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Executive Summary
This research examines cross-cultural differences in brand dilution effects and the moderating role of motivation and extension typicality. Drawing from recent findings that indicate culture affects the way people treat conflicting information, this research predicts that Easterners and Westerners react differently to brand extension failure. Consistent with prior research, failure in a typical extension should lead to less brand dilution for Westerners when they are highly motivated (versus when they are less motivated). When motivation is low, Westerners consider only a subset of information and are likely to focus on the more diagnostic extension failure information. However, when motivation increases, the consideration of other information (e.g., prior positive beliefs about the brand) may mitigate the impact of the negative information on attitude, which leads to less dilution. This effect flips for failure in an atypical extension. That is, in general, failure in an atypical extension does not seem diagnostic of a brand’s quality. Thus, when motivation is low, such extensions should have minimal influences on brand attitudes. However, when motivation increases, people are more likely to take into account more pieces of information (including the extension failure information), which should lead to greater dilution under high motivation.

The opposite pattern of results may mark Easterners. Because Easterners are chronically more likely to take into account more pieces of information, they should be more likely to incorporate both negative extension failure information and positive brand attitude in their judgments when they experience low motivation. However, as motivation increases, closer scrutiny should reveal that some information is more diagnostic than other information. When an extension is typical, more elaborate processing may lead Easterners to focus on the more diagnostic extension failure information. When an extension is atypical, closer scrutiny should lead them to realize that the extension failure is not diagnostic of the brand’s ability and discount this piece of information. Thus, failure in a typical extension leads to greater dilution when motivation is high (versus low); failure in an atypical extension leads to greater dilution when motivation is low (versus high). Three studies test the hypotheses, and the results strongly support the predictions.

The findings from this research have important implications for brand managers operating in a global world. For example, firms selling high-involvement products in Eastern markets (e.g., China) should adopt a different branding strategy than those selling low-involvement products. For Easterners, because the brand dilution effect is stronger when the extension is typical and the motivation level is high, firms selling high-involvement products should be judicious when engaging in close brand extensions. Should an extended product fail, the potential negative feedback effect may be fairly strong. For risky product introductions, other branding strategies (e.g., subbranding) may be more beneficial.

Biography
Sharon Ng is an assistant professor in the Nanyang Business School at Nanyang Technological University. She earned a bachelor’s degree in Business (First Class Honors) from Nanyang Technological University in Singapore and graduated with a PhD from the University of Minnesota’s Carlson School of Management in 2004. She was named a Marketing Science Institute Young Scholar in 2009 and has published in Journal of Consumer Research and Journal of Marketing Research. Her research focuses primarily on the impact of culture on the structure of brand information in memory and how people respond to brand extensions. In addition, she examines cross-cultural differences in other aspects of consumer behavior, such as counterfactual thinking and impatience.

Journal of Marketing Research, Volume 47, Number 1, February 2010
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