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EJM
51,9/10 Leveraging the corporate brand
The importance of corporate brand
innovativeness and brand architecture
Tim Oliver Brexendorf
1530 WHU – Otto Beisheim School of Management, Duesseldorf, Germany, and
Received 7 July 2017 Kevin Lane Keller
Accepted 10 July 2017
Dartmouth College, Tuck School of Business, Hanover, New Hampshire, USA
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Abstract
Purpose – Most research on branding highlights the role of associations for a single brand. Many firms,
however, have multiple brands and/or different versions of one brand. The latter is largely the case for many
corporate brands. This paper aims to broaden the understanding of corporate brand associations and their
transfer within the firm’s brand and product portfolio. In particular, this paper also examines the concept of
corporate brand innovativeness and the influence of brand architecture as supportive and restrictive
boundary conditions for its transfer.
Design/methodology/approach – This conceptual paper explains the nature, benefits and challenges of
corporate brand innovativeness within the context of a firm’s brand architecture. On the basis of a literature
review, the authors provide an overview of the domain and derive avenues for future research.
Findings – Research and practice have not fully realised the importance of corporate brand images for
supporting a firms’ product portfolio. In particular, (corporate) marketing managers need to consider the
potential value of favourable perceptions of corporate brand innovativeness across products and the
moderating role of brand architecture.
Research limitations/implications – More empirical research is needed to understand the reciprocal
relationship and transfer between corporate and product brand associations and equity.
Practical implications – A corporate marketing perspective allows firms to use corporate brand
associations to support products and services for that brand. This paper discusses perceived corporate brand
innovativeness as one particularly important corporate brand association.
Originality/value – The authors discuss the use of corporate brand associations under the consideration
of brand architectures and boundaries and draw on several research streams in the brand management
literature. Much of the branding and innovation literature centres on the product level; research on corporate
brand innovativeness has been relatively neglected.
Introduction
Over the past decade, an important marketing trend has emerged towards greater emphasis
on corporate marketing (Balmer and Greyser, 2006; Balmer, 2009, 2011), corporate brands
European Journal of Marketing
(Balmer 1995, 2001a, 2013; Keller, 2000) and corporate dominant branding structures
Vol. 51 No. 9/10, 2017
pp. 1530-1551
(Balmer and Gray, 2003; Lei et al., 2008; Laforet, 2015). This trend has been manifested in
© Emerald Publishing Limited many different ways and in academic circles by the publication of notable special issues
0309-0566
DOI 10.1108/EJM-07-2017-0445 devoted to the topics of corporate marketing and corporate branding within the European
Journal of Marketing (e.g. Volume 46, Number 7/8; Volume 46, Number 5) and the Journal of Leveraging the
Brand Management (e.g. Volume 19, Number 3; Volume 20, Number 9). corporate
The greater emphasis on corporate-level marketing is underpinned by an organisation-
wide focus and orientation (Webster, 1992; Balmer and Greyser, 2006) that appreciates the
brand
value of an institutional focus in marketing (Balmer, 2011). The corporate brand becomes an
expression of the corporate strategic intent (Urde, 1999) and aligns brand activities with a
more coherent strategic framework (Kernstock and Brexendorf, 2009). Therefore, the explicit
and additional focus on corporate brand-level matters has provided new perspectives to 1531
firms and has opened up a wide range of marketing opportunities for them. A number of
reasons might explain this top-down, mono-brand emphasis, but certainly one is a belief in
the effectiveness and efficiency of creating a strong corporate brand to benefit all the
different types of products sold by the firm using the corporate brand. All indications are
that this increased focus on corporate branding will persist in the future.
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Brand architecture
Firms rarely use one brand for all of their different products and services. Instead, they often
1532 use multiple brands, with different brands used for different products, as well as multiple
brands combined in different ways for any one product, i.e. as sub-brands. A brand architecture
strategy defines the number and nature of common and distinctive brand elements (i.e. names,
logos, symbols, etc.) used across the firm’s products, revealing their explicit ordering. It
suggests which brand elements a firm should apply across new and existing products and
services, clarifying the similarities and dissimilarities between the entities involved (Douglas
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equity transfer across all levels. Corporate brands can act as an umbrella brand to confer
equity to its product portfolio but also, in turn, potentially benefit from feedback effects from
product and services at lower levels of the brand hierarchy to enhance its own corporate
brand equity (Balmer, 1995; Lei et al., 2008). By its nature, a product brand is defined largely
by what it does, whereas a corporate brand is defined as much by whom it is as by what it
does (Keller and Richey, 2006). As such, there is a strong potential for mutual enrichment of
both corporate and product brands.
For all these reasons and more, corporate branding offers these valuable marketing
benefits to firms:
Focus: Marketing resources and efforts can be directed towards a single brand.
Simplicity: Less brands to manage internally and externally.
Efficiency: Brand image and equity can be effectively leveraged across multiple products.
Reinforcement: Can more easily benefit from positive feedback for any new or old
products.
These benefits come at a cost too, as these advantages go hand-in-hand with potential
disadvantages. For example, positive feedback and possible reinforcement from its products
or sub-brands may be offset by negative feedback and possible dilution at the same time.
Formally, corporate branding may suffer from these undesirable costs:
Lack of specificity: The unique opportunities and challenges for specific products
may be overlooked or ignored.
Blurred meaning: By being associated with so many products, the corporate brand
may lack specific meaning.
Dilution effects: The negative effects of any crisis or problem with one particular
problem may spread more easily across products for the corporate brand.
Lost opportunities: There are fewer opportunities to create potentially beneficial new
brands.
Next, we delve more deeply into factors affecting the transfer of associations between the
corporate brand and its products, focusing on corporate brand innovativeness in particular.
In short, when the corporate brand is dominantly visible, corporate brand associations
appear to be highly salient cues that influence product evaluations, relatively independent of
perceived fit and product involvement. In contrast, when the corporate brand is not
dominantly visible, consumers use corporate brand associations only as a means to increase
the reliability of their product evaluation. In this case, corporate brand associations
influence product evaluations only when involvement is high, but not when involvement is
low. These results suggests that the process of brand image transfer is different when the
corporate brand is dominantly visible than when the parent brand is not dominantly visible
(Berens et al., 2005).
brand than a corporate social responsibility message. Keller and Aaker (1998) extended this
finding and showed that corporate marketing activity related to product innovation
produced more favourable evaluations for a corporate brand extension than corporate
marketing activities related to either the environment or the community (see also Gürhan-
Canli and Batra, 2004). Collectively, these research studies suggest the importance of
corporate brand innovativeness, a topic we turn to next.
1536
The effects of corporate brand innovativeness
The extent to which a corporate brand is distinguished by innovativeness can be a key
determinant for differentiation and marketplace success (Henard and Dacin, 2010;
Wood and Hoeffler, 2013). Innovativeness as a corporate brand association, however, is
vulnerable to competitors’ desires to follow and surpass the firm on this dimension
(Mick and Fournier, 1998; Keller, 2000). If more and more corporations follow suit and
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the firm is perceived as comparatively less innovative and loses its innovative appeal,
stakeholders will be less likely to rely on any information conveyed about the corporate
brand being innovative (Gürhan-Canli and Batra, 2004). Consequently, the decreased
perception of brand innovativeness will lower the favourability and value of this image
dimension.
Nevertheless, if a firm can maintain a perception of innovativeness for its corporate
brand, the rewards are many. Research has shown that customers evaluate service
extensions by providers with an innovative late mover image more favourably than service
extensions by companies with a pioneer image (de Ruyter and Wetzels, 2000). There is also
evidence that innovative firms are perceived more favourably than non-innovative firms in
terms of credibility and expertise (Golder and Tellis, 1993), as well as perceived quality and
purchase likelihood (Aaker and Keller, 1990).
Corporate expertise and innovativeness associations also exert a positive influence
on consumers’ evaluations of the innovativeness of a new product (Brown and Dacin,
1997; Hatch and Schultz, 2001), especially when consumers perceive high risk in the
product purchase (Gürhan-Canli and Batra, 2004). In their seminal research, Barone and
Jewell (2013) show that brands that are perceived as innovative earn “innovation credit”
that allows firms to use marketing strategies that deviate or violate commonly used
category norms. Perceived innovativeness may therefore serve as a critical point-of-
difference or point-of-parity for corporate brands (Keller, 2000; Gürhan-Canli and Batra,
2004).
Innovativeness associations are able to temper negative associations in the firm’s quality
perception (Heath et al., 2011). Beyond this, corporate ability associations can be used as a
“backup” or “reinforcer” that may enhance consumer confidence in product judgments.
Innovativeness can therefore be an important value driver for the firms’ product portfolio.
Yet, it must be recognised that it is a difficult task to achieve a reputation for innovation
(Aaker, 2004b).
In how far corporate ability associations like innovativeness can positively transfer on all
brand levels is constrained by the strength of the corporate brand image to begin with
(Hauser et al., 2006) and the brand architecture strategy adopted, as discussed next.
meaningful enough, not to mention that these product brands are often fairly strong as it is
(e.g. Pampers for Procter & Gamble or Dove for Unilever). It will be interesting to see,
however, whether over time as consumers learn more about the corporate ties of various
products and about the corporate brands themselves, more value may be extracted from
these relationships.
Corporate and product brands can differ in the relational linking between associations:
Valence of associations: Corporate and product brands can differ in the inherent
favourability of associations. Corporate brands may not be perceived at the same
level of innovativeness in all their product categories. While BMW may be
perceived as more innovative than Suzuki in the car category, it may be the other
way around for the motorcycle category (see also Shams et al., 2015). It might also
be the case that the corporate brand is seen more favourable than specific product
brands and lines under their umbrella.
Directionality of associations: Corporate brand associations might exert an influence
on the product brands and vice versa. It can be assumed that corporate brand
innovativeness and product brand innovativeness exercise a mutual, self-
reinforcing influence on each other. More complete innovativeness associations that
cover product brand as well as corporate brand innovativeness associations may
lead to a stronger salience of innovativeness of both corporate and product brand.
However, little is known about the bi-directional innovativeness transfer between
corporate and product brands. More research in this respect is needed.
Alignability of associations: Corporate brand associations (e.g. innovativeness) and
product brand associations can be aligned and support each other (e.g.
innovativeness and revolutionary product and packaging design) and can be
unaligned and contradict each other (e.g. innovativeness vs decades-old, traditional
product formulations). Especially, the extent to which strong corporate brand
innovativeness associations give “innovation credit” to line extensions that can be
characterised as incremental innovations, is of huge interest for corporate practice.
In any case, if a corporate brand is linked to products across diverse categories, some of its
strongest associations are likely to be those intangible attributes, abstract benefits or
attitudes that span some or all of the different product categories (Keller, 2013). More
abstract corporate brand associations like innovativeness might allow a transfer across a
broad range of product categories regardless of the particular products housed under the
corporate brand (Meyvis and Janiszewski, 2004).
Brand boundaries Leveraging the
The brand architecture strategy adopted by a firm plays a critical role in defining brand corporate
boundaries (Keller, 2012; Brexendorf et al., 2015). A brand boundary can be defined as the
scope and limit of a brand in terms of the nature of different product or service categories for
brand
which consumers would find appropriate for the brand and grant “permission” for it to
enter. Formally, brand permission occurs when consumers or customers grant consent for
certain activities without any adverse effects on the brand. It relies on the openness of a
brand’s customers to, in effect, grant a permit for offering new products and services and to
1539
engage in novel brand initiatives.
Brand permission is determined by many factors: social norms (e.g. cultural norms,
consumer community norms), consumer characteristics (e.g. scepticism), brand-consumer
relationship norms (e.g. commitment, trust), brand-specific norms (e.g. brand identity, brand
heritage, brand experience) and the conducted activities of the brand over time (Meyvis and
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Dhar, 2008). As consumers grant permission or not, they assess the appropriateness of the
brand initiatives by comparing the brand’s initiatives with automatically activated norms.
Little is known about how consumers combine these different factors, however, to evaluate
the appropriateness of brand activities.
The boundaries of a brand are not immutable. They are malleable, elastic and
continuously determined. In many ways, brands can be interpreted as flexible and dynamic
entities that unite and allocate products and services as elements under its umbrella (Sujan,
1985; Aaker and Keller, 1990; Boush, 1993), thus defining and building its own boundaries
within a certain market space. At the same time, differentiating characteristics or
associations of a brand and its products and services build and create a clear and well-
defined perceptual “boundary” of the differences and uniqueness of the brand with respect
to competitive brands in the mind of the consumer (Day et al., 1979; Sujan and Bettman,
1989).
Given the continuous expansion – as well deletion – strategy that many brands pursue,
consumers constantly need to mentally “assess” the boundaries of the brand. The perceived
boundaries of the brand in the minds of the consumer and its elasticity over time help to
determine the brand’s potential for growth through line and category extensions.
Understanding the boundaries and the elasticity of its brands is thus of tremendous
importance for all brand marketers. The brand’s boundaries may also facilitate or impede
the reciprocal transfer of innovativeness associations between the corporate brand and its
product brands. Strong innovativeness associations of consumers towards the corporate
brand may dissolve the boundaries of product brands and may keep product brands more
elastic that are closely connected and linked with the corporate brand.
Brand elasticity
Brands require elasticity and flexibility as well as the ability to adapt to contemporary
changes in the environment. A brand’s elasticity and stretchability is an important
determinant for new product introductions and the success of brand’s growth (Aaker and
Keller, 1990; Ahluwalia, 2008). The brands’ boundaries as well as the categories in which
they are present are fluid, in permanent flux and subject to constant recalibration.
Consumers update what they think about a brand and its associated boundaries. If product
variants change dynamically within a brand line, they alter the boundaries of the brand and
the category structure and, as a result, the relationship of the brand to the consumer.
Moreover, when new products or product lines (as members of a category) become accepted
as part of a brand family, the brand-knowledge structure is broadened and the brand family
EJM becomes more likely to accept additional members (Boush and Loken, 1991; Dacin and
51,9/10 Smith, 1994; Sheinin and Schmitt, 1994).
When new product or product lines do not fit into the existing knowledge structure, the
consumer may create a new mental category to accommodate the brand extension (Martínez
et al., 2009). Existing research argues that the introduction of additional products to the
brand family may also dilute the strength of a brand (Keller and Aaker, 1992; John et al.,
1540 1998). Continuous and extensive changes in the product line may, on the one hand,
apparently weaken the brand schema but, on the other hand, strengthen the strategic
position of the brand by laying the foundations for all subsequent extension (DelVecchio,
2000). However, continuous and unmeaningful (product) line extensions and deletions
without in-depth consideration of their overall impact on the consumer and the brand may
harm the brand. The perceived meaningfulness of changes within the product line changes
is important for the consumer evaluation of line extension (Quelch and Kenny, 1994;
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(Sub-)categories. Although the perceptual boundaries between product categories are often
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not well defined (Vishwanathan and Childers, 1999), a primary source of meaning for any
brand are the categories (e.g. snacks) and the subcategories (e.g. cereal bars, cookies, potato
chips) for the product sold under that brand. Categories are socially constructed partitions
that divide market space into groupings that are perceived by consumers as similar along
certain dimensions. Consumers can erect conceptual boundaries between product categories
that help to make sense of incomplete and imperfect market cues. Consumers hold product
category representations at multiple abstraction levels as cognitive orderings (Rosa et al.,
1999; Vishwanathan and Childers, 1999).
A category (or sub-category) can further evoke specific associations in the mind of the
consumer (Levy, 1986). Batra and Homer (2004) find that expensive cookies were rated as
“sophisticated and classy”, whereas potato chips were seen as “fun”. Some brands also serve
as cues, exemplars or prototypes for a specific (sub-)category which increases the strength
and frequency of associations between the brand name and the (sub-)category.
A study of Joiner and Loken (1998) showed that consumers often generalised the
possession of an attribute from a specific category (like Sony televisions) to a more general
category (all Sony products) more readily than they generalised the attribute from the
specific category (Sony televisions) to another specific category (Sony bicycles). The effect
was greater the more the specific extension category was typical of the general category
(Sony cameras are more typical than Sony bicycles).
The category (or sub-category) might even also influence consumer perceptions of
corporate brand innovativeness, especially when firms are predominantly involved in one
category (Batra, Lenk and Wedel, 2010). Tesla, for example, is currently perceived as
innovative because they form and create the category of premium electric vehicles.
Innovativeness for a corporate brand in the car industry may also have other connotations
than for a corporate brand that produces soft drinks. Besides the categories, the brand
serves, its boundaries are influenced by the brand hierarchy a firm adopts.
Brand hierarchy. A study of Sood and Keller (2012) suggests that sub-branding supports
both enhancement of extension evaluations and protection of the parent brand from
negative feedback effects. Even corporate brands have boundaries, however and should not
be extended to all product brands (Keller, 2000; Keller, 2013). Some firms avoid an
endorsement of their corporate brand for selected business units and brands to constrain the
transfer of specific corporate brand associations (e.g. Henkel with Schwarzkopf, Mars with
Pedigree). Firms also often introduce or buy new brands that aim to target a niche or offer
differentiation with respect to the core brand to appeal to a different market segment and
cover a larger area of the market (Keller, 2013). The brand hierarchy supports or restricts –
as discussed before – the innovativeness transfer. It further determines the value of
EJM innovations (Rao et al., 2004). The brand hierarchy is strongly related and influenced by the
51,9/10 brand breadth.
Brand breadth. Brand breadth refers to the number and perceived variability of products
and product types represented by a brand and the strength of association between the brand
and the products it represents (Boush and Loken, 1991; Dawar, 1996). Brands embrace and
unite many products and act as “product coordinators” (Rahinel and Redden, 2013) or
1542 “brand categories” (Boush and Loken, 1991). The boundaries of a brand are strongly
influenced by the products and services it keeps and the relationship between them. Brands
become more powerful when they cover interrelated products and services (e.g. Apple).
The interrelationship and interconnectedness between the products may support a
positive transfer of innovativeness from corporate to the product brand level and vice versa.
Brands are frequently extended to several products, some more “distant” than others. Keller
and Aaker (1992) demonstrate that distance from existing products is a factor determining
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the evaluation of extension products. Results of a study by Dawar and Anderson (1994)
suggest that multiple extensions of a brand must also consider the appropriate order and
direction of product introductions to enhance consumer acceptance. The brand breadth
determines the boundaries of a brand as a result of the typicality of all brand and line
extensions.
With regard to its breadth, narrow and broad brands can be differentiated. While narrow
brands are those with extension products very similar to existing products (typical
extensions), broad brands result from extensions dissimilar to current products (atypical
extensions) (Boush and Loken, 1991). Red Bull may be perceived as a narrow brand if the
main product type is energy drink, whereas Yamaha may be perceived as a broad brand
that includes many product categories like pianos, electronics, motorcycles and other
product types. If brands offer products in several product categories, some products may be
more representative and important for the brand than others. For example, customers of
Yamaha may be familiar with pianos, but not with motorcycles and vice versa.
Existing research has shown that a brand that operates in diverse product categories has
certain advantages in extending the brand over brands that is sold in only one product
category (Boush and Loken, 1991; Meyvis and Janiszewski, 2004). Narrow brands benefit
over broad brands when introducing line extensions within the same category of expertise
but are limited by the brand’s extendibility to other product categories. Narrow brands will
have more accessible associations that include the product category than broad brands for
whom product category associations are more diffuse and weaker (Boush and Loken, 1991;
Meyvis and Janiszewski, 2004).
Dominance as the strength of the directional association between the parent category and
the branded product, as well as relatedness as the closeness of the brand’s parent category to
the target categories of possible extension, play an important role in defining the brand’s
boundaries (Herr et al., 1996). Learning new associations for brand extensions is easier (vs
more difficult) for brands that are strongly (vs weakly) category dominant and for target
categories that are closely (vs distantly) related to the brand’s parent category (Herr et al.,
1996).
The products the brand embraces may differ in their nature and strength of associations
to the brand (Dawar, 1996). Research has found that concrete attribute associations may not
transfer as easy and broadly to extension categories as more abstract associations (Monga
and John, 2010; Meyvis and Janiszewski, 2004; van Osselaer and Alba, 2003; Hagtvedt and
Patrick, 2009). More abstract associations like innovativeness, on the other hand, may be
more relevant across a wide set of categories because of their intangible nature. For
example, Aaker and Keller (1990) also showed that the Vuarnet brand had a remarkable
ability to transfer to a disparate set of product categories, such as sportswear, watches, Leveraging the
wallets and even skis. In these cases, complementarity may have led consumers to infer that corporate
the extension would have the “stylish” attribute associated with the Vuarnet name and they
valued such an association in the different contexts.
brand
Although existing research assumes that abstract associations are more extendible,
abstract associations do not always transfer easily. Bridges, Keller and Sood (2000) who
examined the relative transferability of product-related brand information when it was
represented either as an abstract brand association or as a concrete brand association 1543
found that the two types of brand images extended equally well into a dissimilar product
category – handbags. However, Morrin (1999) found that exposure to a brand extension
increased accessibility of the parent brand, with the increase being less for typical than
atypical brands in the category. When the brand extension has a good fit for the brand
category, it increases the parent brand accessibility further, relative to when the brand
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transfer readily to product brands and be more salient during customer decision-
making?
How do firms align internal and external concerns in developing their corporate and
product brand strategies?
How do firms balance different constituent interests in developing their corporate
branding strategies and marketing programmes and activities?
elasticity is a crucially important area within the field of strategic brand management.
Future studies could consider and merge research on brand boundaries, elasticity,
permission and architecture. Further research could investigate the following
directions:
What would happen to the corporate brand and products and sub-brands in the
hierarchy if the boundaries of the corporate brand were extended or narrowed or if
selected products or sub-brands were deleted or added?
What degree of distance or closeness between the product and sub-brands is needed
to enable the best possible positive equity transfer or to avoid negative equity
transfer? Are asymmetric effects possible? Is it possible to develop a brand
architecture where the upside from positive image transfer from the corporate brand
far outweighs possible negative feedback from any one product or sub-brand?
How do dynamic changes at the corporate brand level influence evaluations at lower
levels of the brand hierarchy over time? How do consumers update their perceptions
or impressions of specific products or sub-brands for the corporate brand?
We believe that each of these four areas of proposed future research directions and their
interrelated study create exciting opportunities in this important field of inquiry. As
corporate branding is increasingly being applied in multi-brand level settings, branding
research necessarily needs to take a broader perspective and obtain a greater
understanding of how equity transfers to and from the different brand levels. To broaden
the horizon of branding research, carefully consideration of the boundaries and elasticity
of the corporate brand and different product brand levels should deepen our
understanding of how individuals perceive firms and the products they produce. The
transfer of association from the corporate brand to the product or sub-brand level is a
continuous challenge for corporate marketing managers. Neglecting the impact of
corporate brand associations on all brand levels and the design and implementation of a
compelling brand architecture strategy will clearly inhibit or even prevent the
development of a successful brand strategy.
Note
1. For simplicity, we refer to corporate and company brands interchangeably, recognising that
consumers may not necessarily draw a distinction between the two or know that corporations
may subsume multiple companies.
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Further reading
Balachander, S. and Ghose, S. (2003), “Reciprocal spillover effects: a strategic benefit of brand
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Bayus, B.L. and Putsis, W.P. Jr (1999), “Product proliferation: an empirical analysis of product line
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enhancement”, Journal of Marketing Research, Vol. 35 No. 4, pp. 464-473.
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stretches”, Journal of Marketing, Vol. 63 No. 1, pp. 88-101.
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from brand extension evaluation to brand evaluation”, Marketing Letters, Vol. 8 No. 3,
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Vol. 34 No. 5, pp. 706-712.
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reputation”, European Journal of Marketing, Vol. 48 Nos 9/10, pp. 1648-1663.
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the moderating role of branding strategy”, Journal of Product Innovation Management, Vol. 30
No. 3, pp. 448-464.
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Sinapuelas, I.C.S., Wang, H.M.D. and Bohlmann, J.D. (2015), “The interplay of innovation, brand and Leveraging the
marketing mix variables in line extensions”, Journal of the Academy of Marketing Science,
Vol. 53 No. 5, pp. 1-16. corporate
Yeung, C.W.M. and Wyer, R.S. Jr (2005), “Does loving a brand mean loving its products? The role of brand
brand-elicited affect in brand extension evaluations”, Journal of Marketing Research, Vol. 42
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