Investigating Factors Responsible For Success Of Online

Brands: An Evidence From Customer Of olx Pakistan

Muhammad Mateen
Tahir Ali

KASB Institute of Technology

CHAPTER 01: INTRODUCTION

1.1: Background:

After achieving success in one market, online firms often launch new products to capture new

markets. To avoid the high risk of failure associated with the new product introduction, firms

often exploit consumers' recognition of previously introduced brands to facilitate the entrance of

the new products. This phenomenon poses an interesting question for online information

technology (IT) product providers: How do consumers evaluate the

brand extension of online technology products? A brand is a name and/or symbol that uniquely

identifies the products or services of the seller and differentiates them from those of

its competitors (Aaker, 1991). The widespread acceptance of the Internet and electronic

commerce has given rise to popular IT brand names such as eBay, Google, and Yahoo. As pure

Internet firms, they have risen to become the top 100 global brands according to the Interbrand

report (Berner and Kiley, 2005). Brand is a precious asset to such firms because the consumers'

experiences with the established product, which provide consumers with the relevant information

about the new product, could help reduce the uncertainties and perceived risks associated with

the newly launched products. Therefore, when IT is not just a technology but also a product and
when technology users are also consumers, the brand image of a technology product could be a

salient determinant for technology acceptance.

1.2: Introduction:

Brand extension is the use of established brand names to enter new product categories or classes

(Aaker and Keller, 1992) Indeed, brand extension is of particular relevance to online IT service

products. The key asset and indicator of the success of an online IT product is its traffic. Firms

are investing more money into online advertising to attract traffic. For example, according to the

Interactive Advertising Bureau, expenses on online advertisements in 2008 had risen to $23.4

billion in the US (WebProNews, 2009). Another study, conducted by the European Interactive

Advertising

Association, found 70% of advertisers claim their allocated online ad spend is set to rise in 2009

[48].OLX Founded in 2006 in Argentina and the US, OLX group is the world leading online

classifieds present in 45 countries, across six continents. At global level, over RS160 billion

worth of goods get posted daily on OLX, out of which Rs100 billion worth of goods are sold

each day making it the leading destination for online buyers and sellers.

After being launched in Pakistan in 2012, OLX became an instant hit and became the first and

No.1 online classifieds marketplace in all categories. Intriguing TVCs of OLX Pakistan have

touched the Pakistani people, who lovingly adopted the brand for selling and purchasing

everything from cars to furniture, property to mobile phones, electronics to pets and the list goes

on.
Online shopping has become a growing business in Pakistan and has great potential for even

further growth as online buying and selling is a new norm instead of doing rounds at shopping

centers and overcrowded bazaars in traffic jams.

More and more buyers are enjoying comfort of online shopping owing to rise of smartphones

and availability of easy internet connectivity in the country. According to the government

statistics, Pakistan e-commerce sector has been doubling in size every year and is projected to

surpass one billion dollars in 2020.

OLX Pakistan gets 10,000+ daily app downloads, 500,000+ daily buyers and sellers creating 20

million daily page views, 27,000+ new ads and 16,000+ unique sellers.

Celebrating the completion of five successful years in Pakistan, OLX is launching a special offer

for customers who will post Featured Ads for greater ads visibility and chance to sell 7 times

faster by prioritizing the ad placement. Posting Featured Ads in April will make users eligible for

a lucky draw for wining up to 5 laptops, 5 iPhones and as many motorbikes.

This is, however, just the beginning and the best is yet to come as OLX Pakistan is committed in

serving the people of Pakistan by creating even more win-win exchanges in future.

Interesting Facts

 OLX is the # 1 Classifieds app in Pakistan and the #1 shopping app on Google Playstore.

 Every day, goods (Excluding Car & Re) worth 20 Billion of rupees in value are sold on

OLX

 OLX Community is spread across 118 cities in Pakistan creating a used good economy

worth Trillion of rupees in last 5 years.

  Two billion rupees worth of mobiles are sold on OLX every month.

 70 Thousand cars are posted on OLX every month out of which 65 Thousand Cars are

sold on OLX.

 89,000 ads of property items are posted on OLX every month which sums up to Billions

of rupees worth in value.

Every Minute Every Day!

 Every minute four mobile phones are listed on OLX

 Every minute, two cars are listed on OLX

 Every minute, three electronic items are listed on OLX

 Every day 50,000 conversations take place between buyers and sellers on OLX.

 Every day 500,000+ unique Pakistani Buyers and Sellers visit OLX

Therefore, taking advantage of the existing traffic to introduce a new product represents a critical

opportunity for firms. The understanding of how consumers' attitudes towards one IT product

influence their usage of the extension helps managers to better achieve the synergy of their

online products. Brand extension has been a subject of increasing interest and

scholarly investigation for marketing researchers in over a decade; however, little research has

been directed toward understanding brand extension in the online context. Kling and Smith(R.R.

Kling, D.C. Smith,, 2001) have warned about the limitations of current research on consumer

attitudes regarding brand extension, stating that “in this area, concerns about external validity

have taken a back seat to those about internal validity” (R.R. Kling, D.C. Smith,, 2001). Most

previous studies have failed to take into account important background factors that could
significantly impact the generalizability of their findings. As a marketing channel, the Internet

has unique characteristics that are different from traditional marketing channels. For example,

because of its extremely rapid transmission speed, the Internet is capable of delivering

information products in minutes or even seconds. Such an efficient delivery scheme is almost

impossible with traditional channels (R.A. Peterson, S. Balasubramanian, B.J. Bronnenberg,,

1997 ) The hyperlink is another distinguishing feature for online channels. The worldwide web

enables vendors to easily associate one online service with another by creating hyperlinks.

However, in traditional channels, the connectivity between products is relatively low. As is well

documented, the online channel's unique characteristics have implications for developing and

managing online brands (G. Christodoulides, L. Chernatony, O. Furrer, E. Shiu, T. Abimbola ,

1997 and D.L. Hoffman, T.P. Novak,, 1996) . Experience with this interactive medium also has

shown that simply replicating traditional marketing efforts online is at least inadequate (H.

Meyers, R. Gerstman,, 2001 ). Thus, the current study is a response to the call of Kling and

Smith (R.R. Kling, D.C. Smith,, 2001) for more studies on the background factors and to make

observations on online brand extension, as well as tries to find the key factors that determine the

popularity of extended products in the online channels. Besides the introduction of the brand

extension effect, this study also tries to bridge the gap in the study of the usage behavior between

different systems, which has not yet been explored in the information systems (IS) literature. The

notion of system usage has played a central role in IS research since the 1970s(S.R. Barkin,

G.W. Dickson,, 1977, A. Burton-Jones, D.W. Straub,, 2006 and T.P. Liang, J. Huang,, 1998 ) .

Many researchers have studied the antecedents of usage (T.C. Cheng, Y.C. Lam, C.L. Yeung,

2006, F.D. Davis, 1989, S. Djamasbi, D.M. Strong, M. Dishaw, 2010, V.M. Venkatesh, G.D.

Davis,2000) . Over time, the field has gradually progressed toward a general model of these
antecedents (V. Venkatesh, M.G. Morris, G.B. Davis, F.D. Davis, 2003) . Unfortunately, most

research has examined usage behavior of different products in isolation. Rogers (E.M. Rogers,

1974) pointed out that people should not view innovation in isolation. Instead, innovation can be

considered as a bundle of interrelated technologies. The acceptance of one technology product

may depend on the acceptance or usage of other related technology products. Although

researchers have examined the relationships of system usage between different time periods (S.S.

Kim, N.K. Malhotra, 2005 and V. Venkatesh, M.G. Morris, P.L. Ackerman, 200) and different

tasks(M.K. Ahuja, J.B. Thatcher, 2005 ) , empirical research on the relationship of usage

between different systems is scarce. Thus, an empirical study in this area complements the

current understanding. The remainder of this paper proceeds as follows. The next section

introduces the theoretical background and the research hypotheses, drawing on the categorization

theory as the primary theoretical underpinning to explain the IT brand extension effect. The third

section describes the research methodology used to test the research model. The fourth section

presents the results of data analyses. The paper closes with a discussion of the findings and

implications, their limitations, and directions for future research.

1.3: Problem Statement:

In Pakistan the awareness of online shopping is very low, so how big organization can extend

their product market in Pakistan, through OLX online shopping app is very trending in Pakistan

to attract the consumer for their brands. In this study we identify some factors which influence

the online brand extension in Pakistan. The factors influencing the like Parent brand image,

Parent brand strength, Marketing support, Quality of parent brand and parent brand experience

towards the brand extension success through online shopping for consumer.
1.4: Preliminary Literature Review and Theoretical Framework:

In order to make an attempt to analyze the factors influencing the acceptability of brand

extension, the main focus of the present study is to simply test the model of Chernatony et al.

(2003) by applying on low involvement product in Pakistan.

Empirically, many brand extension studies reported the findings and used laboratory experiments

and surveys with students, employees and consumers with original and fictitious brands (table 1).

The external validity of these studies has been questioned and criticism leveled against

generalizability (Lynch, 1999; Winer, 1999; Klink and Smith, 2001). The methodology used is a

further reason for the conflicting findings between studies (Smith and Park, 1992; Dacin et al.,

1994). It was sought to have closer replicate market behavior and focus on consumer, using

existing brands. Another finding presented with unfamiliar brands, the reputation of the parent

brand is a helpful evaluative cue Wernerfelt (1988) and it is important to appreciate how this

influences brand extension perceptions, it was investigated this variable. Derbaix (1983) work

focused on the perceived risk while purchasing new product, yet reliance on known brand names

is a favored way of reducing perceived risk. It was, therefore, investigated the impact of

perceived risk on brand extension.

1.5: Objectives:

The aim of this research article to analyze the factor influencing of Brand extension of online

brands or the acceptance of online brands and brand image of parent organization. The determine

the factors which is Parent brand image, Parent brand strength, Marketing support, Quality of

parent brand and parent brand experience towards the brand extension success through online

shopping for consumer.

1.6: Hypothesis:

H1o: There is no effect of parent brand image on brand extension success.

H1a: There is positive effect of parent brand image on brand extension success.

H2o: There is no effect of fit on brand extension success.

H2a: There is positive effect fit on brand extension success.

H3o: There is no effect of parent brand strength on brand extension success.

H3a: There is positive effect of parent brand strength on brand extension success.

H4o: There is no effect of marketing support on brand extension success.

H4a: There is positive effect of marketing support on brand extension success.

H5o: There is no effect of quality of parent brand on brand extension success.

H5a: There is positive effect of quality of parent brand on brand extension success.

H6o: There is no effect of parent brand experience on brand extension success.

H6a: There is positive effect of parent brand experience on brand extension success.

1.7: Research Purpose:

The Purpose of this study is to find the factors responsible for success of online brands an

evidence from customer of OLX Pakistan. This study identifies the factor influencing the online

shopping awareness or hurdles effecting the consumer to attract towards online brand

purchasing, also we identify the online scope in Pakistan for future. The online shopping is very

trending in Pakistan, because of consumer can find their products in figure tips with reasonable

price and their doorstep.

1.8: Research Significance:

The significance of the study to find out which factors influence of brand extension of online

brands in Pakistan. case study research with inductive reasoning can investigate this framework from

quantitative perspective. A strong, tested and valid model will enable for responsible for the

success of online branding and awareness for consumers of OLX Pakistan. The impact of variables
Parent brand Image, Fit between parent brand and extension or Parent brand strength towards the

brand extension.

1.9: Research Scope:

Although the study is supplemented with some limitation as the data collected from

developing country like Pakistan is not coherent with the other economies although the

value of paper has not been overshadowed and this can be used for applicative reasoning

and this paper also used in the field of academic purpose.

1.10: Conclusion:

In this section define introduction of the study, research gap, theoretical framework, research

model & variables for further link with literature review and methodology in the upcoming

chapters.

CHAPTER 02: REVIEW OF LITERATURE

2.1: Parent Brand Image

Dobni and Zinkhan (1990) describe that brand image is the perception of consumer about a

brand as reflected by brand associations held in consumer’s memory. Brand associations can be

classified into three categories: attributes, benefits, and attitudes (Alba and Hutchinson, 1987).

Keller (1993) maintains that evaluation of extension will depend upon the association transferred
from core brand to extension. Different kinds of information or brand associations (attributes,

benefits and attitudes) come to mind about core brand in brand extension context.

Some parent brand associations may be relevant when consumers evaluate extension but not all.

The relevancy depends on the perceived similarity to the extension product or service (Feldman

and Lynch, 1988). When the similarity is high, consumers evaluate the extension through same

attitude with parent brand. A favorable prior attitude ofcurrent branded product transfers toward

new product. Positive brand associations attached with core brand are considered same with

extended new product (Boush and Loken, 1991). Keller (2000) suggests that sometimes the

similarity of brand associations between core brand and extension is based on product related

attributes (ingredients) and non-product related attributes (user and usage imagery). When the

similarity is low, consumers consider specific attributes (Park, Milberg et al., 1991).

A brand is an asset for a company, and creating a positive image of a brand leads to a high brand

equity in the market. Consequently, a positive brand image is essential for companies. Brand

image can be defined as the perceptions about a brand as reflected by the brand associations held

in consumer memory (Keller, 1993) Brand image is important for brand equity and high brand

equity lead to successful brand extension (Katsanis and Pitta, 1995) Brand image refers to the

way in which groups crack all of the signals emanating from the products, services and

communication exposed by the brand. Three different aspects of brand image determine different

consumer responses to a product. These dimensions are favorability of association, strength, and

uniqueness of brand associations. Furthermore, a positive brand image is crucial for the position

of a product, its target market, and measurement of market response (Katsanis and Pitta, 1995)

The brand image is the simple perception phenomenon, which is affected by company activities.

(Keller, 1993) regards the brand image as consumer perception about the brand that is reflected
by the brand associations in the mind. The brand image is bundle of perceptions within the mind

of consumer. In other words consumer perception of the prominent features of product is

consumers mental image of the whole set of brand which has been created by company.

2.2: Fit between PB and Extension

There are three dimensions of fit in which two are related with demand in perspective of

economic notions of substitute and compliments in product use. The third part of fit is transfer

which is related to the firm’s manufacturing skills and abilities (Aaker and Keller, 1990). The

perceived similarity or fit consists on shared brand associations between the parent brand and

extensions at both the product and brand levels (Bhat and Reddy, 2001). Brand level fit is the

perceived similarity between the extension product and parent brands image. Similarity between

the extension product and original brand’s current product is the product level fit (Ringle,

Völckner et al., 2012). High degree of fit has negative impact on brand extension’s sale because

both compete for same market. In cannibalization, brand extension steals the sale of parent brand

where both products belong to same company and compete for same customers (Mason and

Milne, 1994). If there is high physical similarity between extension and parent, they will have

same consideration set and they can be interchangeable. So higher quality parent brand will win

battle over extension due to exposure of consumers with parent brand (Srinivasan and

Ramakrishnan et al., 2005).

Two dimensional definition of fit consist of 1) product/features similarity between parent brand

and extension 2) image consistency (Grime, Diamantopoulos et al., 2002; Buil, Martinez et al.

2009). Dimension one is related to functional and physical similarity which is called functional

fit. On this stage extension and parent brand satisfy the same needs (Dacin and Smith, 1994).

The second dimension is image fit. Brand extension share the overall brand concept, feelings and
associations such as value and prestige (Salinas and Pérez, 2009). For example, Arm & Hammer

toothpaste and Arm & Hammer laundry detergent have little physical similarity but satisfy the

higher order needs that are consistent with the brand concept such as value and safety.

Finally, the most important case is, when an extension possess low functional fit and high image

fit with high quality parent brand. When an extension has high functional fit and low image fit,

extension’s sales will hurt. In this case, both pair will occupy same consideration set and parent

brand will steal sale from extension (Guide Jr and Li, 2010).

2.3: Parent Brand Strength

Keller (1993) suggests that parent brand strength consist of brand awareness, brand image and

consumer response to brand. For a successful brand extension, it is necessary that consumers

must be aware about parent brand. Consumer response and brand image are important

components that form the parent brand strength (Ringle, Sarstedt et al. 2013).

2.4: Marketing Support

Marketing support has some sub dimensions like advertising activities, product benefits,

distribution, and sales promotion. The managers can exploit from these dimensions to influence

the market in favor of product success. Advertising support is very necessary when a new

product is introduced in the market (Reddy, Holak et al. 1994). Consumer perceives the product

benefits in the newly designed product which has two facets; functional and experiential benefit

(Park, Jaworski et al. 1986). Functional benefits satisfy the physiological needs of the consumer.

While experiential benefits are related to product benefits which fulfill the consumer’s hedonistic

needs. These benefits are pleasure seeking and inspires for repurchases. Experiential benefits

increase the consumer’s cognitive process in context of products. It is largely assumed that
strong brand name has minimum marketing expenditures to float brand extension and increases

the product awareness (Collins-Dodd and Louviere, 1999).

2.5: Quality of Parent Brand

Meaning of quality is very broad in the context of brand extension. Zeithaml (1988) suggests that

consumer’s perception about quality of product is associated with the brand and performance of

product. Aaker and Keller (1990) describe that the relationship between attitude and perceived

quality exist due to high fit between core brand and extended product. While according to

Bottomley and Holden (2001), evaluation of brand extension is directly affected by perceived

quality regardless of fit.

2.6: Experience of Parent Brand

Personal experience with parent brand may generate relevance with parent brand and increase

liking for the brand. Parent brand knowledge may also increase through direct experience with

the parent brand (Kirmani, Sood et al. 1999).

2.6: Overall Evaluation

It is the subject’s reaction towards a proposed brand extension was measured using behavioral

and attitudinal statements following the established attitude research procedures (Fishbein and

Ajzen, 1975).
 CHAPTER 03: REASEARCH METHODOLOGY:

3.1: Method of Data Collection:

The research paper survey is based upon the primary data collection through the graduated and

post graduate students of different Universities in Karachi. The young students are better

identifying the new technology adoption (Davis, Hanafizadeh, Behboudi, Koshksaray, & Tabar,

1989,2014). The observation that the young people’s or consumers are the innovator and taking

risk to adopt the new technology as compare to older consumers (Lewis, Palmer, & Moll,

2010).The young consumer play the active role to buy decision process to various goods and

service.

3.2: Sampling Technique:

In this research using the method of technique which is convenient base, provided a wider range

of data coverage and address to minimize the problems of incomplete survey form and duplicate

entry can’t be accepted and Accept those survey which is prior experience of online shopping

experience and qualified to participate the survey.

3.3: Sampling Size:

The sampling size of this paper which is 110 and Consist of previous researches to understand

the behavioral intention of m-commerce adoption; the recent study also used non random

sampling technique for the data collection (Featherman & Pavlou, 2003); (Wu & Wang,

2005);Lewis et al., (2010).

References

https://www.brecorder.com/2017/04/10/342729/olx-celebrating-five-successful-years-in-pakistan/

D.A. Aaker, Managing Brand Equity, Free Press, NY, 1991.

D.A. Aaker, K.L. Keller, Consumer Evaluations of Brand Extensions, Journal of

Marketing 54 (1990) 27–41.

M.K. Ahuja, J.B. Thatcher, Moving Beyond Intentions and Toward the Theory of
Trying: Effects of Work Environment and Gender on Post-Adoption Information
Technology Use, MIS Quarterly 29 (3) (2005) 427–459.

I. Ajzen, The Theory of Planned Behavior, Organizational Behavior and Human

Decision Processes 50 (1991) 179–211.
J.C. Anderson, D.W. Gerbing, Structural equation modeling in practice: A review
and recommended two-step approach, Psychological Bulletin 103 (3) (1988)
411–423.

S.J. Armstrong, T.S. Overton, Estimating Nonresponse Bias in Mail Surveys, Journal
of Marketing Research 14 (3) (1977) 396–402.

Y. Bakos, E. Brynjolfsson, Bundling Information Goods: Pricing, Profits, and

Efficiency, Management Science 45 (12) (1999) 1613–1630.

Y. Bakos, E. Brynjolfsson, Bundling and Competition on the Internet, Marketing

Science 19 (1) (2000) 63–82.
S.R. Barkin, G.W. Dickson, An Investigation of Information System Utilization,
Information Management 1 (1) (1977) 35–45.
F.D. Davis, Perceived Usefulness, Perceived Ease of Use, and User Acceptance of
Information Technology, MIS Quarterly 13 (3) (1989) 318–339.

S. Djamasbi, D.M. Strong, M. Dishaw, Affect and Acceptance: Examining the Effects
of Positive Mood on the Technology Acceptance Model, Decision Support Systems
48 (2) (2010) 383–394.

V. Venkatesh, M.G. Morris, G.B. Davis, F.D. Davis, User Acceptance of Information
Technology: Toward a Unified View, MIS Quarterly 27 (3) (2003) 425–478.

F. Volckner, H. Sattler, Drivers of Brand Extension Success, Journal of Marketing 70

(2006) 18–34

R.R. Kling, D.C. Smith, Treats to the External Validity of Brand Extension Research,
Journal of Marketing Research 38 (3) (2001) 326–335.

J.L. Lastovicka, K. Thamodaran, Common Factor Score Estimates in Multiple

Regression Problems, Journal of Marketing Research 28 (1) (1991) 105–112.

L. Leuthesser, C.S. Kohli, K.R. Harich, Brand Equity: The Halo Effect Measure,
European Journal of Marketing 29 (4) (1995) 57–66.
T.P. Liang, J. Huang, An Empirical Study on Consumer Acceptance of Products in
Electronic Markets: A Transaction Cost Model, Decision Support Systems 24 (1)
(1998) 29–43.

S. Taylor, P.A. Todd, Understanding Information System Technology Usage: A Test

of Competing Models, Information Systems Research 6 (2) (1995) 144–176.

V.M. Venkatesh, G.D. Davis, A Theoretical Extension of the Technology Acceptance

Model: Four Longitudinal Field Studies, Management Science 46 (2) (2000)
186–204.

V. Venkatesh, M.G. Morris, P.L. Ackerman, A Longitudinal Field Investigation of

Gender Difference in Individual Technology Adoption Decision-Making Processes,
Organizational Behavior and Human Decision Processes 83 (1) (2000) 33–60.