Group-Level Neural Responses to Service-to-Service Brand Extension

Abstract

Brand extension is a marketing strategy leveraging well-established brand to promote new offerings provided as goods or service. The previous neurophysiological studies on goods-to-goods brand extension have proposed that categorization and semantic memory processes are involved in brand extension evaluation. However, it is unknown whether these same processes also underlie service-to-service brand extension. The present study, therefore, aims to investigate neural processes in consumers underlying their judgment of service-to-service brand extension. Specifically, we investigated human electroencephalographic responses to extended services that were commonly considered to fit well or badly with parent brand among consumers. For this purpose, we proposed a new stimulus grouping method to find commonly acceptable or unacceptable service extensions. In the experiment, participants reported the acceptability of 56 brand extension pairs, consisting of parent brand name (S1) and extended service name (S2). From individual acceptability responses, we assigned each pair to one of the three fit levels: high- (i.e., highly acceptable), low-, and mid-fit. Next, we selected stimuli that received high/low-fit evaluations from a majority of participants (i.e., >85%) and assigned them to a high/low population-fit group. A comparison of event-related potentials (ERPs) between population-fit groups through a paired t-test showed significant differences in the fronto-central N2 and fronto-parietal P300 amplitudes. We further evaluated inter-subject variability of these ERP components by a decoding analysis that classified N2 and/or P300 amplitudes into a high, or low population-fit class using a support vector machine. Leave-one-subject-out validation revealed classification accuracy of 60.35% with N2 amplitudes, 78.95% with P300, and 73.68% with both, indicating a relatively high inter-subject variability of N2 but low for P300. This validation showed that fronto-parietal P300 reflected neural processes more consistent across subjects in service-to-service brand extension. We further observed that the left frontal P300 amplitude was increased as fit-level increased across stimuli, indicating a semantic retrieval process to evaluate a semantic link between S1 and S2. Parietal P300 showed a higher amplitude in the high population-fit group, reflecting a similarity-based categorization process. In sum, our results suggest that service-to-service brand extension evaluation may share similar neural processes with goods-to-goods brand extension.