Causal and Effect of Perceived Risk in Brand Extension: A Case Study of Chinese Heritage Brand with Psychological Contract Violation as a Moderator
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Abstract
This study aims to investigate the influence of consumer-perceived risk on brand extension by considering the moderating role of psychological contract violation. Furthermore, the association between perceived risk, perceived fit and brand trust is examined. The study selected the Chinese heritage brand Wu Liang Ye as a case study and utilized a self-administered questionnaire for data collection. Data were collected from 605 residents of the brand’s location employing a combination of purposive and random sampling methods. The hypothesized model was assessed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The findings show that perceived risk significantly affects brand extension success in heritage brands, and psychological contract violation (PCV) plays a significant moderating role in the relationship between perceived risk and brand extension success. This study offers new insights into managing heritage brands by highlighting the critical role of perceived risk and psychological contracts in brand extension success. It advances the literature by elucidating the complex interplay between consumer perceptions and brand extension strategies, providing a valuable framework for heritage brand managers to balance market expansion with brand equity preservation.
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