Abstract
This study analyzes consumers' evaluation and feedback effects of vertical downscale line extensions through an experiment with price (−25% v. −50%), brand concept (luxury v. prestige) and product category (cars v. fashion) conditions. ANOVA results indicate a significant interaction effect of the brand concept with the product category for the evaluation of the extensions. Consumers attribute lower value, hold less positive attitudes and express lower purchase intention towards the downscale extensions originating from a luxury car brand than from a luxury fashion brand. At the brand level, the size of the discount does not make much difference in the overall evaluation of the extension. Prestige brands are more sensitive to dilution effects resulting from the vertical extension than luxury brands. However, the larger discount increases the distance between the prestige brands and the extension, reducing the negative impact on brand image.
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