The effects of brand familiarity and product category in brand extension: An ERP study

In this paper, neural features influenced by brand familiarity and category were investigated in a brand extension experiment by using conventional event-related potentials (ERPs) and time-frequency analysis. Twenty-four participants were required to decide whether to accept the extension of one brand (stimulus 1) to a certain product category (stimulus 2) in a 2 familiarity x 2 category paradigm. Stimulus 1 consisted of household appliance brands that had different degrees of familiarity (high familiarity vs. low familiarity) to a certain participant, and stimulus 2 consisted of two categories of products (high conflict vs. low conflict). Twenty-two sets of valid data were used for data analysis. We found greater N270 amplitudes in the low-familiarity brand condition and in the high-conflict product category condition, which meant that the participants had to devote more cognitive resources when the brand was less familiar and felt more conflict when the brand was extended to the high-conflict product category. According to the time-frequency analysis results, brand familiarity and product category were found to have a significant effect on the amplitude of theta-band power (4–7.5 Hz) at frontal electrodes in the time period of 270−340 ms. This result indicated that the activity of individual nodes of the language processing networks increased when the extension product category was mismatched with respect to the brand name and that the related memory of the brand was activated and the long-term memory was extracted when the participants faced the high-familiarity brand extension. The study provides an insightful view of how brand familiarity and category influence consumers’ cognitive processes regarding brand extension.