Trademark dilution and its practical effect on purchase decision

What is it about?

This work aims to analyze the effect of unauthorized use of trademarks on its consumer-based brand equity and on the consumer purchase decision, through a mediation model with structural equations. An experiment was carried out with 618 participants, who were exposed to advertising of famous brand products or senior brands, and fictitious products with the same brands or junior brands. Participants were then asked to make some purchases with a real budget of US$5. The results show that exposure to junior brands reduces senior brand equity, i.e. results in trademark dilution, mediating a reduction in the purchase of senior brand products. In addition, similarity between junior and senior brands alleviates brand equity dilution, while consumer involvement with the product category of the famous brand has no moderating effect. The study aims to contribute to our understanding of trademark dilution, including the effect on purchase decision – a subject so far unexplored in the empirical literature. Moreover, the study pursues to highlight the importance of protecting well-known trademarks in order to avoid damage occurring not only in consumer perceptions, but also in firm's sales and brand financial value.

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