The influence of status differentiation on vertical brand extension

Purpose - In this paper, the authors aim to propose that status differentiation, the extent to which people differentiate their behaviors or attribute power to others according to perceived status differences, moderates the effect of stretch direction upward or downward and brand image prestige or functional on consumers 2019 responses to line extensions. Design/methodology/approach - This study was a 2 (culture: Chinese vs American) × 2 (stretch direction: up vs down) × 2 (brand image: prestige vs functional) experiment design. Study 2 was a 2 (status differentiation: high vs low) × 2 (stretch direction: up vs down) × 2 (brand image: prestige vs functional) experiment design. Findings - The results of two studies show that high status differentiation has a positive prestige-enhancement effect on an upward extension but a detrimental effect on a downward extension. This effect is more pronounced for prestige brands than for functional brands. In addition, the authors have found similar patterns for the prestige perceptions of the parent brands after extension. Research limitations/implications - This research makes important contributions to the fields of cross-cultural psychology. The status differentiation beliefs could be primed temporarily and had a significant impact on individuals’ responses to line extension. Practical implications - The research identifies status differentiation as an important factor for marketers to consider when extending their brands to global markets. Originality/value - Past research on vertical extensions has examined numerous factors influencing consumers’ responses. This paper is the only one to examine culture factor.