Price And Core Brand Effects On Brand Extension Quality Evaluations

Abstract

Organizations frequently follow brand extension strategies to launch new products. This paper investigates the impact of the core brand quality, the price of the extension category, and the price of the extended brand on the consumer evaluation of the brand extension. Hypotheses were developed and tested in a survey among 247 consumers using a 2 (high vs moderate perceived brand quality) X 2 (upward vs downward extension) X 2 (high vs low brand extension price) between-subjects design. The findings show that core brand quality is an important factor influencing the success of the extension. Similarly, the price of the brand extension had a significant effect on the quality evaluation of the extension. Also a downward price extension was more likely to be accepted than an upward price extension.