Do line extensions influence parent brand equity? An investigation of supermarket packaged goods

Abstract

PurposeThe purpose of this empirical paper is to determine the effects of line extension introductions on parent brand equity.Design/methodology/approachThe paper uses a cross‐sectional sample of 318 supermarket brands. A system of equations is proposed and estimated using seemingly unrelated regression.FindingsBrands benefit from line extension introductions, but only high equity brands benefit from innovation. Low equity brands benefit from the solo advertising of their new line extensions.Practical implicationsThe results suggest that there are two routes for improving brand equity; high equity brands can introduce innovative products, while low equity parent brands may improve brand equity by supporting new line extensions with solo advertising.Originality/valueThe paper is important in identifying the effects of new product introduction and innovation on brand equity.