The effects of price on brand extension evaluations: The moderating role of extension similarity

This research explores the effects of price information on brand extension evaluations across different levels of similarity. Brand extension similarity is proposed as a moderator of the effects of price on brand extension perceived quality, perceived value, and purchase intentions. Specifically, price is hypothesized to have a larger positive impact on perceived quality evaluations of dissimilar extensions, but a larger negative impact on perceived value and purchase intentions for similar extensions. Results indicate that a high-price introductory strategy used to suggest a high-quality product will likely be more effective for dissimilar extensions than similar extensions. The results of this research suggest a number of implications for new product pricing. Directions for subsequent research are offered as well. Valerie A. Taylor is an assistant professor of marketing in the College of Business Administration at the University of Tennessee at Chattanooga. She received her Ph.D. from the University of South Carolina. Her research interests include product branding strategies, and consumer perception and use of quality cues and signals, and health communication issues. Her research has been published inAdvances in Consumer Research andAmerican Marketing Association Educator's Proceedings. Her teaching interests include marketing communications, marketing strategy, consumer behavior, and marketing research. She has also held positions in the telecommunications industry. William O. Bearden is the Bank of America Chaired Professor of Marketing in the Darla Moore School of Business at the University of South Carolina. He is on the editorial review boards of theJournal of Marketing Research, theJournal of Consumer Research (JCR), theJournal of Marketing, theJournal of Retailing, and theMarketing Education Review and is currently serving as an associate editor forJCR. He has published frequently in theJournal of Marketing Research andJCR, and has a number of publications in other marketing and consumer research journals. His teaching and research interests include consumer behavior, marketing research, and the evaluation of marketing promotions.