Consumer Response to Line Extensions: Trial and Cannibalisation Effects

Cannibalisation and trial are both potential consequences of line extension strategies with, normally, the former to be controlled and the latter encouraged. Both stem from the familiarity of the parent brand, the main driver of line extension strategy. For a brand manager, considering the launch of a new line, these two effects create tensions; how can trial be maximised whilst parental share loss is minimised? We examine these two effects in different line extensions in the UK and Germany to understand how trial and cannibalisation interact to affect the success of a line extension. Our empirical research analyses the purchase patterns of buyers of a new line, before and after the launch of the extension, and compares these with the level of cannibalisation. Our aim is to understand the dynamics of consumer response to the new line. The household panel data analysis of fmcg purchases shows that line extension buyers are disproportionate purchasers of the parent brand, both before and after the launch. However these measures of cross-purchase correlate only weakly with the level of cannibalisation (rho = .42 before, .43 after). Whilst a line extension clearly encourages purchase of the new line by purchasers of the existing parent, this leads to additional portfolio purchasing as often as substitution. This provides some proof of the efficacy of line extension strategies in expanding brand sales.     

Advertising for extensions: Moderating effects of extension type,advertising strategy,and product category involvement on extension evaluation

This paper investigates how advertisements for extensions contribute to consumers’ attitudes towards new line and brand extensions of highly familiar brands. We investigate the relative importance of attitude toward the advertisement (Aad), parent brand quality, and fit between the extension and the parent brand for extension evaluations with a sample of 754 Belgians. Hierarchical regressions showed that Aad is the major influencer of extension evaluation. The importance of Aad, quality, and fit on extension evaluation is moderated by extension type (line or brand extension), advertising strategy (informational, positive emotional, negative emotional), and product involvement (low or high involvement). Quality transfer from the parent brand was more outspoken for line than for brand extensions; Aad was relatively more important for low product involvement and fit for high involvement conditions. Informational appeals, compared to emotional appeals, reduced the effects of parent brand quality and fit, but Aad was all the more important.     

The Eyes Have It: How a Car's Face Influences Consumer Categorization and Evaluation of Product Line Extensions

This research focuses on a previously unexamined risk associated with the widely used new product development strategy of line extensions. Specifically, it explores consumer reactions when line extensions become too visually similar and examines both short‐term and longer term strategies for solving the problem. Examined in the context of consumer durables, specifically, automobiles, the results show that consumers who make categorization mistakes when trying to distinguish between two visually similar product lines have more negative attitudes not only toward the product but also toward the parent brand. The results of Study 1 confirm that providing a design vocabulary that articulates the car's design features is effective in reducing consumer's categorization mistakes. In addition, results of Study 2 indicate that changes to the car's “eyes” (headlights) are more effective than changes to the car's “mouth” (grille) in helping consumers to differentiate among cars in the line.     

By-Brand or By-Category? The Effect of Display Format on Brand Extension Evaluation

Although consumers often encounter brand extensions for the first time during a store visit, most research on brand extensions does not take into consideration how product display in retail environments might affect evaluation of a brand extension. We explore the effect of two distinct display formats on brand extension evaluations: by-brand display, where a brand extension is presented in the context of other products made by the same parent brand (e.g., Nike razors displayed with Nike sneakers, Nike sportswear, etc.), and by-category display, where a brand extension is presented in the context of competing brands within the extension category (e.g., Nike razors displayed with Philips razors, Gillette razors, etc.). Three studies demonstrate that low fit extensions of high quality brands are evaluated more favorably when displayed by-category than by-brand, whereas high fit extensions of low quality brands are evaluated more favorably when displayed by-brand than by-category. In support of the proposed underlying mechanism, we show that display format influences consumers’ evaluations of brand extensions by changing the weight of importance given to parent brand quality and brand-extension fit information. Finally, we demonstrate that display format not only influences evaluation of the extension, but also has downstream consequences for the consumption experience with the extension.     

Drivers of Brand Extension Success: What Really Matters for Luxury Brands

The use of brand extensions has become fundamental to the business model of most luxury brands. Many traditional luxury brands such as Louis Vuitton or Chanel have expanded into traditional luxury sectors beyond their core business. Some brands such as Armani or Prada even crossed boundaries to nontraditional lifestyle segments to pursue new business opportunities. Given the high practical relevance of brand extensions for luxury brands and the importance to understand the success factors for their extendibility and potential backward effects on the parent brand, surprisingly little research has addressed these issues for luxury brands in comparison to nonluxury brands. The current research reveals extension‐related differences between luxury and nonluxury brands by simultaneously analyzing key dimensions of parent brand value, fit, and extension category involvement on the consumer's attitude toward the brand extension, which in turn influences the postextension image of the parent brand. Results of a structural equation model based on a survey among 492 participants show that the predominant driver of brand extension success for both luxury and nonluxury brands is overall extension fit, followed by the consumer's involvement in the extension category. The influence of functional value of the parent brand on the extension evaluation is more important for nonluxury brands. The hedonic value of the parent brand is found to be of relevance only in case of luxury brands. Moreover, a reciprocal spillover effect between the extension evaluation and the parent brand evaluation is observed. The degree of luxuriousness of the parent brand moderates this relationship. This effect is weaker for luxury brands.     

Parent-protecting advertising in product line extensions: Role of communication strategy,message type and extension type

Product line extension, the introduction of new products under the same brand name in a given product category, is a growing practice of product innovation in many industries. However, when companies launch line extensions, information of the new products positively or negatively affects consumer evaluations of the parent products in the same line, generating the so-called spillover effects. Through two experimental studies, the current research explores how marketers can employ appropriate communication strategies and message types in advertising to induce favourable spillovers or to avoid negative spillovers in product line extensions. Experiment 1 investigates the interaction between communication strategy and line extension type. Results reveal that for vertical high-end extensions and for horizontal line extensions, ads using relational strategy that focuses on the relatedness between products in the line increase consumer valuation of the parent product; for vertical low-end extensions, ads with elaboration strategy that stresses the uniqueness of the extensions avoid negative spillovers on parents. Experiment 2 further examines how message type moderates the spillover effects in elaboration ads. Results show that, compared with numerical messages, literal messages engender smaller valuation decreases on the parents and consequently alleviate undesirable spillover effects for most types of product line extensions.     

Product difficulty incongruity and consumer evaluations of brand extensions

Ever since the appearance of Aaker and Keller's (1990) seminal article, the brand extension research stream has intensively investigated factors that impact consumer evaluations of brand extensions. However, the main effect of product difficulty and the interactions between the parent brand quality and fit variables have not been consistent across studies. We conjecture that this inconclusiveness of findings is due to an equivocal conceptualization and operationalization of the key concepts – product difficulty and product difficulty incongruity. The existing studies mainly focus on product difficulty, i.e., the perceived difficulty level of designing and making the extension, whereas the latter refers to the difference between consumers’ perceptions of the difficulty of designing and making the parent product and the difficulty in designing and making the extension product. We specifically propose that product difficulty incongruity will negatively impact consumer evaluation of brand extensions, and this negative effect is stronger for high parent brand quality and consumers with high levels of need for cognition. The findings from two empirical studies well support our predictions.     

Consumers' beliefs resulting from conceptual combinations: Conjunctive inferences about brand extensions

The nature of consumers' inferences about conceptual combinations is examined in this article. Specifically, brand extensions are posited as representing the unique combination of two knowledge categories or concepts—the brand and the new product class—and inferences about the combination as representing conjunctive inferences that consumers form on line to comprehend the combination. Predictions of what consumers might infer about brand extensions and of the possible sources of these inferences were tested in a concurrent verbalization study that utilized an idiographic coding scheme. The study results indicate that consumers frequently and spontaneously formed inferences when evaluating brand extensions. Both the presence of attributes and the valences of attributes were inferred. Consumers appeared to construct these inferences on line rather than retrieving them from brand, product-class, subcategory, superordinate category, or exemplar knowledge. As such, inferences about conceptual combinations appear to be distinct from those previously found in the consumer inference literature. © 1996 John Wiley & Sons, Inc.     

The role of brand strength,type, image and product-category fit in retail brand collaborations

Retailer brand collaborations are an underexploited way for retailers to expand product lines and target new segments relatively quickly and cheaply, yet little work has explored the area and the influence of important factors in the image inheritance process remains unknown. Using data from two experiments involving 240 subjects, we examine the role of brand type, brand strength and the fit between parent and brand collaboration product categories to show that a new retail product's image inherits more characteristics from a symbolic parent brand (even when the brand is weak) and when there are higher degrees of parent retailer-image fit. However, fit between the new retail collaboration's product category and that of the parent brands is only important for functional brands. The results help retailers decide which partner to choose to maximize image inheritance.     

Exploring ethnic consumer response to crossover brand extensions

This research uses a social identity theory approach to investigate the impact of cultural identity on ethnic consumer response to ethnic crossover brand extensions—brands associated with one ethnic group that crossover into a product category associated with another ethnic group (e.g., McDonald's Café con leche). Study 1 demonstrates that the manner in which crossover brand extensions blend ethnic consumers' in-group and out-group cultural representations impact brand extension cultural fit and parent brand attitudes, and perceived ethnic target market impacts brand extension attitudes. Study 2 demonstrates that high ethnic embeddedness extensions strengthen ethnic consumers' self-brand connections. These findings provide managerial implications for practitioners considering a crossover brand extension strategy.     

Consumer Responses to Vertical Service Line Extensions

Vertical line extensions extend an established brand to products at different price/quality points. In this study, we examine consumer evaluations of vertical service line extensions and the feedback effects of these extensions on the parent brand. Findings of two empirical studies in the hotel industry indicate that consumers perceive higher risks in step-up extensions than in step-down extensions, which consequently influences their evaluations of the extensions. This effect of extension direction is also found to be moderated by risk relievers such as service guarantee and consumers’ prior knowledge in the service category. Furthermore, we found that a parent brand receives more positive evaluations after the introduction of a step-up extension than that of a step-down extension.     

The Effect of Consumer Multifactorial Gender and Biological Sex on the Evaluation of Cross‐Gender Brand Extensions

Introducing cross‐gender brand extensions—masculine or feminine brands that extend to the opposite gender—is a growing trend on the marketplace, though not always a successful one. This research examines the effect of consumer multifactorial gender and biological sex on consumers’ evaluation of cross‐gender brand extensions. The influence of gender role attitudes is demonstrated: consumers with traditional gender attitudes are significantly more reluctant to accept these extensions than consumers with more liberal attitudes. Hence the extensions have a negative impact on the subsequent attitude of the former group toward the parent brand, contrary to their effect on more egalitarian consumers. No significant impact of the consumer's biological sex, gender identity, or sexual orientation is identified. The theoretical and managerial implications of these findings for the development of cross‐gender brand extensions are discussed.     

Attitudes toward the extension and parent brand in response to extension advertising

This paper investigates how ads for extensions can trigger different reactions with respect to consumers' attitudes towards new line and brand extensions of familiar brands. Using a structural equation model, the authors research the influence of attitude towards the ad (Aad), parent brand quality, and perceived fit on attitude toward the extension (Aext), and resulting feedback effects on attitude toward the parent brand (Apb) with a sample of 509 Belgians. Results are compared between two types of advertising strategies (informational vs. positive emotional). The findings indicate that informational appeals, in comparison to emotional appeals, reduce the effects of parent brand quality and fit, but Aad is all the more important. In terms of feedback effects to the parent brand, Aext transfers more easily to Apb with an informational appeal than with a positive emotional appeal. On the other hand, Aad directly influences Apb for positive emotional appeals, but not informational appeals.     

The relative advantages of benefit overlap versus category similarity in brand extension evaluation: The moderating role of self-regulatory focus

The literature has identified factors that determine the favorable evaluation of a new brand extension, such as sharing a common product category or providing similar core benefits as the parent brand. However, there has been little research on which of these factors has a greater impact on consumer evaluation. This study explores how self-regulatory focus moderates the relative impacts of benefit overlap (i.e., the consistency of core benefits provided by extensions) versus product category similarity (i.e., the similarity among product categories that include the extensions) on brand extension evaluations. The results of an experiment support the prediction that benefit overlap extensions have greater significance for promotion-focused consumers, whereas category similarity extensions are favored by prevention-focused consumers.     

When distraction may be a good thing: The role of distraction in low-fit brand extension evaluation

This study examines the effect of distraction after being exposed to information on low-fit brand extension evaluation. We show that when consumers are distracted (vs. engaging in deliberate thinking) after encoding extension information they evaluate low-fit brand extensions more favorably. Findings suggest that distraction can help establish connections of remotely associated information between a parent brand and a low-fit extension. We also find that the effect of distraction is contingent on the individual characteristic of consumers' agency–communion orientation. The core effect holds strongly for consumers high in communion orientation, but not for those with an agency orientation. Finally, we examine how marketing communication strategies (i.e., manipulating product message construal level) interact with distraction to influence consumer perceptions of low-fit brand extensions. Theoretical and practical implications of these findings are discussed.     

New Brands Versus Brand Extensions, Attitudes Versus Choice: Experimental Evidence for Theory and Practice

The current study compares better-fitting and worse-fitting new brand names and brand extensions on brand attitudes and choice shares across situations that differ in terms of the amount of product information available and consumer knowledge of the target product category (which had limited effects), 35[emsp4 ]mm cameras (choice-set competitors Nikon and Minolta). While brand extensions and better-fitting brands generally enjoyed more positive brand attitudes and larger choice shares, effects were moderated by product information. When information was limited to brand name and price, the better-fitting brand extension (Sony) commanded more share than did the better-fitting new brand (Optix) which in turn commanded more share than did either the worse-fitting extension (Nike) or the worse-fitting new brand (Topix). But when information on product features was added, target brands were chosen similarly across brand names where the better-fitting new brand Optix garnered slightly (non-significantly; 5%) more share than the better-fitting extension Sony. This weak preference was reversed, however, in the attitude data where Sony was rated significantly higher in liking than Optix. Two focal conclusions emerge. First, new brands can perform as well as or better than brand extensions when consumers process product information. In this study, brand-extension advantages were confined to situations of limited information processing and better fit. Second, since branding effects differed across attitudes and choice, researchers hoping to duplicate in the laboratory the types of branding effects likely to occur in the marketplace may want to expand their traditional focus on attitudes to include choice.     

Brand expertise and perceived consistency reversals on vertical line extensions: The moderating role of extension direction

Vertical line extensions are a valuable growth strategy for many retail service sectors. Correctly positioning a new vertical line extension in the price/quality spectrum is an important decision that has considerable implications for bottom line profits. This paper examines the moderating role of extension direction on the effect of perceived consistency on vertical extension evaluations. In two studies, we show that a lack of perceived consistency acts as a reminder to consumers that the brand may be stretching beyond its expertise, increasing perceived performance and financial risks for upscale extensions but not for downscale extensions. As a consequence, higher consistency results in higher upscale extension favourability whereas evaluations of downscale extensions are similar regardless of their perceived consistency with the parent brand.     

Investigating the effects of a line extension or new brand introduction on market structure

Market structure has been characterized by the locations of brands in the perceptual space of households (perceptual map) and the importance weights associated with the attributes of this map. It is hypothesized that a line extension or a new brand introduced into this market could potentially affect the brand locations or the importance weights. We show how a simple extension of a recent approach to market structure analysis enables us to empirically identify which, if any, of these two aspects of market structure is affected by the line extension or new brand. An empirical application to the detergent product market is provided.     

The Effect of Parent Brand Experience on Line Extension Trial and Repeat Purchase

This research analyzes how consumer experience with a parent brand affects trial and repurchase probabilities for a line extension. We develop and test the uncertainty hypothesis which is based on the premise that consumers use experience with the parent brand to infer the quality of the extension. Experience with the parent-brand increases consumers' expectation that the extension quality is high. Therefore, consumers with more parent-brand experience will be more likely to try the extension. However, they will be less likely to repurchase the extension because of the selection bias.We test the hypothesis with scanner panel data from three product categories. The results are consistent with our hypothesis. We also discuss the implications of our results on how to design market programs for new line extensions.     

Vulnerability of global brands to negative feedback effects

Going global is a successful strategy to leverage a brand's equity, in part, because global is synonymous of quality for consumers. This research examines the impact of competitor brand familiarity on the quality perceptions of global brands in Chile when the brand extends into new product categories. The results indicate that there is a negative impact on the quality perceptions of brand extensions when an extension competes with well-known and well-liked competitor brands. However, brand extension quality beliefs seem to produce negative feedback effects on parent brand quality beliefs only for narrowly extended parent brands but not for broadly extended ones.