Competitive effects on the evaluation of brand extensions

This research examined the influence of competition on the evaluation of brand extensions. Previous research on the brand extension evaluation has primarily focused on product and/or brand attributes with some emphasis on consumer decision making, while ignoring product competition and category structure. Product and brand attributes are important variables, but when examined in isolation from competition they are unlikely to provide a complete picture of the extension evaluation process, since consumers usually do not operate in a vacuum where competitive forces do not exist. In some cases where brand extensions introduce new categories, the impact of direct competition may be minimal. However, in the present competitive landscape where product life cycles are short and competitive pressures strong, any new category established through a brand extension is unlikely to remain without competition for long.; Based on literature from categorization, consumer behavior and marketing strategy, a series of relationships were hypothesized to determine the effects of competition on the evaluation of brand extensions. The moderating roles of consumer knowledge, target category structure, and provision and format of competitive information were investigated. A series of three experiments was conducted to test the hypotheses. The results of the experiments demonstrated that competition significantly affects the evaluation of brand extensions. The results of the experiment 1-a & b indicate that competitive interference is present in a number of different contexts even when an extension is seen as a logical step to enter market entry. Results also indicate that consumers who possess higher knowledge of the target category are particularly sensitive to the presence of competition even if the parent brand is highly familiar to them.; The second experiment built on the findings from the first experiment and examined the provision of category structure on the extensions evaluation outcome. The results show that providing category structure results in higher competitive effects. Finally, the third experiment was conducted to examine whether goal-deriven or taxonomic categorization of a brand extension would be more affected by the competition. Contrary to the hypothesized relationship, the findings fail to indicate any difference between the two types of categorization.