Author(s): Anant Ram Sudhagani
Private label brands (PLBs) have emerged as a global phenomenon and have created considerable interest among the scholars and practitioners. They have become a serious threat to national brands. Retailers regularly introduce PLBs to compete with national brands and other rival retail chains. While introducing a new product should retailers use an extended brand or a new brand? The existing branding theories do not provide a ready answer in the private label context. This study attempts to answer the question which launching strategy- extended brand or new brand- is effective in terms of eliciting favorable evaluations from customers? A quasi-experimental design was adapted to test the hypothesis that extended brand name will be more favorably evaluated than new brand name. The main independent variable branding strategies which is in two levels as Extended brand (E) and New brand (N), was paired with a blocking variable namely product type in two levels as Functional (F) and Prestige (P) product. These four experimental treatments (EF, EP, NF, NP) were manipulated by writing suitable brand descriptions and were presented to a random sample of 275 shoppers for evaluation. The evaluations were captured by a 7 item scale involving cognitive, affective and behavioral dimensions. A 5-point rating scale was used to record the responses. A 2x2 factorial ANOVA was performed to analyses the responses. The F ratios for branding strategies (F 1,271 = 3.902; p = 0.049), and for product types (F 1,271 = 7.890; p = 0.005) are significant beyond 5% level and the interaction (F 1,271 = 0.155; p = 0.694) is not significant. The results of this empirical study indicate that, in general, consumers evaluate brand extensions of private labels more favorably. The central contribution of this research is that Private label Extension (PLE) strategy appears to be more viable than new private label (NPL) strategy for retailers. While launching new products, retailers must consider brand extension as a vital guiding strategy since consumers respond more favorably to it.