Brand extension feedback effects: towards a mediated framework

Purpose – Brand extension attitude is a key antecedent of consumers' reciprocal evaluations of parent brand equity. Traditionally, the link from brand extension attitude to change in parent brand equity is modeled as a direct path, potentially obfuscating any underlying processes. The current research aims to propose that the impact of brand extension attitude on change in parent brand equity materializes via change in parent value equity perceptions of a parent brand. Design/methodology/approach – A conceptual model is developed, positioning change in parent value equity as a mediator of the effect of brand extension attitude. The model is estimated on a sample of 888 Australian consumers using a cross‐sectional self‐administered survey. Drawing upon actual industry dynamics, a hypothetical scenario of Australian supermarkets extending into the banking sector is used as stimulus. Findings – The research model demonstrates acceptable fit to data, confirming most hypotheses. Change in parent value equity mediates the effect of brand extension attitude on change in parent brand equity. Rival model comparisons, however, reveal that a partial mediation scenario better represents feedback effects. The research model is suitably modified to include an additional path. Practical implications – The current study broadens the scope of brand extension feedback effects from parent brand equity to additionally include parent value equity. Practitioners can now envision brand extensions as simultaneously impacting multiple facets of a parent brand, not previously considered. Originality/value – The current research explicates an underlying process of how consumers' extension‐derived attitudes are converted into revised parent brand equity evaluations. Such an insight is novel in the literature.