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Hospitality Branding$
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Chekitan S. Dev

Print publication date: 2012

Print ISBN-13: 9780801452031

Published to Cornell Scholarship Online: August 2016

DOI: 10.7591/cornell/9780801452031.001.0001

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Brand Extensions and Customer Loyalty

Brand Extensions and Customer Loyalty

Chapter:
(p.102) Chapter Nine Brand Extensions and Customer Loyalty
Source:
Hospitality Branding
Author(s):

Chekitan S. Dev

Publisher:
Cornell University Press
DOI:10.7591/cornell/9780801452031.003.0011

Brand extension is the practice of introducing a new brand (differentiated by market segment) using a well-established brand name as leverage. Most major hotel companies have at least one brand extension, implying that hotel chains consider the strategy to be successful. This chapter examines whether hotels can increase customer loyalty by introducing brand extensions. The results show that customers are less likely to switch brands when the length of brand extension is around three. That is, when they offer up to three extensions, brands are able to retain additional customers by offering a choice of segments under the same name. Below three extensions, however, the switching rate rises, perhaps because the number of choices is too limited to cover a wide enough set of customer needs. Beyond three extensions, the switching rate also rises. Stretching a brand beyond three extensions (that is, into several diverse market segments) may strain customers' credulity. Thus, contrary to other findings, this study strongly suggests not only that there is an optimum number of hotel brands within a family but also that this number appears to be three.

Keywords:   hotel brands, brand extension, hotel chains, hotel companies, market segments, customer loyalty

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