The choice of brand extension: the moderating role of brand loyalty on fit and brand familiarity

The purpose of this study is to investigate the role of loyalty in consumers’ selection of brand extensions in the presence of familiar competitors. The findings show that fit may not have a linear relationship with the choice of an extension when loyalty and brand familiarity are considered. Loyal consumers’ likelihood to choose high-fit and moderate-fit extensions is not much lower than their likelihood to choose products from familiar competitors. We also find an inverted-U-shaped relationship between choice behavior and degree of perceived fit for loyal and moderately loyal consumers. Moreover, brand concepts can make a brand more elastic and extendable, increasing loyal and moderately loyal consumers’ likelihood to choose moderate- and even low-fit extensions. However, disloyal consumers are highly unlikely to choose extensions over products from familiar competitors regardless of fit and types of similarity. Finally, the effect of similarity on consumers’ choice of extensions is fully mediated by loyalty and perceived risks.