The reciprocal impact of vertical service line extensions on parent brands

Abstract

PurposeThe purpose of this paper is to examine the extent to which perceived extension innovativeness, extension quality, and consumer involvement affect reciprocal attitudes toward a newly launched vertical service line extension and the parent brand.Design/methodology/approachAn empirical investigation using a survey methodology was conducted with a sample of 664 respondents representative of the target population. Three pre‐tests were conducted. Partial least squares structural equation modeling and analysis of variance helped test the complex paths of nominal, mediating, and moderating variables.FindingsExtension innovativeness, extension quality, and consumer involvement positively mediate the relationship between the new extension and the parent brand. In addition, parent brand perceived innovativeness negatively moderates the impact of extension innovativeness on attitudes toward the parent brand. Perceived quality of the extension does not solely mediate a reciprocal attitude but is partially mediated by extension innovativeness.Research limitations/implicationsFuture studies should investigate different types of services and consumer goods to generalize the results. Other dimensions of involvement could also be tested.Practical implicationsThis study provides key findings to managers who are responsible for launching newly‐created upscale service extensions. When evaluating a new vertical service line extension, consumers actively process the available information. Thus, marketers must be careful to communicate the quality and the innovativeness of a new service because both factors can dynamically influence reciprocal attitudes toward the parent brand.Originality/valueThis article brings new insights as well as closing an important theoretical gap in the literature regarding the complex dynamic effects of perceived innovativeness, quality, and involvement in a context of a vertical service line extension during launch as it reciprocally impacts attitude toward the parent brand.