The purpose of this paper is to propose and test a conceptual framework specifying the multidimensional role of involvement and perceived risk in brand extension domain.
A survey research design was applied to test the proposed hypotheses. Three hypothetical extensions of a real brand were selected. A total of 101 respondents participated in the study. Regression analyses was conducted to examine the role of involvement and perceived risk dimensions in brand extension evaluation.
Results indicate that consumers evaluate brand extension more favorably when it is highly relevant, more pleasurable, and associated with less risk probability. In addition, each facet of perceived risk, namely, financial, performance and psychological, are found to be equally important in making decisions about brand extension.
This paper contributes to the growing body of literature of brand extension. The study provides a new direction to brand managers and marketers to understand the full dynamics of the relationship of consumers with brand extensions. To get more benefit from brand extension strategies, managers should pay attention to involvement and perceived risk associated with extension categories.
This paper is unique in that it identifies the importance of multidimensional nature of involvement and perceived risk to study consumer evaluation of brand extension.
