The Role of Corporate Image and Extension Similarity in Service Brand Extensions

In this article we examine the role of corporate image in extending service brands to new and traditional markets in the telecommunications sector. With regards to corporate image, service brand extensions are primarily associated with innovation-related attributes, such as order of entry (i.e., pioneers versus followers). Increasingly, firms are extending their services to markets that are beyond the markets that they traditionally have been active in. The results of an experimental study show that consumers evaluate service extensions by providers with an innovative late mover image more favourably that service extensions by companies with a pioneer image in terms of perceived corporate credibility and expected service quality. With regards to these evaluation criteria, it was also found that consumers prefer service brand extensions to related rather than unrelated markets. In addition we find that the relative distance between service providers with an innovative late mover image and pioneers is larger in related markets.