Nowadays enterprises use brand strategy to enhance product¡¦s depth and width, raising the customers¡¦ evaluation on brand. To lower the cost of launching a new product, enterprise usually uses line extension to launch a new product. Most researches about the effect of product line extension on consumer evaluation all focus on physical product. Research focuses on service product is rare. This study focuses on service product, and wants to know the application of vertical extension strategy in service industry. Although extension direction is main strategy when doing product line extension in practical use, extension direction is considered as moderating variable to others, not main issue in previous academic studies. Thus this study treats extension direction as main body of the research, and discusses the changes of consumers¡¦ attitudes towards parent brand and extension brand in different situation. This study chooses two hotels, The LALU and CHINATRUST Hotel which are real and have different brand concepts, as the design scenario, using experiment design to understand consumers¡¦ evaluations at extension service and parent brand when facing different directions of product line extension. Besides, this study uses service continuity to replace ownership effect, and chooses extension direction as main effect, observing the interaction between extension direction and brand concepts, service continuity and branding strategy, trying to understand the factors influencing consumers¡¦ evaluation in product line extension. This study finds consumers¡¦ evaluation of upward extension is significantly higher than downward extension during product line extension. However, no matter upward or downward, consumers¡¦ evaluation on parent brand become lower. The prestige-oriented brand concept enhances this negative effect, but branding strategy of subbrand can ease this effect.

Many firms attempt to ensure the success of new product introductions by applying an existing, well-known brand name to the product. The strategy, known as brand extension, has become commomplace. In recent years, the strategy has been used in media industry. Especially, since the Internet started gaining in popularity in the mid-1990s, the newspaper industry has started applying brand extensions to online markets. For example, United Daily News, Chinatimes, and so on has developed websites of various types. However, we doubt whether it¡¦ll affect consumers¡¦ attitude toward the parent brand. For this reason, we attempt to figure out consumers¡¦attitude toward the newspaper brand when a newspaper office has introduced extensions with good or poor fit. Besides, in this study, we also propose that three factors including ownership status, product attributes, and dominance of the parent brand will influence consumers¡¦s evaluation of the parent brand. Previous research have provided mixed evidence about the reciprocal effects of a brand extension on its parent brand and rarely studied the impact of these four factors on parent brand evaluation, especially in media industy. As a result, we select United Daily News and Appledaily as two objects of the study and find out the extensions (websites) with good and poor fit of these two newspaper brands through group discussing. After T-test analysis, we have some findings as follows: 1.There¡¦s no significant effect of fit on parent brand attitude toward United Daily News, but there¡¦s significant difference for Appledaily. 2.The consumers who think of the newspaper brand as more dominant have higher evaluation of attitude toward the parent brand than those who think of the newspaper brand as less dominant, whether extensions with good or poor fit introduced. 3.The owners of newspaper brands have higher evaluation of attitude toward the parent brand than nonowners, whether extensions with good or poor fit introduced. 4.The product attributes of newspapers brands will affect consumers¡¦s attitude toward the newspaper brands.

The times of following a ‘one brand – one product’ strategy have long past. Nowadays, firms are increasingly recognizing the true value of their brands and are starting to use these as a source of competitive advantage. By introducing new products under an existing brand name, firms leverage the power of their brands and thus, aim at benefiting from the success of the parent brand. Brands are amongst the most valuable assets owned by a company, which encourages them to engage in brand extensions. The authors mainly distinguish between three brand extension strategy types: line extension, vertical line extension and category extension.             Previous quantitative studies have identified that particularly brand equity and brand identity stand out as significantly influencing brand extension strategies. Therefore, this qualitative case study further explores how these two branding constructs affect firms’ brand extension decisions. While most past studies investigated the potential success of fictitious brands, this study performs qualitative interviews with brand and product managers of eight real case firms operating in the FMCG industry in Germany.             The empirical data indicates that the pressure to innovate rises, as more and more new extension products are being introduced to the market in recent years. Nevertheless, the majority of firms opt for line extension strategies, while only few dare to enter a further distanced market segment. Hence, the condition of a “fit” between the parent brand and extension product is mostly accounted for. The study further suggests that a brand without strong brand equity will not be able to perform brand extensions at any level. However, even if brands do benefit from strong brand equity, firms may adopt divergent strategies, which is mainly dependent on the brand’s identity. The research results show that narrowly defined brands, predominantly distinguishable by concrete product features and physical facets, restrict the firms’ capability to extend a brand beyond its original product line. Contrarily, brands with a more abstract or value based identity provide more opportunities to stretch further from the parent brand. An emotional brand that succeeds in building a relationship to the customer, in representing a distinct personality or telling a story, is able to extend to a new product category. The study concludes that certain brands may be under-exploited, as they do not leverage their high equity and identity capabilities in terms of extending the brand to a further distanced market segment.             As a result of the findings, two Brand Extension Strategy Matrices are constructed, setting the brand identity abstraction level (product or value based identity) into relation to (1) brand equity and (2) the identity “fit” of an extension product and the parent brand. Each of these two matrices explains the strategic consequences of a given set of brand equity and brand identity.