Factors influencing luxury service brand extension in a developing country

Abstract

Purpose - Despite the prevalence of luxury brand extension in the service industry, customers tend to be skeptical of the value of the extended brand. This study aims to investigate whether a parent luxury service brand significantly alters customers' predicted quality, identity and attitude toward the extended brand. Design/methodology/approach - This study uses partial least squares structural equation modeling to examine the proposed hypotheses in a developing country. Findings - The results show that the parent brand's brand distinctiveness positively and significantly signals the identity and quality of the extended brand. The model also identifies the mediating effects of quality as it signals the relationship between customers' perception of the parent brand and attitude toward the extended service brand. As expected, as the quality of the extended brand improves, so does attitude toward the extended hotel brand. By contrast, the perceived identity of the extended brand does not significantly increase support for a positive attitude toward the extended brand. Originality/value - This study contributes to the existing consumer marketing literature by suggesting future research directions and brand extension strategies for luxury hotel brand companies in developing countries.