The Effects of Sequential Introduction of Brand Extensions

TLDR

The study hypothesizes that the perceived quality of a core brand and the number, success, and similarity of intervening extensions influence evaluations of proposed new extensions and the core brand itself. The authors performed a laboratory experiment to assess how intervening extensions affect evaluations of new extensions from a core brand that may or may not have prior extensions. The experiment revealed that the effect of intervening extensions depends on the relative quality of the core brand: a successful intervening extension improves new extension evaluations only when the core brand is of average quality, whereas an unsuccessful one reduces them only when the core brand is high quality; core brand evaluations rise with a successful intervening extension only for average quality cores, multiple intervening extensions produce distinct effects compared to a single one, and similarity has little impact.

Abstract

A laboratory experiment examines factors affecting evaluations of proposed extensions from a core brand that has or has not already been extended into other product categories. Specifically, the perceived quality of the core brand and the number, success, and similarity of intervening brand extensions, by influencing perceptions of company credibility and product fit, are hypothesized to affect evaluations of proposed new extensions, as well as evaluations of the core brand itself. The findings indicate that evaluations of a proposed extension when there were intervening extensions differed from evaluations when there were no intervening extensions only when there was a significant disparity between the perceived quality of the intervening extension (as judged by its success or failure) and the perceived quality of the core brand. A successful intervening extension increased evaluations of a proposed extension only for an average quality core brand; an unsuccessful intervening extension decreased evaluations of a proposed extension only for a high quality core brand. Though a successful intervening extension also increased evaluations of an average quality core brand, an unsuccessful intervening extension did not decrease core brand evaluations regardless of the quality level of the core brand. The relative similarity of intervening extensions had little differential impact, but multiple intervening extensions had some different effects than a single intervening extension.