Does eWOM matter to brand extension? : An examination of the impact of online reviews on brand extension evaluations

Purpose The purpose of this study is to find out how electronic word of mouth (eWOM) may affect evaluations of products with different brand images. In particular, the study explores differential eWOM impacts across several brand types and extension categories. Design/methodology/approach An experiment with 2 (brand image: prestige/function) × 2 (category similarity: low/high) × 2 (eWOM message type: positive/negative) between-subjects design was used to examine the impacts of eWOM on different types of brand extensions. A total of 268 subjects from a public university in the Southwest participated in the study. Analysis of Variance (ANOVA) was used in analyzing the data. Findings The findings highlight the differential impact of eWOM on brand extension evaluations with different brand images. First, eWOM is more effective in influencing evaluations of functional brand extensions than prestige brand extensions. Second, whereas negative eWOM does equally bad on both high- and low-similarity brand extensions, positive eWOM is more effective in improving evaluations of high-similarity extensions than low-similarity extensions. Originality/value This study is the first to examine the impact of eWOM on products with different brand images. This is a critical issue for brand managers who allocate limited marketing resources to monitoring and managing vast amounts of eWOM activities. The findings provide important guidance for managing social media marketing communications.