From Online to Offline Through Brand Extensions and Alliances

This paper studies the expansion of an online brand towards an offline product category through brand extensions and alliances. Specifically, it analyses the effects on the online brand image as a consequence of this expansion, and it analyses them under different conditions of image and fit. An empirical study was conducted to 407 undergraduates in a Spanish University, and data are analyzed through multivariate analysis of variance. Main results lead us to conclude that: (1) the effects of extensions and alliances are mainly negative on the online brand image, (2) the impact is focused specially on the functional and emotional dimensions of brand image (3) The effect is more negative for online brands with high image than for online brands with low image, and (4) the effect is more negative in the case of an alliance with an offline brand with low image than in the case of an alliance with an offline brand with high image or in a brand extension. DOI: 10.4018/jebr.2012010102 18 International Journal of E-Business Research, 8(1), 17-34, January-March 2012 Copyright © 2012, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. strategies harming or strengthening the image of Google? Due to the lack of responses in the previous literature, in the present work we will try to give answer to the following questions: • Are these strategies of brand extensions and alliances to reach an offline setting harming or strengthening the parental online brand image? • Focusing on the variation in the online brand image: • Is it more effective to develop these strategies for an online brand with low image or for an online brand with high image? • Does the fit between the online brand and the offline product category play an important role in this decision? • What type of strategy is best to reach the offline category, extensions or alliances?; and in the latter, with which type of ally? In the previous literature, there are works that deals with offline brands launching new online services (Horppu, Kuivalainen, Tarkiainen, & Ellonen, 2008; Boshoff, Schlechter, & Ward, 2009). However, the expansion of an online brand going offline has not been analysed yet. Going back to the example of Google, and even if the main reasons for the company to grow are to improve mobile access to its services or push its ad based business, the profits expected in the smartphone business is too promising to be left to other handset players (Northstream, 2010). Besides, the conclusions of this work may help companies such as Dell, that is a company that used a direct sales distribution from its beginnings, and afterwards it expanded its distribution to retail stores. Moving from selling online to distribute through retail stores may also entail risks that need to be thoroughly analised (Lawton, 2008). The own managers of the company posit that this movement has been implemented carefully in order to avoid risks (Wikipedia, n. d.). In the same sense, much of the work in the brand extension and brand alliance literature has focused on the acceptance of the new product and consumer intention to purchase, while lesser attention has received the effect of these strategies on the parental brand image (Völckner, Sattler, & Kaufmann, 2008; Pina, Iversen, & Martinez, 2010). The analysis of the effects that the new launch has on the parental brand image is of main importance to determine the success of the strategy (Aaker, 1991; Keller, 1993). In fact, the parent brand image can be diluted even in successful brand expansions in terms of attitude towards the new launch (Farquhar, 1989; Kardes & Allen, 1991; Völckner et al., 2008). The cost of introducing a new brand may be prohibitely high (Yorkston, Nunes, & Matta, 2010), and therefore leveraging brand image and transfering brand associations between online and offline settings are hot topics in the literature (Kwon & Lennon, 2009). For these reasons, feedback effects on the parental brand image may be more important to consider than the own acceptance of the new product. Finally, much of the research has studied either brand extensions or brand alliances independently, but comparatively few works have compared both strategies empirically (James, 2006; Besharat, 2010; Marin & Ruiz, 2010). From the managerial perspective, to know which strategy is best, and under which conditions, is of great relevance in order to launch new products. Indeed, there is a lack of consensus on the literature regarding the suitability to use one strategy or the other. Some works point at the preference of an extension strategy when the brand image and reputation is high, indicating that brand alliance is appropriate when moving to a distant product category. However, in practice we may see that brand extensions are far more common than brand alliances, and there are examples of brand extensions even in relatively far categories (Marin & Ruiz, 2010). For the reasons given, this work delves into the effects that the new offline launch has on the parental online brand image, and it analyses them under different conditions of brand image and perceived fit. Comparisons between two strategies: extensions and alliances will be made, and within the latter, differences between alliances with and offline brand with 16 more pages are available in the full version of this document, which may be purchased using the "Add to Cart" button on the product's webpage: www.igi-global.com/article/online-offline-through-brandextensions/62276?camid=4v1 This title is available in InfoSci-Journals, InfoSci-Journal Disciplines Business, Administration, and Management. 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