A Limit to Brand Extensions

Cultural associations can really help — or hurt.

Title: Extending Culturally Symbolic Brands: A Blessing or a Curse?(Subscription or fee required.)

Authors: Carlos J. Torelli (University of Minnesota) and Rohini Ahluwalia (University of Minnesota)

Publisher: Journal of Consumer Research, vol. 38, no. 5

Date Published: Forthcoming (February 2012)

Certain well-known brands represent more than just their products or services. They also evoke particular cultures and their associated traits. In some cases, marketers have devoted considerable resources to building their brands into cultural icons, which can help them dominate product categories in the global marketplace.

But this paper warns that because consumers associate well-known brands with particular countries and their symbolism, branching out into new categories can backfire when the new product doesn’t match the cultural values that are tied to the brand. Budweiser, for example, is recognized around the world as a quintessentially American brand. But what if Budweiser tried to branch out from beer and venture into, say, barbecue sauce or cappuccino makers?

The company would fare much better with barbecue sauce, argue the authors of this paper, because both the brand and its new product extension represent the same country and culture. “A brand’s cultural symbolism can be a liability or an asset, and to harness it profitably, a manager needs to understand the cultural symbolism of the potential extension categories under consideration,” the authors write.

And it’s an increasingly important issue, the authors say, because brand extensions can be an essential stream for growth in today’s ultra-competitive marketplace, especially for iconic brands that might already be leaders in their own category. But research has shown that the rate of failure when a brand extends its products into a new category is as high as 84 percent, so factors that are likely to improve the chances of success could be highly consequential.

To identify those factors, the researchers first compared how consumers evaluated potential product extensions that were either a moderate or a low fit with the identity of a well-known brand — in this case, Sony. The researchers turned to 73 members of a consumer panel in the Minneapolis–St. Paul, Minn., area to rate six hypothetical product extensions.

For products that were moderate fits with Sony’s history as a manufacturer of electronics, the participants were asked to react to the idea of a Sony cappuccino maker (culturally incongruent because cappuccino is associated with Italy), a Sony electric car (culturally congruent because of Japan’s automotive industry), and a Sony toaster oven (culturally neutral). For extensions that had a low fit with Sony’s product history, the panel evaluated serving sets for cappuccino (culturally incongruent), sushi (culturally congruent), and general food (neutral).

In both the moderate- and low-fit categories, the culturally similar extensions were ranked more favorably and the culturally dissimilar products less favorably than their neutral counterparts. This supports the idea that perceptions of cultural connectedness transcend ideas about whether an extension “fits” with a company’s past products.

In addition, an analysis of written evaluations provided by the panelists showed a lack of deliberation about the proposed products’ cultural or national associations; this is consistent with prior research that has found people often fail to articulate or consciously assess the influence of such associations in forming opinions.

The next study tested these findings on different brands and product categories. The researchers picked two brands with distinct cultural associations (Giorgio Armani for Italian associations and Burberry for British). Both belong to the high-end fashion category and were ranked similarly by study participants for favorability, familiarity, and breadth of products.

For new products, a teakettle was chosen to evoke high levels of British symbolism and low levels of Italian culture, and a cappuccino maker was picked for the opposite effect. A toaster oven was chosen as the “neutral” product. The participants — this time, 81 members of a consumer panel in the Minneapolis–St. Paul area — were each asked to give their gut reaction to one of the products by using a nine-point scale. They then used a seven-point scale to rate how much they thought the products fit with the brand’s identity. Once again, the analysis showed that participants preferred products that were culturally connected to the brand.

The researchers wondered, however, whether the same would be true of brands that do not have strong cultural symbolism but are tied to a specific country. If so, this would suggest that consumers deliberate about the “expertise” of the brand’s country of origin — in other words, rather than forming subconscious cultural associations, consumers might be evaluating products on a methodical assessment of, say, Italian manufacturing.

To test this question, the researchers focused on alcoholic beverages produced in Mexico and the United States. First, two brands with strong cultural associations were chosen: Corona represented Mexico and Budweiser the United States. Another U.S. brand, Coors, was also included as a comparison. In pretests with 50 participants, Coors was rated similarly to the other two beers in terms of favorability, familiarity, and breadth of products. But although it was known to 90 percent of the participants as a U.S. product, Coors was rated as neutral in both U.S. and Mexican cultural symbolism. (A fourth beer, whose brand name was not provided, was also included as a control.)

Tequila was chosen as one targeted brand extension because of its high level of cultural symbolism with Mexico but not the United States. A second test product, brandy, was included because of its tenuous cultural connections (less than 17 percent of the participants spontaneously associated it with a particular culture). The researchers noted that the proposed tequila and brandy extensions represented equivalent fits for each beer maker — in other words, any beer company could be reasonably expected to branch out into those products. But, they added, Corona’s tequila would be the only extension that had strong cultural ties.

The participants — for this test, fittingly, 205 college students, from the University of Minnesota — were each asked to rate one of the extensions in terms of the ease with which they understood the new product’s concept. They also indicated, on a seven-point scale, their buying intentions, how competently they thought the brand could manufacture the product, their feelings toward products made in the United States and Mexico (products in general as well as alcoholic products specifically), and their prior attitudes toward either tequila or brandy.

Overall, participants thought more highly of the culturally congruent Corona tequila. Participants thought much less favorably of the Budweiser tequila than that of Coors (even though both are U.S. brands), because Budweiser was more strongly identified with the United States and tequila thus created more of a cultural contrast. These effects also extended to participants’ intentions to buy the product.

The findings ruled out the idea that a company’s country of origin, rather than its cultural symbolism, drove the panel’s reactions. Participants did not perceive a difference in the manufacturing expertise of the beer makers, and the students’ prior attitudes toward tequila and brandy didn’t matter. The participants also didn’t elaborate on their assessments, underscoring the influence of their automatic cultural associations.

The researchers say their findings have important implications for branding managers, pointing the way to extensions they might not otherwise have considered but also serving as a warning about the dangers of going too far. For example, although consumers thought better of Armani’s move into cappuccino makers than might be expected (after all, it’s a clothing company), they were less enamored of an Armani teakettle (because it not only is an unusual fit for the company but also is at odds with its national culture). And even when the product fit is right, alarm bells should go off when the cultural connection is wrong, as it was with Budweiser and tequila.

“Culturally symbolic brands may successfully extend into culturally congruent products regardless of fit,” the authors conclude, “and may backfire in culturally incongruent categories, despite their perceived fit.”

Bottom Line:
Consumers respond more favorably to new products from well-known brands when they match the consumers’ expectations about the brand’s culture. This matters even more than whether the move into a new category fits with the company’s history, traditional strengths, and other offerings.