Extension of corporate services brands: the effect of perceived similarity extension and perceived quality brand

The main objective of this study is to assess the effect of parent brand perceived quality and perceived similarity on the evaluation of corporate service brand extensions. It is also the intention of this study to verify whether providing information cues about the characteristics of the extension contributes to the brand extension evaluation. The hypotheses were tested by means of three experiments involving 1,131 subjects. The results of Study 1, conducted with fictitious brands as stimuli, demonstrated that the perceived quality of the parent brand played a more significant role than perceived similarity on the evaluations of brand extensions. In Study 2, where real brands were used as stimuli, the results were the same as in Study 1. Study 3 found that providing information cues about the characteristics of the extensions had a positive effect for one of the extensions of the high quality parent brand but not for the two proposed extensions of the low quality parent brand. Taken as a whole, the results suggest that the perceived quality of the parent-brand plays a fundamental role in the evaluation of corporate service brand extensions. The study also contributes several hypotheses for future studies and managerial implications for managers of corporate service brands.