical for a successful mar-
keting strategy in international markets. Man-
agers could then benefit from understanding the
brand’s position in different markets and the way
consumers respond to brand extension strategies.
Despite this, to our knowledge no previous re-
search has undertaken an analysis of the effects
of brand extensions on the parent brand equity
in different countries.
This article seeks to address these gaps in the
literature by analyzing how consumer-based par-
ent brand equity is affected by brand extension
strategies. In view of the prevalence of global
brands this article further seeks to determine if
brand extension strategies have similar effects
on consumer-based parent brand equity in two
countries, specifically in the United Kingdom
(UK) and Spain.
Despite the rich literature on brand exten-
sions, several researchers advocate investigating
the generalizability of brand extension research
findings (Bottomley & Holden, 2001; Klink
& Smith, 2001; Völckner & Sattler, 2007).
Therefore, this study addresses this request and
seeks to advance knowledge by providing more
confidence about the evolving theory of brand
extensions.
The article opens by proposing a model of
brand extension effects on parent brand equity.
The methodology and data collection to test this
is explained. This is followed by the analysis
of empirical findings. Finally, conclusions and
implications are drawn.
PROPOSED MODEL AND
HYPOTHESES
To manage brand extensions effectively, mar-
keters need to understand the way successful
products can grow from established brands. We
propose a grounded model that shows the rela-
tionships between the salient variables character-
izing the brand extension strategy and the effect
they may have on parent brand equity. The model
includes constructs related to the parent brand,
the extension, and the consumers’ personality.
Parent brand equity (measured before and after
the extension), as we detail in the Methodol-
ogy section, is based on three dimensions: brand
awareness, perceived quality, and brand asso-
ciations. Consumers’ attitude toward the exten-
sion, category fit, image fit, perceived difficulty
of making the extension, and consumer innova-
tiveness are also included. The model is shown
in Figure 1.
Initial parent brand equity is the first vari-
able included in the model. Research findings
suggest positive relations between the different
dimensions of brand equity—brand awareness,
perceived quality, and brand associations—and
the evaluation of brand extensions. Consumers’
 Buil, Martı́nez, and de Chernatony
FIGURE 1. Conceptual Model
CATEGORY
FIT
H2
INITIAL PARENT H1 CONSUMERS’ ATTITUDE
BRAND EQUITY TOWARD BRAND EXTENSIONS
H4
PERCEIVED
DIFFICULTY
H6
attitudes toward brand extensions are likely to be
more favorable when consumers are aware of the
original brand. To guide both new decision and
repeated choice tasks, consumers draw on brand
awareness (Hoyer & Brown, 1990; Macdonald
& Sharp, 2000). Thus, the level of consumer
knowledge can affect consumers’ reactions to
brand extensions (Klink & Smith, 2001). Simi-
larly, perceived quality of the original brand pos-
itively influences consumers’ attitude toward the
extension. Many studies have found a favorable
direct effect between the perceived quality and
the attitude toward brand extensions (Bottomley
& Holden, 2001; Martı́nez & de Chernatony,
2004; J. W. Park & Kim, 2001; van Riel,
Lemmink, & Ouwersloot, 2001; Völckner &
Sattler, 2006). Thus, the higher the perceived
quality of the parent brand, the greater its
positive effect on acceptance of the extension
(Milewicz & Herbig, 1994). Finally, consumers’
attitude toward brand extensions is also ex-
plained by brand associations. The evaluation
of brand extensions is likely to be more favor-
able when existing parent brand associations are
positive (de Ruyter & Wetzels, 2000; del Rı́o,
Vázquez, & Iglesias, 2001), because of the trans-
fer of these positive associations from the orig-
inal brand to the extension. We therefore postu-
late the following:
H1: Initial parent brand equity has a positive
influence on consumers’ attitude toward
brand extensions.
73
IMAGE
FIT
H3
H7 FINAL PARENT
BRAND EQUITY
H5
CONSUMER
INNOVATIVENESS
Perceived fit, which refers to the congruence
between the original brand and the extension,
is an important variable in the brand extension
evaluation process. Consumers can evaluate
brand extensions on the basis of their attitude
toward the parent brand and their attitude toward
the extension category. When both factors are
considered, a third issue arises: the perceived
fit (Czellar, 2003). Generally, an extension
perceived as similar to the parent brand, that
is, with a high fit, should be more valued and
preferred by consumers than a low fit extension
(Aaker & Keller, 1990; Hem, de Chernatony, &
Iversen, 2003; Martı́nez & Pina, 2005; van Riel
et al., 2001).
Brand extension research has developed two
main approaches to measure this concept. Aaker
and Keller (1990) proposed three measures of
fit: complement, substitute, and transfer. Other
researchers, such as Bhat and Reddy (2001) and
Grime et al. (2002), considered two different
dimensions of this construct: category fit and
image fit. The current study follows the later
conceptualization. Most previous research on
brand extensions has tended to focus on category
fit (i.e., product feature similarity) and even
when other aspects have been considered, they
have not been separately studied. However, in
assessing brand extensions, concept consistency
or brand image fit is as important as category
fit (Grime et al., 2002; C. W. Park, Milberg,
& Lawson, 1991). Therefore it is necessary to
analyze the influence of these two factors (C.
W. Park et al., 1991). Moreover, this approach
74 JOURNAL OF EUROMARKETING
is more appropriate than Aaker and Keller’s
dimensions, because the effects of some of their
measures of fit (e.g., substitute) are not clear
(Bottomley & Holden, 2001; van Riel et al.,
2001).
Category fit indicates the similarity between
the new category and other products from the
original brand (Czellar, 2003). Category fit per-
ceptions rely on the likeness of features, at-
tributes, or benefits between the extension and
the brand’s existing products (Grime et al.,
2002). Thus, if the extension shares the same
features, attributes, or usage situations with the
parent brand, the category fit will be high.
Brand extension research has generally re-
lied on categorization theory (Rosch & Mervis,
1975) to study how consumers evaluate brand
extensions (Aaker & Keller, 1990; Czellar, 2003;
Klink & Smith, 2001). This theory states that
people organize objects or information into cat-
egories. Accordingly, when consumers are ex-
posed to an extension, they categorize the new
product by assessing the degree of consistency
with their existing category knowledge (Aaker
& Keller, 1990; Boush & Loken, 1991; C. W.
Park et al., 1991).
Drawing on categorization theory, if con-
sumers perceive an extension to be a member
of a category, beliefs and affect associated with
the parent brand will transfer to the extension.
As such, higher levels of category fit will favor
the transfer of beliefs and affect. In this context,
consumers will regard the new products as cred-
ible and develop more favorable attitudes toward
brand extensions (Boush & Loken, 1991; Boush
et al., 1987). Therefore, consumer evaluations
of brand extensions are likely to be more favor-
able at higher levels of category fit. We therefore
postulate the following:
H2: Category fit has a positive influence on con-
sumers’ attitude toward brand extensions.
Brand-level or image fit refers to the match
between the image of the brand and the exten-
sion (Czellar, 2003). C. W. Park et al. (1991) rec-
ognized the relevance of brand-name concept or
image as an important way in which consumers
evaluate fit. According to these authors, concept
consistency relies on the extension’s ability to
reflect the brand concept (i.e., the brand image).
Image fit will be high when the extension is con-
sistent with the brand’s meaning for consumers
and when the same associations connected to the
parent brand are shared with the extension (de
Ruyter & Wetzels, 2000).
Similar to the aforementioned arguments,
when consumers are exposed to an extension,
they may assess the new product by analyzing
the degree to which the extension is consistent
with the brand concept or brand image (Milberg,
Park, & McCarthy, 1997; C. W. Park et al., 1991;
Seltene, 2004).
Likewise the perceived image fit between the
brand and the extension may determine the ex-
tent to which beliefs and affect associated with
the parent brand transfer to the extension. As
such, higher levels of image fit will favor the
transfer of affect and brand associations, and
consequently, consumers will develop more fa-
vorable attitudes toward the extension (C. W.
Park et al., 1991; Seltene, 2004). Thus, given
a strong and reputable parent brand, consumer
evaluations of brand extensions are likely to be
more favorable at higher levels of image fit.
Therefore we propose the following:
H3: Image fit has a positive influence on con-
sumers’ attitude toward brand extensions.
Perceived difficulty of making the extension
is another potential determinant of consumers’
attitude toward brand extensions. According
to Aaker and Keller (1990), consumers may
perceive difficulty making the extension when
the extension launched by a company is very
difficult to produce. By contrast, consumers
may perceive less difficulty when the extension
is much easier to make (i.e., inferior level or
lower quality).
When consumers perceive the difficulty of
making the extension to be high, they may con-
sider this as an achievement, which will be re-
warded by a favorable evaluation (van Riel &
Ouwersloot, 2005). By contrast, if consumers
perceive the extension too easy to make, sim-
ple (i.e., lower level) or lacking innovation, they
may consider this as a company’s attempt to
take advantage of the original brand to com-
mand higher prices. Similarly they may feel
 Buil, Martı́nez, and de Chernatony
inappropriate to use a well-established brand to
introduce an inferior product. Therefore, con-
sumers’ attitude toward brand extensions will
be more favorable when extensions are complex
and difficult to make (Aaker & Keller, 1990;
Echambadi, Arroniz, Reinartz, & Lee, 2006; van
Riel & Ouwersloot, 2005). Consequently, we
posit the following:
H4: Perceived difficulty of making the exten-
sion has a positive influence on consumers’
attitude toward brand extensions.
Consumers’ attitude toward extensions may
also be explained by consumer innovative-
ness. Consumer innovativeness indicates con-
sumers’ predisposition to purchase new prod-
ucts (Roehrich, 1995, 2004). Although brand
extensions are continuous innovations they are
far from risk free. Therefore, consumer inno-
vativeness may be a significant determinant of
extension attitude because highly innovative in-
dividuals have a higher tolerance for risk. As a
result, they will act more favorably with exten-
sions (Hem et al., 2003; Klink & Smith, 2001;
Völckner & Sattler, 2006). Less innovative con-
sumers, in contrast, may show a less positive
response because of their lower willingness to
try new products. In view of this, the following
hypothesis is formulated:
H5: Consumer innovativeness has a positive
influence on consumers’ attitude toward
brand extensions.
Although parent brand equity largely depends
on the strategies firms undertake (e.g., marketing
mix efforts, brand extensions, etc.), the resulting
brand equity will also depend on the initial parent
brand equity (Yoo, Donthu, & Lee, 2000).
According to associative network theory,
brand information is stored in networks con-
sisting of nodes (i.e., brands and related con-
cepts) connected by links that vary in strength
(Anderson, 1983; Keller, 1993). When con-
sumers are exposed to brand extensions, brand
nodes (i.e., parent brand) are activated. As a re-
sult of this spreading activation process, retrieval
of the parent brand occurs (Morrin, 1999). Con-
sequently, consistent with this theory, brand eq-
uity dimensions, such as brand awareness, brand
75
associations, and perceived quality, will remain
or even be reinforced once the extension has been
successfully launched (Ambler & Styles, 1997;
Pitta & Katsanis, 1995). As such, we expect that
initial parent brand equity will have a positive
and direct effect on the final parent brand equity
after an extension. Thus, we propose the follow-
ing:
H6: Initial parent brand equity has a positive
influence on final parent brand equity after
a brand extension.
Parent brand equity influences consumers’ at-
titude toward extensions, but also, this attitude
affects the core brand’s equity. Therefore, the
way consumers evaluate brand extensions can
change or modify the core brand and its dimen-
sions.
Drawing again on associative network theory,
the introduction of an extension can result in re-
call of the feelings, beliefs, and experiences as-
sociated with the parent brand (Swaminathan,
2003), higher name accessibility, and rein-
forcement of its associations (Pullig, Simmons,
& Netemeyer, 2006). However, this process
will depend on consumers’ attitude toward the
extension. For example, it has been found that
extensions perceived to be poor quality or
evaluated unfavorably dilute brand associations
(Chang, 2002; Martı́nez, Polo, & de Chernatony,
2008). Thus, when in evaluating a brand exten-
sion if the consumers’ attitude is favorable, this
attitude will produce a positive effect on the par-
ent brand equity. By contrast, if consumers’ eval-
uation of a brand extension is negative, it may
damage the equity of the brand. We postulate the
final hypothesis of the model:
H7: Consumers’ attitude toward brand exten-
sions has a positive influence on final parent
brand equity after a brand extension.
In an increasingly global economy where
companies expand their activities to interna-
tional markets, an understanding of the cul-
tures in which they are competing is essential
(Veloutsou, Gilbert, Mouthinho, & Goode,
2005). However, managers of global brands of-
ten launch the same brand extensions in different
markets without paying attention to the cultural
76 JOURNAL OF EUROMARKETING

differences that might exist. Researchers have between these countries with such distinct cul-
found that differences in country cultures im- tural profile provides an interesting examination
pact on consumer response to advertising (Orth, of cross-national differences.
Koenig, & Firbasova, 2007; Waller, Fam, & Because of its familiarity to consumers and
Erdogan, 2005), brand positioning (Roth, 1995), its presence in both countries, the study focused
or consumption and usage of a large number of on the sportswear market. In both markets there
products and services (de Mooij, 2000; de Mooij are global brands of sportswear with high levels
& Hofstede, 2002). Therefore, it is necessary to of consumer awareness. Furthermore, fieldwork
identify whether brand extension strategies for was done among students, who as young people
global brands have the same effect on parent are the core target market.
brand equity and whether the variables analyzed
behave in the same way across countries. Pretests
As we noted earlier, previous research related
Prior to data collection, two pretests were
to the effects that extensions may have on the
conducted among students to choose the parent
parent brand is limited and is based on research
brands and the hypothetical extensions in both
in single countries. These studies have analyzed
countries. This procedure (i.e., using actual
the reciprocal effects that brand extensions have
brands and hypothetical extensions) is the most
on some aspects of the parent brand, such as
common practice in brand extensions research
parent brand evaluations and beliefs (Ahluwalia
(Aaker & Keller, 1990; Boush & Loken, 1991;
& Gürhan-Canli, 2000; Chang, 2002; Gürhan-
Broniarczyk & Alba, 1994; van Riel & Ouwer-
Canli & Maheswaran, 1998; John, Loken, &
sloot, 2005, etc.). The objectives of the pretests
Joiner, 1998; Keller & Aaker, 1992; Loken
were, first, to select two highly valued brands
& John, 1993; Milberg et al., 1997; Milberg
with different degrees of awareness and per-
& Sinn, 2008; Romeo, 1991; Sheinin, 2000;
ceived quality and, second, to identify two hypo-
Zimmer & Bhat, 2004), memory structures
thetical extensions with different perceived fit.
and retrieval processes (Morrin, 1999), and
They were carried out with a group of 58 and
brand choice (Balachander & Ghose, 2003;
45 students from the University of Birmingham
Swaminathan, Fox, & Reddy, 2001). By con-
(UK) and 84 and 86 students from the University
trast, few researchers have studied in particular
of Zaragoza (Spain), respectively. Two brands
the influence of brand extensions on parent
(from a list of 8) and two extensions (from 11
brand equity (A.C-H. Chen & Chen, 2000).
different products) were chosen in both markets:
Similarly, the extent to which brand extension
Nike, with the highest awareness and quality lev-
strategies affect brand equity in a cross-national
els, and Puma, also with high but significantly
context has received no attention. Only a few
lower awareness and quality levels. The hypo-
studies have examined the consumer evaluation
thetical extensions were jeans and camera, with
process across countries and/or cultures (Basu
a high and low level of fit, respectively. Table 1
& John, 2007; Bottomley & Holden, 2001;
reports the results.
Echambadi et al., 2006). Therefore, this study
Students often purchase sports products, and
seeks to advance knowledge by investigating the
the brands and extensions selected for the analy-
cross-national effect of global brands’ extension
sis are equally available and have the same func-
strategies on parent brand equity.
tion for consumers in both the UK and Spain.
These guidelines ensure the functional equiva-
lence (Usunier, 2000).
METHODOLOGY
Samples and Procedure
To test the proposed model we undertook
fieldwork in the UK and Spain. Both are devel- After the pretests in both countries, we de-
oped western European countries, yet they ex- signed four different questionnaires (one for
hibit some cultural differences (Hofstede, 1984; each brand-extension pair). The questionnaires
Kumar, 2000). Because of this, a comparison had two different parts. In the first part, similar
 Buil, Martı́nez, and de Chernatony 77

TABLE 1. Results of the Pretests

UK Spain
Pretest 1: Brands Nike Puma t Nike Puma t

Awareness 6.81 5.55 7.42∗∗∗ 6.6 4.74 9.57∗∗∗

Perceived quality 6.57 5.16 7.41∗∗∗ 6.42 4.83 9.49∗∗∗

UK Spain

Pretest 2: Extensions Jeans Camera t Jeans Camera t

Perceived fit Nike 3.07 1.71 5.54∗∗∗ 3.13 2.14 5.65∗∗∗

Perceived fit Puma 3.04 1.78 5.61∗∗∗ 2.99 1.98 5.48∗∗∗

Note. Seven-point Likert scales.

∗∗∗
p < .01.

for all the questionnaires, respondents an-
swered questions that assessed consumer
innovativeness, the perceived difficulty in man-
ufacturing the new product, and the brand equity
of a particular brand (Nike or Puma). In the sec-
ond part, respondents were told that the brand
(Nike or Puma) had decided to launch a new
product (jeans or cameras) with the same brand
name. Then they were asked to assess the per-
ceived category and image fit, and data were also
collected on their attitude toward the extension
and the brand equity of the original brand in the
new context (final parent brand equity).
To ensure translation equivalence of the ques-
tionnaires between the two countries, several ex-
perts who speak both English and Spanish re-
vised the questions. Furthermore, a few students
answered the questionnaires in both languages,
and their comments were used to correct po-
tential problems of equivalence (Usunier, 2000).
Conceptual equivalence is assumed because the
concepts used in the questionnaire have similar
meaning across the two countries.
Data were gathered from students using a sur-
vey in the UK and Spain. A total of 461 question-
naires were completed. Nonvalid questionnaires
were discarded, resulting in 203 valid question-
naires for the UK and 227 for Spain. Although
some researchers suggest that the use of student
samples creates problems regarding external va-
lidity and generalizability of findings, the use
of student respondents is common in brand ex-
tensions research (Ahluwalia & Gürhan-Canli,
2000; K. J. Chen & Liu, 2004; Lane, 2000;
van Riel & Ouwersloot, 2005, etc). In addition,
student samples are more likely to be homoge-
neous when compared across countries because
they can be matched in terms of years of edu-
cation, age, area of study, and so on. For this
reason, student samples can help surface dif-
ferences in brand extension research and avoid
the effect of demographic variables (e.g., age
and education) that could confound the results
(Callow & Lerman, 2003; Craig & Douglas,
2000; Herk, Poortinga, & Verhallen, 2005;
Orth et al., 2007). Therefore, such matched
student samples are considered appropriate
when comparing different countries (Agarwal &
Teas, 2002; Durvasula, Andrews, Lysonski, &
Netemeyer, 1993). Moreover, students are par-
ticularly relevant for this study because they
are the target consumer segment for the se-
lected product, sportswear clothes, where brand-
ing plays an important role influencing decisions
(Mintel, 2002).
Following recommendations proposed in the
literature, the study controlled for sample equiv-
alence by using business studies students with
similar years of education and age in both coun-
tries. Finally, data collection equivalence was as-
sured using the same data collection procedure
and identical instructions.
Measures
A literature review was undertaken to select
the most appropriate way to measure each vari-
able in the model.
78 JOURNAL OF EUROMARKETING
To conceptualize consumer-based brand eq-
uity this study builds on Keller’s (1993) and
Aaker’s (1991) definitions. Keller’s (1993) con-
ceptualization involves two components: brand
awareness and brand image. Aaker (1991) de-
fines brand equity as “a set of brand assets and
liabilities linked to a brand, its name and symbol
that add to or subtract from the value provided by
a product or service to a firm and/or to that firm’s
customers” (p. 15) and includes five dimensions:
brand awareness, perceived quality, brand as-
sociations, brand loyalty, and other proprietary
brand assets. We draw on the brand equity di-
mensions that relate to facets of consumers’
minds: brand awareness, perceived quality, and
brand associations. This brand equity conceptu-
alization has been followed by other researchers
(e.g. Bauer, Sauer, & Schmitt, 2005; Cobb-
Walgren, Ruble, & Donthu, 1995; Lee & Back,
2008, etc.). Brand loyalty is not included because
it differs from other dimensions as it is more re-
lated to use experiences rather than mental facets
(Aaker, 1991). In addition, brand loyalty is con-
sidered by many researchers as a consequence
of brand equity (Keller, 2007; Na, Marshall, &
Keller, 1999; S. A. Taylor, Celuch, & Goodwin,
2004) and not as one of its components. Finally,
the fifth of Aaker’s dimension, other proprietary
brand assets, has been omitted because it is not
directly related to consumers.
To measure brand awareness four items were
employed (Netemeyer et al., 2004; Yoo et al.,
2000). Perceived quality was assessed following
Yoo et al. (2000) and Villarejo (2002). Finally,
measures for brand associations were used from
Aaker (1996) and Pappu, Quester, and Cook-
sey (2005, 2006). These measures were applied
both before the extension and after the exten-
sion. The remaining variables were measured
using the scales described in Table 2.
RESULTS
Scale Validation
The items of the proposed model were eval-
uated using exploratory techniques to assess the
reliability and dimensionality of the measures
for both UK and Spanish samples. Then, con-
firmatory factor analyses were performed using
EQS 6.1 and the robust maximum-likelihood es-
timation in each group (Bentler, 1995).
To assess the reliability of the measures, Cron-
bach’s alpha and the item-total correlation for
all scales were used. Following this process
items AWA1 before and after the extension were
deleted in both countries. We then performed
exploratory factor analyses using principal com-
ponents analysis with varimax rotation. The re-
sults suggested that the corresponding items of
each scale cluster into a single factor with sig-
nificant factor loadings. The explained variance
exceeded 60% in each case. Only the items
of consumer innovativeness and brand associa-
tions (before and after the extension) dimensions
loaded on two different factors in both groups.
Finally, confirmatory factor analyses were
performed using EQS 6.1 and the ro-
bust maximum-likelihood estimation (Bentler,
1995). The study used the criteria proposed
by Jöreskog and Sörbom (1993) for eliminat-
ing items. Results suggested the deletion of
items FIT/C1 and ASS3 and ASS4 before and
after the extension because the R 2 were be-
low 0.3 in both countries. The model fitted
well with the UK sample: Satorra–Bentler (S-
B) χ 2 (539) = 705.09, p < .00, non-normed fit
index [NNFI] = 0.943, comparative fit index
[CFI] = 0.954, incremental fit index [IFI] =
0.956, root mean square error of approximation
[RMSEA] = 0.039. For the Spanish sample the
model also provided acceptable fit to the data:
S-B χ 2 (539) = 874.21, p < .00, NNFI = 0.888,
CFI = 0.909, IFI = 0.912, RMSEA = 0.052.
Standardized loadings of individual items were
significant with values above 0.5, suggesting the
convergent validity of each factor. Composite
reliability indices exceeded the recommended
minimum standard of 0.7 and the average vari-
ance extracted for each construct in both coun-
tries exceeded the minimum of 0.5, with one
exception (Attitude Spain = 0.49; Hair, Black,
Babin, Anderson, & Tatham, 2006).
To assess the discriminant validity we cal-
culated the confidence interval around the cor-
relation estimate between any two factors. The
intervals obtained did not include 1.0, which in-
dicated that discriminant validity was achieved
in both countries.
 Buil, Martı́nez, and de Chernatony 79

TABLE 2. Measures

Factor Items

Consumer INN1 I like to buy new and different products

Innovativeness INN2 New products excite me
Roehrich (1995) INN3 I am usually among the first to try new products
INN4 I try new products before my friends and neighbours
INN5 I know more than others on latest new products

Perceived DIF1 Difficulty in designing and making the product

Difficulty DIF2 Complex techniques or knowledge are needed
Aaker and Keller (1990) DIF3 Specialized resources are needed (personnel, facilities. . . )

Brand Awareness AWA1 (I/F) When I think of (product category), brand X is the brand that first comes to
Yoo et al. (2000) mind
Netemeyer et al. (2004) AWA2 (I/F) I know what brand X looks like
AWA3 (I/F) I can recognize brand X among other competing brands
AWA4 (I/F) I am aware of brand X

Perceived Quality PQ1 (I/F) Brand X is of high quality

Yoo et al. (2000) PQ2 (I/F) The likely quality of brand X is extremely high
Villarejo (2002) PQ3 (I/F) The likelihood that brand X would be functional is very high
PQ4 (I/F) Brand X must be of very good quality

Brand Associations
Aaker (1996)
Pappu et al. (2005, 2006)
ASS1 (I/F) I trust the company which makes brand X
ASS2 (I/F) I like the company which makes brand X
ASS3 (I/F) I would feel proud to own products from the company which makes brand X
ASS4 (I/F) There are reasons to buy this brand over competitors
ASS5 (I/F) This brand has a personality
ASS6 (I/F) This brand is different from competing brands

Perceived Category Fit FIT/C1 The extension is similar to the brand’s products
Aaker and Keller (1990) FIT/C2 The firm’s resources are helpful to make the product extension
Taylor and Bearden (2002)

Perceived Image Fit FIT/I1 The product extension fits with the brand image
Aaker and Keller (1990) FIT/I2 Launching the extension is logical for the company
Taylor and Bearden (2002) FIT/I3 Launching the extension is appropriate for the company

Consumers’ Attitude ATT1 Favourability of the extension

Toward Brand ATT2 Perceived quality of the extension
Extensions ATT3 Likelihood of trying the extension
Aaker and Keller (1990)
Pryor and Brodie (1998)

Note. Brand awareness, perceived quality and brand associations were measured before (Initial = I) and after the extension (Final = F).

Measurement Invariance lished not only to make valid cross-national com-

Measurement invariance is an important is-
sue in conducting cross-national studies. It con-
cerns “whether or not, under different condi-
tions of observing and studying phenomena,
measurement operations yield measures of the
same attribute” (Horn & McArdle, 1992, p.
117). Measurement invariance must be estab-
parisons (Steenkamp & Baumgartner, 1998) but
also to pool data across different groups of re-
spondents (Rungtusanatham, Ng, Zhao, & Lee,
2008). Therefore, measurement invariance was
assessed for both purposes.
We tested measurement invariance us-
ing multigroup confirmatory factor analysis
(Steenkamp & Baumgartner, 1998). Thus, a
80 JOURNAL OF EUROMARKETING
TABLE 3. Tests of Measurement Invariance
Constructs S-Bχ2 (df )
Configural invariance 1619.08 (1078)
Metric invariance 1676.77 (1101)
Note. S-B = Satorra–Bentler; NNFI = non-normed fit index; CFI = comparative fit index; IFI = incremental fit index; RMSEA = root
mean square error of approximation.
∗
The corrected value is presented because S-Bχ2 is not distributed as χ2 (Byrne, 2006).
sequential testing procedure with increasingly
restrictive forms of measurement invariance was
performed. In cross-national research, the estab-
lishment of configural invariance (the same pat-
tern of factor loadings across different groups)
and metric invariance (equal factor loadings
across groups) is considered adequate to ensure
measurement invariance (Evans, Mavondo, &
Bridson, 2008; Keh & Sun, 2008; McFarland,
Bloodgood, & Payan, 2008; Pons & Laroche,
2007; Raju, Laffitte, & Byrne, 2002; Yoo &
Donthu, 2002). Therefore, configural and metric
invariance were examined.
The final models obtained in the previous sec-
tion were used to test the first level of invariance.
Testing for configural invariance requires only
that the same number of factors and factor load-
ing pattern be the same across groups (Byrne,
2006; Steenkamp & Baumgartner, 1998; Van-
denberg & Lance, 2000). Thus no constraints
are imposed on the parameters.
As Table 3 shows, the multigroup analy-
sis of the baseline models for the UK and
Spain had acceptable fit indices. Although the
Satorra–Bentler chi-square was significant, S-B
χ 2 (1078) = 1619.08, the RMSEA of 0.048 and
the fit indices (NNFI = 0.908, CFI = 0.926,
IFI = 0.928) indicated an acceptable fit. Fur-
thermore, all the factor loadings were highly
significant in both countries. Therefore it can
be concluded that the proposed model exhibited
configural invariance.
To test for metric invariance, factor loadings
were constrained to be invariant across countries.
Given that the difference in the S-B chi-square
value (S-Bχ 2 ) is sensitive to sample size,
two more alternative criteria were employed to
determine whether the fit of this model declined
substantially (Byrne, 2006). First, an adequate fit
NNFI CFI IFI RMSEA S-Bχ2∗ df CFI
0.908 0.926 0.928 0.048 — — —
0.904 0.922 0.924 0.049 57.04 23 0.004
of the model to the data. Second, differences in
the CFI value between nested models, because
changes less than .01 provide evidence of the
measurement invariance (Cheung & Rensvold,
2002). Finally, identification of misfitting pa-
rameters was accomplished by means of the La-
grange Multiplier Test.
As Table 3 shows, the increase in S-Bχ 2 be-
tween the model of configural invariance and
metric invariance was significant (S-Bχ 2 =
57.04, df = 23, p < .05). However, the estima-
tion results suggested that this model fits the data
well: RMSEA = 0.049, NNFI = 0.904, CFI =
0.922, IFI = 0.924. Furthermore, CFI declined
insubstantially (0.004). Based on these results,
it can be concluded that there was adequate sup-
port for a reasonable level of metric invariance
of the constructs across both samples.
These results suggested a similar understand-
ing of the latent constructs across these two
countries, thus providing the basis for pool-
ing the two data sets and making valid cross-
national comparisons (Rungtusanatham et al.,
2008; Steenkamp & Baumgartner, 1998).
Test of Hypotheses
Before testing the hypotheses, we analyzed
the global effect of brand extension strategies on
parent brand equity. The t test revealed a dilution
effect in both countries for each brand-extension
pair. Table 4 summarizes the results.
Once results corroborated that brand exten-
sions have a negative effect on parent brand eq-
uity, the proposed hypotheses were tested us-
ing structural equation modeling. Previously,
the dimensions that comprise initial and fi-
nal brand equity (brand awareness, perceived
quality, and brand associations) and consumer
 Buil, Martı́nez, and de Chernatony
TABLE 4. Global Effect of Brand Extension Strategy on Parent Brand Equity
UK
Initial Parent Final Parent
Brand-Extension Brand Equity Brand Equity
Nike–jeans 5.1 4.4
Nike–camera 4.7 4.1
Puma–jeans 4.2 4.0
Puma–camera 4.6 4.1
Note. Seven-point Likert scales.
∗∗∗
p < .01.
innovativeness (hedonist innovativeness, as an
expression of need for stimulation [INN1 and
INN2] and social innovativeness, as an expres-
sion of need for uniqueness [INN3, INN4, and
INN5]), following a hierarchical factor structure,
were linked to second-order factors. Because ini-
tial and final brand associations dimensions also
loaded on two different factors—organizational
associations (ASS1 and ASS2) and brand’s name
associations (ASS5 and ASS6)—brand equity
resulted in a third-order factor model. Given that
there are few instances in the literature of testing
third-order factor models because of implemen-
tation problems (Dabholkar, Thorpe, & Rentz,
1996), we transformed these third-order fac-
tor brand equity models into second-order fac-
tor models. Therefore, individual items scores
(items ASS1 and ASS2, and items ASS5 and
ASS6) were averaged under each of the two
first-order brand association constructs (before
and after the extension). Then scores were used
as indicators to derive the brand association di-
mensions.
The application of the structural equation
modeling is an important step toward a better
knowledge of brand extension evaluations and
the effects on parent brand equity. Most of the
previous studies on brand extensions have used
t tests, analyses of variance, and linear regres-
sions. Structural equation analysis allows some
variables to act simultaneously as dependent and
independent. Thus, a series of structural rela-
tionships were examined. In this analysis, the
structural model used the entire sample (430 re-
spondents) to check for overall patterns of rela-
tionships. Results are shown in Figure 2.
81
Spain
Initial Parent Final Parent
t Brand Equity Brand Equity t
6.10∗∗∗ 5.4 5.0 4.55∗∗∗
5.19∗∗∗ 5.4 4.8 6.18∗∗∗
2.69∗∗∗ 5.2 5.0 2.62∗∗∗
4.23∗∗∗ 5.0 4.4 5.32∗∗∗
Hypothesis 1, which proposed a positive re-
lationship between initial parent brand equity
and attitude toward the extension, shows a pos-
itive and significant coefficient (β = 0.143, t =
3.43). Thus, there is support for the notion
that brands with high value have a positive
effect on the consumers’ attitude toward the
extension.
Results also support Hypothesis 2, which pos-
tulated a positive effect of category fit on con-
sumers’ attitudes toward the extension, because
the coefficient is positive and significant (β =
0.151, t = 3.49). Therefore attitude toward ex-
tensions will improve when there exists a higher
level of similarity between the new category and
other products of the parent brand.
With regards to Hypothesis 3, the image fit has
a positive effect on the attitude toward the exten-
sion (β = 0.842, t = 16.81). Thus, the higher the
match between the image of the original brand
and the extension, the better consumers’ evalua-
tions of brand extensions.
Hypothesis 4, which proposed a positive in-
fluence of perceived difficulty on attitude toward
the extension, is rejected (β = 0.010, t = 0.24).
Perceived difficulty in designing and making the
new product does not appear to have any effect
on the evaluation of the brand extensions.
The relationship between consumer innova-
tiveness and consumers’ attitude toward the ex-
tension is weak and insignificant (β = –0.050,
t = –1.13). Therefore, Hypothesis 5 is also re-
jected.
The results provide support for Hypothesis
6. Initial parent brand equity has a positive and
direct effect on brand equity after the extension,
82 JOURNAL OF EUROMARKETING

FIGURE 2. Structural Model Results

CATEGORY IMAGE
FIT FIT
.151*** .842***

INITIAL PARENT .143*** CONSUMERS’ ATTITUDE .196*** FINAL PARENT

BRAND EQUITY TOWARD BRAND EXTENSIONS BRAND EQUITY

PERCEIVED .010 -0.05 CONSUMER

DIFFICULTY INNOVATIVENESS

.687***

Fit Indices

S-B χ2 (481) = 932.62, p < .001 RMSEA = 0.047 CFI = 0.932

NNFI = 0.926 IFI = 0.933

Note. Although the category fit has been estimated with a single item, the error variance has been established according to the
variable’s variance, for a reliability coefficient of 85%. S-B = Satorra–Bentler; RMSEA = root mean square error of approximation;
NNFI = non-normed fit index; CFI = comparative fit index; IFI = incremental fit index.
∗
p < .1. ∗∗ p < .05. ∗∗∗ p < .01.

TABLE 5. Multisample Model Results: UK and Spain

Hypotheses UK Standardized β (t) Spain Standardized β (t) LM Test χ2 (p ) Difference

H1 Initial parent brand equity → 0.092 (1.62) 0.144∗∗ (2.24) 0.174 (.68) No
Consumers’attitude toward brand
extension
H2 Category fit → Consumers’ 0.246∗∗∗ (3.70) 0.102∗ (1.75) 1.263 (.26) No
attitude toward brand extension
H3 Image fit → Consumers’ attitude 0.803∗∗∗ (10.13) 0.857∗∗∗ (11.81) 0.070 (.79) No
toward brand extension
H4 Perceived difficulty → –0.002 (–0.04) 0.015 (0.27) 0.018 (.89) No
Consumers’ attitude toward brand
extension
H5 Consumer innovativeness → –0.041 (–0.65) –0.010 (–0.17) 0.143 (.71) No
Consumers’ attitude toward brand
extension
H6 Initial brand equity → Final parent 0.567∗∗∗ (6.33) 0.690∗∗∗ (3.96) 2.166 (.14) No
brand equity
H7 Consumers’ attitude toward brand 0.203** (2.26) 0.272∗∗∗ (3.64) 1.649 (.20) No
extension → Final parent brand
equity

Note. LM = Lagrange Multiplier.

∗
p < .1. ∗∗ p < .05. ∗∗∗ p < .01.
 Buil, Martı́nez, and de Chernatony
as shown by the coefficient (β = 0.687), which
is significant (t = 9.62). This result shows that a
strong brand that has been extended is likely to
reinforce the final brand equity.
The results also provide support for Hypothe-
sis 7. Consumers’ attitude toward the extension
has a positive and significant effect (β = 0.196,
t = 3.84) on brand equity after the extension.
Support for Hypothesis 7 also shows that the
relationship between initial parent brand equity
and final parent brand equity is mediated by con-
sumers’ attitude toward brand extensions. Thus
the brand equity of the original brand leads to
a direct, but also indirect, effect in brand equity
after the extension through consumers’ attitude
toward brand extensions.
Comparative Analysis: UK and Spain
To study whether brand extension strategies
have similar effects on parent brand equity in
different countries, we analyzed the differences
between the two samples: UK and Spain. Thus,
we performed a multigroup analysis included in
the EQS 6.1. Table 5 shows the results.
The Lagrange Multiplier Test reveals whether
the coefficients are significantly different in both
countries. The results presented in Table 5 show
that the differences are not significant across
countries. Findings suggest that in both the UK
and Spain, the behavior is similar. Therefore the
country where the extension is launched does not
strongly moderate the relationships proposed.
Only Hypothesis 1, which proposed a positive
influence of initial parent brand equity on con-
sumers’ attitude toward brand extensions, shows
a different effect in each market. In both the UK
and Spain, the influence is positive. However, the
coefficient is only significant in Spain. Neverthe-
less, as the results show there are no significant
differences between both coefficients.
CONCLUSIONS AND MANAGERIAL
IMPLICATIONS
The main purpose of this study was to explore
to which extent brand extension strategies af-
fect consumer-based brand equity. Furthermore,
because most organizations use global brands
83
to compete across different countries, we car-
ried out a cross-national study in the UK and
Spanish markets. The objective of this cross-
national study was to examine how brand exten-
sion strategies in different countries influence
parent brand equity.
The results indicate that the brand extension
strategy has a dilution effect on parent brand eq-
uity. This negative and significant effect has been
found in both the UK and Spain. For this reason
it is especially important for managers to know
the factors that can assist in brand extensions.
Of the factors analyzed—initial brand eq-
uity, category and image fit, perceived difficulty
of making the extension, and consumer
innovativeness—only the latter two do not have
an effect on consumers’ attitude toward brand
extensions. Thus, companies should concentrate
their efforts on building and enhancing brand
equity and launching products with a high fit to
obtain positive evaluations of the new product.
The stronger brand equity before the exten-
sion, the better consumers’ evaluation. Results
also show that fit between the parent brand and
the new product is an important variable in-
fluencing the brand extension’s success. Con-
sumers prefer brand extensions that are similar
to the firm’s historical products and that are con-
sistent with the parent brand image. As C. W.
Park et al. (1991) observed the evaluations of
brand extensions not only depend on the simi-
larity of the extension with the parent brand (cat-
egory fit), but also the degree of brand concept
consistency or image fit (Grime et al., 2002).
Our study shows that while both kinds of per-
ceived fit are important in consumer evaluations
of extensions, image fit has a greater effect on
consumers’ attitude toward brand extensions.
Contrary to predictions, evaluation of exten-
sions is not influenced by perceived difficulty
of making the extension. This relationship has
been not supported in other studies (Barrett, Lye,
& Venkateswarlu, 1999; Lye, Venkateswarlu, &
Barrett, 2001; van Riel et al., 2001) and could
show that perceived difficulty of making the ex-
tension is not a relevant variable when com-
panies launch brand extensions (Völckner &
Sattler, 2006).
Similarly, we failed to demonstrate the in-
fluence of consumer innovativeness on attitude
84 JOURNAL OF EUROMARKETING
toward the new product. This could be due to
using the hypothetical extensions of jeans and
cameras, which are well-known consumer cate-
gories. In this case, the difference between brand
extension evaluations by earlier adopters of new
products (more innovative consumers) and by
later adopters (less innovative consumers) could
be lower than when extensions are new or unfa-
miliar.
By contrast, parent brand equity after the
extension is significantly and positively influ-
enced by initial parent brand equity and con-
sumers’ attitude toward the extension. There-
fore, it is important for firms to have strong and
well-known brands to leverage their value
through brand extensions (Pitta & Katsanis,
1995; Rangaswamy et al., 1993). A similar pat-
tern is found when consumers positively evaluate
brand extensions.
Finally, the results of the study indicate that
the effect of brand extension strategies on brand
equity with respect to global brands is not
influenced significantly by country. Multisam-
ple analysis revealed that the factors analyzed
have a similar impact in both countries.
Some managerial implications can also be
drawn from the results. Companies should be
careful when deciding to launch an extension,
because results show a dilution effect in the par-
ent brand equity. Although a strong brand name
does not guarantee the extension success, the
type of brand used to launch the extension can
play an important role in the result. If a company
wants to launch a brand extension, it will be less
risky when the brand has strong brand equity.
The parent brand’s initial equity may help to pro-
vide a defense against failed brand extensions,
thus avoiding brand equity dilution or, at least,
diminishing potential negative effects (Keller &
Sood, 2003).
Because consumers prefer extensions that
are close to the parent brand’s core mar-
ket, launching extensions perceived as simi-
lar to the parent brand’s category will help to
improve consumers’ attitude toward the ex-
tension and the final parent brand equity.
Although the similarity between the new cate-
gory and other products from the original brand
is important, the similarity between the im-
age of the parent brand and the extension ap-
pears to play a critical role when consumers
assess brand extensions. Companies can use
marketing mix variables, such as the product
design or advertising campaigns, to increase
this perceived fit. For instance, advertising cam-
paigns used for the extension could empha-
size the main parent brand associations, as this
would help transfer the positive brand associa-
tions from the original brand to the extension.
Such campaigns could also lead to a greater
exposure to the brand extension, helping con-
sumers to recognize more shared attributes be-
tween the original brand and the extension and
thus increase the perceived fit (Klink & Smith,
2001).
One of the most fundamental concerns of mar-
keters in many companies is whether the mar-
keting strategies can be used in different inter-
national markets. The results from the categories
and countries investigated in this study indicate
that consumers respond similarly to brand ex-
tensions. Therefore, managers should pay atten-
tion to the same factors when they are launching
extensions into different markets or countries.
However, they should recognize that the relative
importance of the determinants of brand exten-
sion success could be different.
The ubiquity of global TV transmissions, in-
creased travel, and so on, has given rise to the
youth segment sharing common interests, iden-
tifying with brand logos and preferring similar
brands (Douglas & Craig, 1997; Kjeldgaard &
Askegaard, 2006). Our results indicate a high de-
gree of homogeneity among the youth segment
in both countries, which is in line with previ-
ous assumptions. The youth segment could be
an attractive segment for companies with global
brands seeking to grow through brand exten-
sions, because across countries this segment re-
sponds similarly to this strategy.
There are limitations to this study. The study
was conducted in the UK and Spain. Thus the
results are only generalizable between these two
countries. Future research should include other
countries. In addition, because the research fo-
cused on one product category, future stud-
ies should examine other products or services
brands and extensions. Finally, although it has
been shown that findings from student samples
are largely generalized to nonstudent samples
 Buil, Martı́nez, and de Chernatony
(Völckner & Sattler, 2007), future studies should
ensure they have representative samples.
ACKNOWLEDGEMENT
The authors thank the following sources for
their financial help: CICYT (Ref. SEJ2005-
02315) and the projects “GENERES” (Ref. S-
09) and “PM026/2006” from the Government
of Aragon. Eva Martı́nez also expresses her
gratitude for the financial help received from
the Spanish Ministry of Education and Sci-
ences (PR2006-0136) and Isabel Buil from the
“Caja de Ahorros de la Inmaculada” and DGA
(CONSI+D) and the research grant (Ref. B161-
2004) from the Government of Aragon.
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