Social media (SM) has witnessed a surge in usage over the past decade, with approximately 4.59 billion active users globally in 2022, showing a yearly increase of 4.2%. In the US, around 75% of internet users engaged with platforms like YouTube, Instagram, and Facebook, spending an average of 144 minutes daily on these platforms. The primary reasons for SM use include socializing with friends and family (47.6%) and seeking information on news, products, brands, opinions, content, and shopping.
Companies have recognized this trend and are increasingly leveraging SM for consumer communication. It is estimated that ad spending on SM will surpass 30.3% of total digital ad expenditure in 2023. Marketers are particularly focusing on Consumer Engagement (CE) on SM due to its positive impact on various marketing outcomes like brand attitude, relationship quality, brand intimacy, and brand loyalty.
One strategy employed on SM platforms to enhance CE and extension acceptance is Brand Extension (BE). BE involves using an existing brand name to launch a new product type. By leveraging the parent brand’s equity, companies can transfer consumers’ positive attitudes toward the parent brand to the new products, thereby reducing communication costs and perceived risks.
Luxury brands have also adopted BE strategies to extend their offerings within the same industry or even into service industries like hotels and restaurants. Luxury fashion brands such as Versace, Armani, and Dior have successfully extended their businesses to hotels and restaurants under their brand names.
Despite prior research on CE and BE strategies separately, there is a lack of studies examining how CE through SM influences luxury BE strategies. Understanding how CE through SM impacts extension success in the luxury sector can provide valuable insights for marketing strategies and branding managers.
This study aims to fill this gap by investigating the relationship between CE through SM and luxury BE strategies. By exploring how attitudes toward BE influence loyalty to luxury restaurants, the study seeks to understand how loyalty to restaurants, formed through CE, impacts loyalty to the original luxury fashion brands. This research has the potential to offer fresh perspectives for marketing and branding practitioners in the luxury sector.