Extending downward is not always bad: Parent brand evaluations after brand extension to higher and lower price and quality levels

Abstract

Extending brands vertically to different price and quality levels is a popular strategy of brand managers to leverage the value of well-established brands. This strategy may increase sales but also risks diluting and cannibalizing one of the most valuable assets of a company – the parent brand. Extant research has found especially negative effects after downward extensions (to lower price and quality levels). Building on social comparison theory, this study investigates parent brand evaluations after upward and downward extensions and examines the influence of moderators (for example, extension degree, brand concept) from a price perspective. The findings reveal positive effects of the perceived value for money and intention to buy the parent brand after a downward extension.