How can a Brand Successfully Extend in a Premium Market when Collaborating with a High-End Retailer? An Abstract

This study investigates the collaboration between brands and high-end retailers that desire to enter the premium market. Since retail channels play a key role in distributing new products, retailers may have a significant impact on the positioning of new products from an extended brand. Drawn from the attitude accessibility theory, the attitudes toward brands or retailers are expected to be more positive or negative based on consumers’ preexisting associations with brands or retailers. Such preexisting attitudes may serve as a filter for consumers when interpreting new information or evaluating new products from extended brands offered by retailers. To examine how a brand collaborating with a high-end retailer can successfully extend its products in a premium market, H&M and Nordstrom were selected based on the pretest results.

With a total of 211 responses from American consumers, Mplus was used for analyzing data, and the hypothesized model was tested using structural equation modeling (SEM). CFA was performed on the five latent variables described in the conceptual model: image fit, quality fit, attitude toward brand, attitude toward retailer, and brand extension evaluation. The model fit indices for CFA indicated a good model fit: χ² (160, n = 211) = 343.17, p = 0.001, RMSEA = 0.07 (90% CI = 0.06–0.08), CFI = 0.96, TLI = 0.95, and SRMR = 0.03. The goodness of fit indices for the path analysis of brand extension were as follows: χ² (161, n = 211) = 350.95, p = 0.001, RMSEA = 0.075 (90% CI = 0.06–0.08), CFI = 0.96, TLI = 0.95, and SRMR = 0.045. The path results revealed that image fit was significantly related to attitude toward brand (β = 0.56, p < 0.001) and quality fit was significantly associated with attitude toward the retailer (β = 0.56, p < 0.001). Also, there were significant paths between attitude toward brand and brand extension evaluation (β = 0.28, p < 0.001) and between attitude toward retailer and brand extension evaluation (β = 0.30, p < 0.001).

Supporting theory-based expectations, the current study addresses the issues and key elements behind the brand extensions collaborating with retailers. The findings of this study contribute to brand and retail management by providing empirical evidence on how new products from extended brands can produce positive evaluations in the marketplace through collaboration with retailers.

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