Brand extension failure and parent brand penalty: The role of implicit theories

Abstract Given that the vast majority of brand extensions fail, it is important to understand how extension failure influences consumer judgments of the parent brand that launched the extension. In the brand extension literature, there is a paucity of research on the role of consumer characteristics in influencing response to such failures. To fill this gap, the present research examines the impact of consumers' implicit theory orientation—their perspective on whether personality traits are malleable versus fixed—on the severity of negative feedback effects following extension failure. Seven studies show that entity theorists, who believe in the fixedness of personality traits, penalize parent brands more than incremental theorists, who endorse trait malleability. This brand penalty effect arises because as compared to incremental theorists, entity theorists are motivated to view brands as a cohesive group and therefore equate extension failure with the diminishment of the overarching parent brand. This effect is more likely when brand cohesiveness is low or ambiguous, but it is less likely when brand cohesiveness is high. Furthermore, while entity theorists are more likely to reduce brand evaluations after extension failure, the two groups do not differ in parent brand evaluations after extension success.