The impact of customer-company identification on consumer reactions to new corporate initiatives: The case of brand extensions

Ashraf, R ORCID: https://orcid.org/0000-0002-5703-598X and Merunka, D (2013) The impact of customer-company identification on consumer reactions to new corporate initiatives: The case of brand extensions. Marketing Intelligence and Planning, 31 (5). pp. 489-507. ISSN 0263-4503

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Abstract

Purpose: Customer-company identification (CCI) refers to a social relationship between a company and its customers. Prior research highlights the positive consequences of CCI but does not study the process by which CCI shapes both positive and negative consumer reactions to new company initiatives. This study aims to elaborate this process by modelling the mediating consequences of CCI (commitment to the company and feeling of belonging to an in-group) on consumers' responses to brand extensions. Design/methodology/approach: Data were collected from 291 respondents, spanning two companies and four brand extension scenarios. The model parameters were estimated through partial least squares path modelling. Findings: CCI leads to commitment to the company and to a related group, through identification processes. Both forms of commitment influence consumer reactions to new corporate initiatives. The effect of company commitment is stable; in-group commitment is more influential in forming consumer responses but varies depending on the severity of the situation. Originality/value: This research elaborates the mechanisms of identity-based commitment and its effect on consumer responses to new company initiatives. The two-tiered, identification-based commitment model highlights how identified customers relate to both the company and in-groups of consumers, as a result of CCI. It explains both positive and negative consumer reactions, an insight missing from prior studies. © Emerald Group Publishing Limited.