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Chinese Journal of Management Science ›› 2022, Vol. 30 ›› Issue (7): 110-120.doi: 10.16381/j.cnki.issn1003-207x.2019.1953

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The Brand Strategy of Conspicuous Goods: Brand Extension or New brand?

WANG Qi-jun, NIE Jia-jia   

  1. School of Economics and Management, Southwest Jiaotong University, Chengdu 610031, China
  • Received:2019-11-28 Revised:2020-05-08 Online:2022-08-05 Published:2022-08-05
  • Contact: 聂佳佳 E-mail:niejia@126.com

Abstract: Conspicuous goods exist in a lot of categories, such as luxury goods, fashion products, automobiles, digital products,which satisfy not just material needs but also social needs of consumers. The consumer can get the pleasure from using conspicuous goods for showing off their wealth and status to others. This kind of pleasure could be called the status utility. In order to show off their wealth, consumers are willing to pay higher prices for the conspicuous goods than ordinary products.Moreover, companies often introduce new product lines to gain more market share. In this case, the companies need to decide the brand name for the new product. According to the behavior of the companies in reality, there are two options:New brand or brand extension. The new brand means that a brand new name is created to a new product, while brand extension means that an a new product is named an established brandname. Prior research on brand extension of the common goods has investigated how branding affect consumers’ perceptions of product quality. However,consumers of conspicuous goods care not only about product quality but also about the status of its users.This is because that the brand of conspicuous goods signals consumers’ status and gives status value to them, and the status value of the product is influenced by the expectedwealth of its users.People used to identify product origin by their brand (brand name or brand logo). Thus, if adopt brand extension to introduce new product, the consumers of new product and original product will obtain identical brand status, while the consumers of new product and original product will get different status utility if adopt new brand strategy.Intuitively,consumers’ status utility would influence their purchase decisions, which further affect firm’s profit.

Key words: conspicuous product; brand strategy; brand extension; game theory

CLC Number: