How celebrity endorsers enhance parent brand extendibility to low similarity brand extensions

To exploit further growth opportunities, firms increasingly consider extending their brands not only within related categories but also into categories that do not fit well with the parent brand. Prior research has shown that brand extensions with a low similarity with the parent brand are risky and may result in high failure rates. This research investigates the extent to which celebrity endorsements for a parent brand enhances its brand extension potential and allows a brand to accommodate more diverse extensions. In two experimental studies with 927 respondents, significant interaction effects emerge between endorsement and similarity: celebrities increase consumer evaluations of brand extensions, more so for low similarity extensions than for high similarity extensions. Thus, celebrities can mitigate the negative impact of low similarity extensions. This effect stems from the reduction in perceived purchase risk. Finally, for a low similarity extension, celebrity endorsement is more effective for parent brands with small rather than large product portfolios.