Brand positivity and competitive effects on the evaluation of brand extensions

Abstract

The dominant approach in brand-extension research has focused on the role of fit in the extension evaluation process. Overemphasis on fit has resulted in research designs that involve singular evaluation of the extension without considering how competing brands in the target category might affect the evaluation of brand extensions. Singular evaluations are known to result in brand positivity effects; that is, brand extensions are evaluated more favorably than is warranted. This research finds that singular evaluations do indeed lead to brand positivity effects. However, brand positivity effects are mitigated when respondents were provided with competitive information along with target-category structure and comparative/non-comparative brand positioning statements. Results also suggest that parent brand-extension fit, though an important determinant of an extension's assessment, plays a less critical role in a comparative evaluation context when an extension's brand strength is accounted for in relation to its competition in the target category. Therefore, the findings stress the importance of both competition and parent-brand fit in making informed positioning decisions and more realistic predictions of extension success. The research demonstrates when, how and to what extent comparative evaluations result in lower extension ratings and provides managerial strategies to introduce an extension effectively.